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HP and Microsoft's alliance: both more and less than meets the eye

Tim Stammers | Jan. 19, 2010
The announcement included little information about what the integration will cover, or when.

Microsoft and Hewlett-Packard have declared a plan to boost spending on product integration and joint marketing by $250 million over the next three years. The announcement was heavily hyped, and in reality was only a vague statement of direction. It was also a reaction to the alliance between EMC and Cisco, and the prospective merger of Sun and Oracle, and it underlined the implications of technology convergence. It could mark the start of a deeper alliance between Microsoft and HP.

Ignore the hype this is not a big deal, yet

HP and Microsoft maximised the impact of their announcement by involving their respective CEOs, Mark Hurd and Steve Ballmer, and by promising the IT industrys most comprehensive technology stack integration to date so comprehensive that it will range all the way from infrastructure through applications to services.

The duo declined to say how they will split the extra spending between technical integration and sales & marketing. But clearly, the latter share will be sizeable. Spending on joint reseller programmes is to grow tenfold, and some sales staff will be paid entirely according to the volume of joint products they sell.

Regardless of that issue, the breadth of the two companies portfolios means that a $250 million increase in spending is not dramatic. HP and Microsoft currently spend a combined $28 billion annually on sales, general and administrative costs, and $12 billion on research and development. As Hurd noted, they already spend hundreds of millions of dollars annually bringing products to market together.

The new spending is dwarfed by the $1 billion that IBM claimed to spend on Linux during 2001, a move that arguably propelled Linux into mainstream enterprise computing. By comparison, HP and Microsofts $250 million over three years is merely incremental spending.

Many questions were unanswered

The announcement included little information about what the integration will cover, or when. It was made clear, however, that the integration will start with systems management and virtualisation tools, and move on to the packaging of HP servers with Microsoft applications such as Exchange.

This latter integration contradicts the fundamental principal of cloud computing, which is to eliminate the ties between applications and hardware, not strengthen them. Nevertheless, Ballmer described cloud computing as the driving force behind the new deal, and revealed that Microsofts coming Azure public cloud will be powered by HP hardware, although it did not say which hardware.

HP and Microsoft are reacting to convergence and competition

According to Ballmer, the idea of boosting joint spending was broached around April last year. That was around the same time as seismic shifts were occurring in the IT industry.


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