H-P, Microsoft link up in $250 million cloud computing pact

SAN FRANCISCO — Hewlett-Packard Co. and Microsoft Corp. announced Wednesday a $250 million partnership designed to simplify technology operations for businesses and promote cloud-computing technologies.

The high-tech giants said they plan to partner in
all aspects of business technology, including servers, storage,
software and networking, during the three-year agreement.

H-P and Microsoft
said the partnership would be based on an “infrastructure to
application” business model, including collaboration on the Microsoft
Windows Azure platform and offering prepackaged technology offerings
for data management and online transactions.

The companies said they have been working on the new
partnership for several months, and that some offerings based on H-P’s
hardware systems and Microsoft’s virtualization technology are available now.

Speaking on a conference call, Microsoft Chief Executive Steve Ballmer and H-P CEO Mark Hurd said the driving force behind the deal is the growth of cloud computing
technology, and providing easier access to business applications from
multiple locations.

“If a customer wants to build those
1/8applications3/8 and deploy them inside their own data center or some
other hosted environment, they need a stack on which to build,” Ballmer
said. “Our customers are going need hardware that is optimized to fit
into this application and management model that Microsoft and H-P are working on.”

Hurd added that the two companies are “talking about
aligning big parts” of their abilities to go to the market with
simplified technology platforms that are easy for their customers to
use.

“This is (a) very deep level of integration,” Hurd
said. “We’re talking about packaging up from an availability
perspective, from a performance perspective, 1/8and3/8 being able to
align logistics capability.”

Yun Kim, a research analyst with Broadpoint AmTech,
said the deal is, in a way, an extension of a long-time partnership
between H-P and Microsoft, but with more emphasis on developing “stacks” of hardware loaded with Microsoft’s software for cloud-computing environments.

“The focus is next-generation computing
technologies,” Kim said. “They want to be able to offer something for
cloud-computing needs that encompasses all the hardware and software
together into one package.”

Kim said he didn’t expect any negative reaction to H-P’s plans from Microsoft competitors such as Oracle Corp. (ORCL), due to H-P’s history of being neutral when it comes to doing technology partnerships with multiple software vendors.

“H-P is the Switzerland of technology,” Kim said. “They’ll partner with anybody and Oracle knew that when it did deals with H-P.”

H-P shares were down 23 cents at $51.74 and Microsoft’s stock rose 15 cents to $30.22 after the announcement.

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