HP and EDS: A Convenient Marriage

5/13 - "HP will be able to compete head-to-head with IBM Global Services, particularly in the outsourcing market...HP will be in IBM’s face in many of IBM’s mainframe site, whose data centers EDS runs. This is going to help HP sell some of its enterprise software...Dell has a strong partnership with EDS and it will surely suffer because of this merger. HP will simply get all the associated server business. I’ve no idea how to estimate the size of this, but it’s not peanuts...Industry trends are running in favor of outsourcing and managed service provision in many areas. HP can ride this trend."

"In summary, the synergies abound for increased sales of HP hardware and software and HP has proved it can strip cost out of its own operation, so it ought to be able to do the same for EDS. And let’s not forget the fact that it’s primary goal will be to grow the combined consultancy operation."

"The obvious question to ask here is: “Has Mark Hurd bitten off more than HP can chew?” My guess is that he probably hasn’t. If nothing else Mark Hurd is a gifted and focused manager. He doesn’t acquire companies as though he were collecting old masters for a fine art collection - there’s always a commercial plan...The bottom line is that you will see a double impact on HP from the merger; operational costs in outsourcing should diminish over time and sales should receive a boost."