HP, Microsoft team up on $250 million cloud computing project

Jan 14, 2010 By Brandon Bailey

Hewlett-Packard and Microsoft said Wednesday they will jointly spend $250 million to develop hardware and software products that are designed to work together smoothly in their customers' data centers and in cloud computing facilities.

"This is all about integrating technology and making things as close to 'plug and play' as we can," HP CEO Mark Hurd said during a telephone conference call with Microsoft and other executives, in which they announced a partnership that appears to represent another move toward consolidation in the commercial tech industry.

The two tech giants said they will collaborate in designing a full "stack" of data center , software management tools and other applications, as well as on Windows Azure, which is Microsoft's operating platform for , in which customers can access data center services over the Internet.

Microsoft, which is a major provider of business software, said it will use HP hardware in the data centers that run the Azure platform. HP, which is a leading provider of data center hardware, said it will develop products that can be sold pre-loaded with Microsoft's operating system, database program or other software.

"We're driving ahead aggressively with Hewlett-Packard," Ballmer said during the announcement. However, he also noted that both companies will continue to develop products in collaboration with other partners in the tech industry, such as Oracle and Dell.

Both executives also said their companies will continue to develop hardware and software that works with products from other tech vendors.

The announcement comes as most of the big players in commercial technology are increasingly striving to offer a full range of hardware and software products, so they can serve as a one-stop shop for their customers. That has led to several major acquisitions. HP, for example, recently purchased 3Com to expand its portfolio of .

Giant software company Oracle, which competes with Microsoft, meanwhile, is seeking to acquire computer maker Sun Microsystems and has talked about selling Sun hardware that is more closely integrated with Oracle's .

Hurd said Wednesday that HP and , which have cooperated in the past, had been talking about a larger partnership for several years. He and Ballmer made a definite decision to proceed in spring 2009, Hurd said. That's about the same time Sun was targeted for acquisition, first by IBM and then by Oracle after the IBM deal fell through.

But Hurd added: "I wouldn't want you to think this is a reaction to anything. We're doing something at a level of integration that we're not aware of any two companies on the planet ever having done before."


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