HP-EDS Deal Could Drive Channel Consolidation

Hewlett-Packard confirms that it is discussing a possible deal with giant systems integrator EDS. If it happens, it could position HP to compete much more effectively in the service realm against IBM and its Global Services unit. However, the news also underscores the growing amount of channel comsolidation that is now underway.

Despite the economic downtown (or maybe because of it?), there's an awful lot of potential deal-making going on in the channel. Just recently, Forsythe Solutions Group, a large IT infrastructure integrator, acquired MoreGroup, a data storage management integrator. Then RCM Technologies, an IT solutions provider, acquired MBH Solutions, an enterprise business solutions company.

Neither deal approaches the scale than an HP-EDS combination would reach. But taken together, the activity shows that the merger and acquisitions end of the business in the channel is purcolating right now. In the past, slowdowns have marked a time when strong channel companies scout out strategic moves to strengthen their positions in the channel. HP certainly seems to be on the verge of doing that now, and the ramifications of acquiring EDS. should that happen, are going to ripple through the channel and likely trigger other competing moves.


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