HP, Microsoft Bet $250 Million On Cloud, Promise Sales Boost For Channel Partners

Companies say joint venture will benefit channel partners though synchronized go-to-market plans, stronger collaboration, integration and technology development.

January 19, 2010

D.H. Kass

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Microsoft Corp. and Hewlett Packard Co. said that they will invest some $250 million over the next three years to advance an orchestrated engineering, sales and marketing joint venture that crosses the data center from infrastructure to application and offers tangible rewards for channel partners.

The two companies intend to offer solutions framed on a “next generation infrastructure-to-application model,” aimed at hastening the pace of implementation, simplifying IT management and dropping costs by automating previously manual processes.

The partnership, which adds on to an existing arrangement the two vendors have maintained for more than 20 years, outlines an “engineering roadmap” that HP and Microsoft will use to guide new projects, including data management machines, pre-packaged application solutions, virtualization offerings and integrated management tools.

With a technological goal to optimize how the physical infrastructure—servers, network, storage—and applications work together, the vendors have kicked started the undertaking by deploying Microsoft’s SQL Server database on HP hardware, available to channel partners to sell.

“We’re talking about optimizing machine capability around SQL Server,” said HP chief executive Mark Hurd.

“We’re talking about packaging that up from an availability perspective, from a performance perspective, being able to align logistics capability around it, being able to align our implementation capability, our service capability, we’re talking about bringing 11,000 [service] people and optimizing that benefit to customers,” he said.

Dave Donatelli, HP executive vice president and general manager, enterprise servers and networking, said that the agreement spans the breadth of HP’s customer base.

“The agreement is targeted at all facets of our business from the enterprise customer all the way through the medium-sized business through what we call our SMB customer as well,” he said.

HP and Microsoft’s tighter pairing is particularly important for the resulting benefits the vendors suggest will come to channel partners.

Each said that shorter sales cycles resulting from applications bundles and “all-inclusive packages,” financing options from HP, dedicated field resources and worldwide, jointly-funded marketing campaigns will serve to boost channel partner revenue.

“Thirty-two thousand channel partners, more dedicated sales reps all bringing these technologies to market,” said Donatelli.

Agreement more than an extension

Both Hurd and Steve Ballmer, Microsoft chairman and chief executive, contended that the endeavor was not merely an extension of their long-term relationship but rather a more profound association that covered sales, marketing, services and channel partners.

“Microsoft has best of breed solutions for virtualization and management of Microsoft environments, and HP has been a leader in heterogeneous environments, and really stitching those things together has been kind of a desire for a long time,” Ballmer said.

“The cloud is the driving force behind this deal at this time,” he said.

Hurd said that the current investment by the two companies did not fully reflect the multi-layered nature of their association.

“So we’re going to invest not $250 million, I want to make sure I’m clear with this, but $250 million of incremental dollars unique to this program. Already there are hundreds of millions of dollars spent between Microsoft and HP every year, bringing solutions for our customers,” Hurd said.

“This is $250 million incremental dollars, alignment between engineering teams, services teams, go-to-market teams, all with the desire to make things simpler and easier for our customers, get the deeper levels of integration to optimize machine capability with software capability.”

In stressing the call-to-arms service aspect of the agreement, Hurd dismissed the notion that the application bundles central to the vendors’ effort resembled those compiled in the past.

“There’s a difference between a bundle and the opportunity now on how deep it get integrated, and how much true engineering work gets done,” he said.

“Now, we’re talking about 11,000 [service] people, pre-testing, pre-loading, lining up logistics and maybe it’s the scale that we need to get across in the messaging, because this is, to my knowledge, actually, the biggest alignment of infrastructure we’ve ever put behind any kind of enterprise offer that we’ve had,” he said.

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TAGS: cloud computing,Microsoft,virtualization,data center,hewlett-packard

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