HP and Microsoft join forces

Hewlett-Packard (HP) and Microsoft have announced they will spend $250 million over three years to simplify servers and cloud computing for business customers.  The agreement will see the companies combine some research and development efforts and deliver pre-packaged servers, storage, software, and networking gear. The partnership will focus on three key areas: making IT easier for businesses to manage; accelerating the adoption of cloud computing; and building what the companies are calling a new software model. As part of the agreement, Microsoft and HP will also jointly promote MicrosoftÔÇÖs public cloud computing service, Windows Azure. Commenting on the agreement, Mark Hurd, HPÔÇÖs chairman and chief executive officer, said: ÔÇ£This collaboration will allow HP and Microsoft to offer our customers transformative technology that will reduce costs, generate business growth and accelerate innovation.ÔÇØ Steve Ballmer, chief executive officer of Microsoft added: ÔÇ£Our extended partnership will transform the way large enterprises deliver services to their customers, and help smaller organizations adopt IT to grow their businesses. Microsoft and HP are betting on each other so our customers donÔÇÖt have to gamble on IT.ÔÇØ HP is the world's largest PC maker by units, with the majority of its machines running on Microsoft's Windows operating system. HP had 19.8 percent share of all new PC shipments during the fourth quarter of last year. By 2011, businesses are predicted to spend up to $95 billion on cloud computing, or about 60 per cent of their total IT spend. Worldwide IT spending is expected to expand by 3.2 percent to $1.5 trillion in 2010, after a decline in 2009. The deal is another sign of the integration that technology companies are hoping to achieve with products that used to be sold as separate components by different suppliers. Slowing growth in the industry as a result of the recession has prompted a wave of acquisitions as technology firms aim to become one-stop-shops for their corporate customers. By strengthening their relationship, Microsoft and HP hope to develop products that can compete with those of rivals such as IBM, which has a broader range of software for corporate customers than HP. Through partnering with Microsoft, HP now hopes to be able to match IBMÔÇÖs offering. Another rival, Oracle, is expected to significantly boost its cloud business through its $7.4 billion acquisition of Sun Microsystems. In November, Cisco Systems announced a partnership with storage vendor EMC and software vendor Vmware, which would create packages of servers, networking equipment, storage, and virtualization software. *┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á *