Microsoft, HP to spend US$300M on joint products

Microsoft and HP on Wednesday announced a three-year agreement to spend US$300 million creating integrated hardware and software products aimed at corporate enterprises.

The companies said their partnership would touch on five different product areas of interest to CIOs, which would be complemented by an increased sales team from HP that would deliver them. The product areas include unified communications, collaboration and content management, business intelligence, business process integration and core infrastructure. The US$300 million will go towards developing, testing and deployment, among other areas. Executives said the two companies share about 20,000 customers around the world.

“It plays to our entire company portfolio,” said HP executive vice-president Ann Livermore via teleconference, who promised the combined products would be priced attractively to enterprise customers. HP already has 3,000 employees ready to sell the joint products. “We can begin tomorrow both from a sales and a delivery perspective.”

Microsoft chief operating officer Kevin Turner said the partnership is part of Microsoft’s “people ready business campaign,” which is intended to help users get more out of their enterprise software purchases such as Windows and Office.

“HP and Microsoft have a very unique partnership. Ann and I have a very unique partnership,” he said. “When I was the CIO for Wal-Mart, we were a big Microsoft customer and a big HP customer. This is a natural point for us to collaborate.”

Microsoft already formed a partnership around unified communications in July with Nortel Networks, an alliance chief executive Mike Zafirovski said could bring the equipment maker more than $1 billion in revenue. Turner said the market opportunity for unified communications was large enough for more than one joint initiative.

“We will also do partnerships with others in the same space, with those that bring unique services and capabilities, and that’s a lot of what the Nortel opportunity is about, as well as the channel they use to bring those products to the marketplace,” Turner told

“We’re also a partner of Nortel’s and a lot of the services and big solutions we implement have a network component,” Livermore added. “It would be natural for the three of us to work together.”

Besides product integration, executives said the partnership would involve ongoing account planning and massive training inside their services organizations. Turner did not rule out the possibility of delivering the combined product sets through either or both firms’ reseller channel, but suggested that those partners would be focused on small business and mid-market customers, not large corporations.

Microsoft recently formed a wide-ranging interoperability partnership with Novell to help customers more easily manage mixed Windows and Suse Linux instances in virtualized IT environments, but Turner indicated Suse software would not be a part of the combined product sets being sold through the deal with HP.

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