The Deal's West Coast tech reporters continue to report away on the big Hewlett-Packard Co.-Electronic Data Systems Corp. deal, and you'll see their work on The Deal.com and in a story that will appear in The Deal newsweekly magazine on Monday.
That leaves this more casual observer of the tech scene to wonder anew about how these two businesses will actually come together. So far there's not a lot of clarity, which may be one reason why HP investors have been skeptical, despite HP CEO Mark Hurd's record in getting the HP-Compaq acquisition to finally pay off. On the one hand, we hear Hurd referring to the tens of thousands of hours of
due diligence and planning that preceded the deal; on the other, there's HP EVP Ann Livermore saying that
detailed integration plans have yet to be made.
No doubt we'll find out more about the plan, which calls for injecting HP's outsourcing business into EDS and having EDS run it. Some efficiencies will be derived from shifting to EDS to HP's administrative systems, but where others will come from hasn't been revealed. HP's second-quarter earnings call next week could be a forum for further detail.
But for today we mainly have reminders of the complexity of this kind of deal, which besides the two companies involves a whole ecosystem of customers and third-party consultants and resellers. You can see these groups already trying to
figure out what the deal means for them in their
various homes on the Web.
Final thought: Isn't it interesting that IBM Corp. -- the company HP is trying to catch in services -- sold its personal computer business as it concentrated ever more intensely on software and services? Admittedly IBM had become something of a laggard in a tough business, whereas thanks to its success with Compaq, HP is now the leader. But personal computers account for nearly a third of HP's revenue before this deal, and imaging and printing account for a further 27%.
To my eye, that gives IBM a focus that HP lacks. There are parallels, perhaps, to Microsoft Corp. trying to compete simultaneously in software and Web search -- the latter challenge being one that it too tried to address with a big acquisition, albeit one that hasn't happened.
The decision to let EDS run outsourcing would seem to be a recognition of HP's great span (or, if you're a skeptic, its sprawl). But getting the model to work will be no small task. How Hurd, EDS CEO Ron Rittenmeyer and the rest of their teams will actually go about this is what folks are waiting to hear. -
Kenneth Klee
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