Microsoft and HP Could Reshape the IT Landscape: Page 2
Microsoft and HP: Better Together Than Alone
It's easy to look at the rapid revenue and market share gains of Apple, Google and Facebook and dismiss both Microsoft and HP. However, from a platform perspective, both Microsoft and HP have been surprisingly successful. HP's acquisitions — especially that of Compaq, which has shifted HP's center of gravity to Intel chips and PC form factors — have allowed HP to add strength in scale-out to strength in scale-up, and to "catch the wave" of bottom-up PC penetration of data centers. The result is that over the last two decades, HP has gone from a small fraction of the size of IBM to about 30 percent bigger in revenues — and the gap is widening. Note that the majority of those HP revenues come from PC form factor hardware and PC-market printers.
Meanwhile, the last 10 years have not been pleasant ones for Microsoft, and especially because user perceptions have been that its software is increasingly less relevant in the smartphone era. However, the company has been on something of a roll as of late, with the amazing consumer success of Kinect in the last few months and two straight quarters of greater than 20 percent revenue growth, and several commentators note that Microsoft appears to have finally won the business office suite wars except in some parts of Europe. In addition, while all eyes have been on Microsoft's efforts in the consumer and Internet arenas, it has managed to leverage its scale-out PC-server-farm approach into a ubiquitous position in many large enterprise data centers and a dominant position in many medium-sized firms. In these, Office, Outlook, SharePoint and SQL Server actually run the business, with Microsoft-based BI a significant presence in its customers' shops; and Microsoft has the business services to support them. Finally, while Microsoft is not yet a Linux enthusiast, its relationship with that movement has clearly lost much of its edginess.
The result is that both Microsoft and HP have strong offerings for inclusion in scale-out platforms. No one dominates Linux, but HP has an exceptionally long history of supporting Unix and then Linux at both the small server and data center levels. Meanwhile, Microsoft is dominant in the Wintel business market, and has used its clout to move Windows into ever-higher levels of its customers' IT and analytical processing. And both HP and Microsoft have a hold on business spend driven by the consumer market that neither IBM nor Oracle can seriously dent.
However, combine Microsoft and HP — call it MicroHP — and what do you have? A full Windows-plus-Linux scale-out hardware and software lineup, with an exceptionally strong position both in SaaS/public cloud and data centers, and a huge presence on the business desktop. This would allow such a combined entity to produce well-tuned appliances for such hot areas as BI/analytics — just as, apparently, Microsoft and HP have just done.
Such a combination does not have to be formal. Indeed, considering the massive egos prevalent in the computer industry, it is hard to imagine either side considering a merger. However, that does not prevent IT buyers from treating the two as one.