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Storm's A-Brewin' for IBM (and Others): Microsoft and HP Blow into Town

Don't even bother combing your hair if you're in Seattle this week. The swirling, gusty winds that have been howling here all week will just make a mess of it, anyway. And if the wind doesn't muss your 'do, the hard, seemingly incessant rain will. (Yeah, it's Seattle -- but even the locals say that this is bad.) The hanging gray skies and electricity-killing Microsoft just had a brownout -- storms here make the atmosphere in this otherwise beautiful area almost miserable enough to make a Bostonian stop complaining about a New England winter. Almost.

But the heavy winds outside aren't the only storm brewing in the Pacific Northwest. A front has moved up from the Valley, so to speak, to join forces with the tempest of Redmond. Microsoft and HP announced a huge deal yesteday that essentially combines HP services and the Microsoft technology platform in a single, comprehensive offering. There's a storm brewing, all right, and it's headed east -- toward Armonk, N.Y. (That, by the way, is where IBM is headquartered -- in case that little reference just fell flat.)

To be sure, this new effort is Microsoft's (and HP's) attempt to take on IBM's "On-Demand" business services model in the large enterprise market. And there is huge money to be made there. Not only are there massive services revenues at stake, but the Microsoft-HP offering will now wage a war for supremacy with IBM in the five key areas that the new alliance is focusing on: messaging and unified communications, collaboration and content management, business intelligence, business process integration and core infrastructure. Between this HP deal and Microsoft moving in on SAP and Oracle in the enterprise resource planning space with Dynamics, Microsoft's plan for total corporate domination is now in full swing. Seriously. And it might just succeed.

But who will benefit from it? HP, certainly. What about other partners, though? Some of the attendees at this week's MS 101 partner event here in Redmond might be shaking in their boots this afternoon. After all, most of the partners here are the big guns -- enterprise-focused service providers and consultants. And it's their territory that Microsoft and HP are now moving into together. (Oh, by the way, somebody from IBM is here this week, too. Which could make things interesting.)

Now, the Microsoft and HP folks, not surprisingly, will tell you that this new alliance will reap revenue from new opportunities, not from snaking accounts away from current huge partners. And they say that partners will still have opportunities to complement the new offering, despite how comprehensive it's intended to be (and is).

To some extent, that might be true. But there's no question that the storm that's brewing in Redmond this week will dump nasty weather on more players than just IBM. Some of Microsoft's own partners are going to get wet, and it'll be interesting -- to say the least -- to see how Microsoft balances its new love-in with HP (which goes very, very deep) with its relationships with other faithful partners.

The good news here? Well, it's mainly that competition drives innovation, and that Microsoft's initiative with HP will cause competitors -- IBM especially -- to revamp their offerings and make them more viable, more effective and, hopefully, cheaper. Plus, we might get some more clever TV ads in which nerdy IT guys suddenly become heroes.

In any case, the clouds have rolled in, and a bad moon is rising. Get ready for the storm.

What do you think of Microsoft's HP alliance? Let me know at lpender@rcpmag.com.

Posted by Lee Pender on December 14, 2006 at 11:54 AM