HP and EDS: Blockbuster or Bust?

Is HP's acquisition of EDS a major milestone for the company, or a strategic misstep?

Is HP's acquisition of EDS a major milestone for the company, or a strategic misstep? There was no shortage of opinions around the web yesterday. Here are some highlights:

  • InformationWeek notes that there will almost certainly be significant data center consolidation. In 2006, HP announced one of the most ambitious projects yet, consolidating 85 data centers worldwide into six larger centers located in Atlanta, Houston and Austin.
  • Nick Carr says "cloud computing promises to turn many traditional systems-outsourcing businesses into pure commodity businesses - undifferentiated utility services."
  • Drue Reeves at The Burton Group reflects on the competitive implications for Dell. "From a services perspective, the move by HP leaves Dell with few options to get into the services race. About the only possible acquisitions left are Unisys (already a Dell services partner), Accenture, Computer Science Corp, and Perot Systems. Accenture is probably the cream of the crop, but their price – thanks to HP’s move – may be more than Dell wants to pay at this point."

  • The India Times examines how the HP-EDS deal will change the IT outsourcing landscape in India. "Emergence of a formidable third player will mean additional pressure on MNCs and tier I domestic players like TCS, Infosys and Wipro."
  • The Dallas Morning News focuses on EDS' huge presence in Plano, Texas and whether the HP acquisition may affect the local economy.
  • The Wall Street Journal takes a look at HP stock and its downward movement since the deal became public. "It’s got less to do with H-P the company and everything to do with H-P the stock," the Journal concludes.