HP and EDS: Blockbuster or Bust?
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."
Posted by Rich Miller 
May 15, 2008 | Permalink | Newsletter
May 13, 2008
It's Official: HP Will Buy EDS for $13.9 Billion
That didn't take long. HP announced this morning that it will acquire EDS for $13.9 billion, or $25 a share. The deal comes just hours after the companies acknowledged they were in talks, and has been unanimously approved by the HP and EDS boards of directors. The transaction should close in the second half of this year, HP said.
Buying EDS will more than double HP's services revenue, which amounted to $16.6 billion in fiscal 2007. The companies' collective services businesses, as of the end of each company's 2007 fiscal year, had annual revenues of more than $38 billion and 210,000 employees, doing business in more than 80 countries.
Posted by Rich Miller May 13, 2008 | Permalink | Newsletter
May 12, 2008
HP in Talks to Buy EDS for $12 Billion
Hewlett-Packard is close to a blockbuster deal to acquire Electronic Data Systems Corp. (EDS) for between $12 billion and $13 billion, the Wall Street Journal reported this afternoon, citing "people familiar with the situation." HP soon confirmed that it was "engaged in advanced discussions with Electronic Data Systems Corporation regarding a possible business combination involving the two companies."
Shares of EDS surged $5.27, or almost 28 percent, before a halt closed trading at $24.13. The valuation cited by The Journal implies a price between $24 and $26 a share for EDS. HP stock fell $2.48 (5 percent) to close at $46.65.
If HP succeeds, it will acquire more than 100 data centers in 26 countries worldwide, which EDS uses to manage IT operations for some of the world’s largest tier-one enterprises. EDS is the second largest outsourcer in the world.
Posted by Rich Miller May 12, 2008 | Permalink | Newsletter
May 11, 2008
Report: HP to Buy BT Data Centers for $2.9B
BT is in talks to sell its British data centers to Hewlett-Packard (HP) for £1.5 billion (about $2.9 billion), according to a report in the Sunday Times in the UK. An excerpt:
The deal, which is still being worked on but should be signed in the next few weeks, will lead to BT transferring 400 staff to HP. In exchange for the data centres, BT will take on the management of HP’s voice and data networks globally. It already runs them in Europe. This means the pair will be bidding together for contracts on a more regular basis, though insiders played down the idea that HP and BT were moving towards an eventual merger.The deal would involve 24 BT data centres in the UK but not BT's facilities in the U.S. The companies will sign a 10-year contract for BT to continue using the facilities. The Times Online has additional details on the talks, and some background on BT's operations and why they are contemplating the deal.
Posted by Rich Miller May 11, 2008 | Permalink | Newsletter
April 22, 2008
HP Upline Storage Service Still Down
HP is working to resolve technical problems that forced it to suspend its new online storage service, HP Upline, just 10 days after its launch. HP spokesperson Sheila Watson told Network World that the company is investigating an "isolated technical issue" and the service could return this week. HP Upline launched April 7, but began experiencing outages last week. On Friday users received this notice from HP:
On Thursday, April 17th, HP suspended operation of the HP Upline Service. We fully anticipate that suspension of the Upline Service will be temporary and short in duration, and will notify you when the Upline Service is operational again. ... If you are not a resident of the United States, we regretfully must inform you that the initial launch of the HP Upline Service was intended for United States residents only. Unfortunately, our filtering tools did not adequately screen for subscribers residing outside of the United States.U.S. residents will be able to resume using the service once it reopens, while non-U.S. accounts are being deleted. The Upline service launched to generally positive reviews from tech media, including PC Magazine and ArsTechnica.
Posted by Rich Miller April 22, 2008 | Permalink | Newsletter
March 17, 2008
HP Launches Cloud Platform, Data Center Tools
HP today announced Data Center Transformation portfolio, a suite of services to help companies modernize and consolidate their existing data centers, or shift their operations to a cloud-based service hosted by HP.
The most intriguing new piece of HP's strategy is the company's entrance into cloud computing with HP Adaptive Infrastructure as a Service (AIaaS), which lets customers host applications in HP data centers optimized for Microsoft Exchange, SAP applications and other critical business apps. The HP platform joins a growing number of software as a service (SaaS) offerings, most notably Amazon's utility hosting services and Salesforce.com.
"Within a matter of hours, customers can rapidly access additional computing power to meet their fluctuating needs," HP said in its announcement. "With HP AIaaS, customers can realize improved service levels and convert traditional capital investment into an ongoing operating expense because all assets are owned and managed by HP."
Posted by Rich Miller March 17, 2008 | Permalink | Newsletter
March 13, 2008
Barclays Adopts HP's Dynamic Smart Cooling
Barclays said today that it will adopt HP's Dynamic Smart Cooling to reduce energy consumption in a major new data center in Gloucester, England. The big UK bank will become the first company in Europe to use Dynamic Smart Cooling, a comprehensive cooling solution that incorporates airflow analysis, instrumentation and a management server to monitor and manage cooling in a data center.
The announcement builds on an existing relationship in which Barclays has worked with technologies from HP (HP) to reduce data center energy consumption by as much as 40 percent in some facilities. Barclays says Dynamic Smart Cooling is part of a package of energy savings measures that will trim energy usage in its 28,000 square foot Gloucester data center by 13 percent.
Dynamic Smart Cooling (DSC) is designed to provide precise management of air-conditioning systems in response to changes in server temperatures. Real-time monitoring allows data center managers to use a higher set point for cooling systems, which in turn saves energy through reduced use of chillers and computer room air conditioner (CRAC) units. Data center managers can save 4 percent in energy costs for every degree of upward change in the set point.
Posted by Rich Miller March 13, 2008 | Permalink | Newsletter
January 24, 2008
HP Consolidation Update: 28 Sites Retired
InformationWeek has an update on the data center consolidation by HP (HP), in which the company is consolidating 85 data centers worldwide into six larger centers located in three U.S. cities. CIO Randy Mott shares a status report:
The six data centers - two in Austin, two in Houston, and two in Atlanta - are operational. So far, 28 of the old data centers have been shut off and 700 applications moved into the new ones. ... The number of applications now stands at 3,300, and active IT projects are actually down to less than 500. Mott says he'll get close to the 8,000 mark for IT workers, but just as important is that the ratio of HP IT employees to contract workers will shift from approximately 50-50 in 2005 to about 90-10.HP's plan called for it to build two 200,000 square foot data centers in each of three markets. In Atlanta, the facilites are located in Suwanee and Alpharetta.
Posted by Rich Miller January 24, 2008 | Permalink | Newsletter
December 17, 2007
NYSE Picks HP Gear for Trading System
The New York Stock Exchange (NYSE) has selected HP servers to improve the efficiency of its online stock trading system, the NYSE Hybrid Market, which handles more than 500 million messages a day. The NYSE said it will use rack-based HP ProLiant DL585 servers, ProLiant BL685c server blades and Integrity NonStop servers for its online transactions.
"During the past several years, the requirements of investors and securities companies have significantly changed," said Steve Rubinow, chief information officer, NYSE. "Although order commitment reliability is certainly paramount, users want a trading platform with flawless execution and transaction speed. HP is helping us deliver it all through these dependable server platforms."
Posted by Rich Miller December 17, 2007 | Permalink | Newsletter
November 12, 2007
HP Acquires EYP Mission Critical Facilities
HP has signed a definitive agreement to acquire EYP Mission Critical Facilities Inc. (EYP MCF), one of the leading data center design and engineering firms. HP said the acquisition will help its customers equip their data centers for improved energy efficiency and high-density environments. Financial terms of the transaction were not disclosed.
EYP MCF is headquartered in New York and has approximately 350 employees with 13 offices in the United States and the U.K. The company has designed hundreds of technology-intensive mission critical facilities. EYP MCF's expertise in green data center design and energy efficiency was a driver in the deal, as it aligns with HP’s extensive power and cooling solutions, such as Dynamic Smart Cooling.
"The data center is the foundation of IT for enterprises, an essential building block for driving business growth and adapting to changing business objectives," said John McCain, senior vice president and general manager, HP Services. "Acquiring EYP Mission Critical Facilities boosts HP’s ability to help customers transform their data centers and build dynamic computing environments from the ground up."
Posted by Rich Miller November 12, 2007 | Permalink | Newsletter
October 25, 2007
Diesel Powers HP's Bangalore Data Center
There were a number of articles yesterday about Hewlett-Packard's new data center in Bangalore, India, which consolidated 14 HP data centers in that country into a single 70,000 square foot facility. Most of the coverage focused on HP's use of its Dynamic Smart Cooling to achieve a 40 percent reduction in energy consumption over typical datacenter cooling methods.
Patrick Thibodeau at ComputerWorld focused on another reason the HP Bangalore data center is different: it runs entirely on diesel fuel because of the unreliability of local power supplies. HP says diesel is the "power of choice in Bangalore," but it introduces an energy cost component not seen in facilities that can use grid power. Thibodeau notes that the cost of diesel means that HP is paying upward of 26 cents per kilowatt-hour, compared with electricity costs in California that can range from 7 to 14 cents per kilowatt-hour (not to mention the 1.2 cents per kWh in central Washington).
HP's energy profile for the facility may still be more expensive than some places, but the reliance on diesel also amplifies the economic value of the savings gained inside the data center from the precision cooling. HP estimates it will save 7,500 megawatt-hours annually. With power nearly four times the cost of U.S. grid power, the savings are bigger as well.
Posted by Rich Miller October 25, 2007 | Permalink | Newsletter
June 25, 2007
HP Blows A Data Center To Bits
How far will data center vendors go to demonstrate the disaster-proof nature of their products? Pretty far, it seems. First we had Sun Microsystems putting a Blackbox on a shake table to simulate a major earthquake. HP has turned the publicity stunt volume up to 11, and has actually blown up an entire data center (link via ComputerWorld) to demonstrate the fail-over capabilities of its technology.
At a high-tech ballistics center managed by National Technical Systems in Camden, Arkansas, HP simulated a gas leak using real explosives that resulted in a very real explosion and datacenter destruction. What was blown up? Products from the entire spectrum of HP products, including HP servers, HP StorageWorks products, HP Software and HP Procurve networking products running in five operating environments—HP-UX, HP OpenVMS, HP NonStop, Red Hat Enterprise Linux and Microsoft Windows Server 2003.Words can't compete with explosions, so go have a look and then come back. :)
Posted by Rich Miller June 25, 2007 | Permalink | Newsletter
March 22, 2007
HP to Save $8 Million With Smart Cooling
HP generated a lot of buzz earlier this year when it announced Dynamic Smart Cooling, its new system for advanced management of data center power and cooling. The product won’t be available until this fall, and enters full production in early 2008. In the meantime, HP executives are evangelizing the new offering at industry events.
On Tuesday, HP blade system infrastructure technologist Ken Baker briefed attendees at DataCenterDynamics 2007 in New York on the capabilities of Dynamic Smart Cooling (DSC). Baker said HP is currently implementing DSC at the six new data centers it is building in Atlanta, Austin and Houston as part of a massive consolidation of its worldwide data centers. "We’re going to eat our own dog food on this, because we really believe in it," said Baker, who said early estimates suggest DSC could save the company about $8 million in power and cooling costs in just one of its new 100,000 square foot facilities in Austin.
Dynamic Smart Cooling is designed to provide precise targeting of air-conditioning systems in response to changes in server temperatures. The system deploys sensors throughout the data center, which communicate with the AC systems. The "smart" piece is the system's use of computational fluid dynamics (CFD) modeling to understand the flow of air within the data center and route the cold air to the hot server. HP says the approach can cut cooling costs by 20 to 45 percent as it turns AC systems on or off as temperatures rise and fall.
Baker said HP spent a lot of time investigating its cooling options while contemplating DSC. "We tried a lot of different technologies," Baker said. "At the end of the day, good old air fan cooling has proven to be the way to go in most cases."
Posted by Rich Miller March 22, 2007 | Permalink | Newsletter
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