HP Building a One-Stop Data Center Shop

By Chris Preimesberger  |  Posted 2008-05-14 Print this article Print

Analysis: The EDS deal is huge in the overall HP plan, but so is a much smaller acquisition of a few months ago.

Hewlett-Packard is making a major play to become the world's No.1 go-to shop for building a next-generation data center.

HP is spending a tremendous amount of cash ($13.9 billion) on its acquisition of Electronic Data Systems in order to own that company's world-leading IT outsourcing services, but the whole deal was set up a few months earlier by a much smaller, almost under-the-radar acquisition.

HP is quietly building its own in-house, all-purpose build-a-data center capability, thanks both to the impending purchase of EDS and the recent acquisition of EYP Mission Critical Facilities, the second-largest data center designer and builder in the U.S. market.

"The key to both transactions: Each of the new additions brings industry credibility that could not be obtained in any other way," Validus DC Systems Chief Operating Officer Ron Croce, a longtime industry observer, told eWEEK. Validus is a startup specializing in DC power distribution.

"Both of those companies [EDS and EYP] are well respected in their sectors. HP has great credibility on its own but it didn't have the expertise in these areas that these two established companies bring to the table. If you're a CIO looking to invest a lot of money in a new-generation data center, you tend to look to the best in the field to help you," Croce said.

Data center refreshes coming

A lot of new data center construction is in the offing, Croce said.

"Data centers generally run in 10-year cycles. A lot of them were built in the late '90s for the Internet boom, and now those are way outdated-especially when it comes to conserving power," he said. "It's very expensive to renovate the old ones ... much of the time, it's better and more cost-effective just to build new ones, using the new, power-efficient systems."

EDS, with 139,000 employees, is the world pure-play leader in outsourced IT services, with a current market cap of around $10.5 billion. HP dabbled a little in outsourced services in the past, but now it's really on the map in that market.

EYP Mission Critical Facilities was a well-established, privately held company providing data center consulting services. HP announced the acquisition Nov. 12, 2007, with industry sources indicating that the price was in the $200 million range. That deal closed on Feb. 8.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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