HP Preps for Services Battle
Buying EDS would make HP an IBM challenger.IT giant HP plans to buy EDS (Electronic Data Systems) for between $12 billion and $13 billion, according to reports in the Wall Street Journal May 12. The acquisition will likely help add to HP's services portfolio, which could mean a new set of options for customers. While HP has continued to improve its offerings from PCs to servers to storage under the leadership of CEO Mark Hurd during the past several years, services is one area where the company is looking to catch up to IBM's much-heralded Global Services division. While HP pulled in about $16 billion in revenue from its services division in 2007, IBM managed to collect about $57 billion in the same year.
After IBM, EDS is one of the largest providers of IT services and outsourcing in the world, and it has government contracts with one dozen countries, which would give HP access to new customers. It would also give HP a chance to provide a wider range of services to its existing customer base, while offering a better counterweight to what IBM already offers.