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.
The benefits to HP's services portfolio are profound, but it might take some
time for customers to realize those benefits. At $13 billion, the acquisition
would be the largest for HP since the company bought Compaq in May 2002.
While the acquisition of Compaq eventually allowed HP to challenge Dell in
the worldwide computer market, it took several years for HP and Compaq to
comfortably merge their operations into a formidable market force.
For most of his tenure as CEO, Hurd has
focused his energies on acquiring companies to fill out HP's software and data
center automation portfolio, such as Mercury Interactive and Opsware.
The money that HP is reportedly offering for EDS
would be a major investment that would almost recreate the services division.
HP is expected to release its quarterly report on May
15.