HP Building a One-Stop Data Center Shop

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 A lot of them were built in the late '90s for the Internet boom, and now those are way outdated—especially when it comes to conserving power," he said.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.