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Five Customer Reasons For and Five Customer Reasons Against the HP purchase of EDS
For
1. Customers want one stop responsibility for their purchases. HP with EDS will have a longer stack going all the way from printers, through PCs, through data centers and now all the way to IT services.
2. Customers want to see how a vendor treats its customers. EDS has a lot of big customers, including General Motors, and has learned a lot about measuring and delivering on customer contracts.
3. Customers want a local contact. While HP and EDS use a substantial amount of outsourced services, but they are both still headquartered in the U.S.
4. Customers want to choose from a mix of channel, service providers, hosted services, open software and big one stop direct contracts. HP is the channel’s best friend these days and is at the forefront measuring hosted services and now with EDS can be a big one stop shop.
5. Customers want to do business with a company that has a focus on their needs. Buying EDS translates into HP displaying its commitment to the business to business market with serious dollars. This is not a Microsoft/Yahoo foray into consumer markets.
Against
1. Big acquisitions are awfully tough to get right. Remember HP’s nearly disastrous purchase of Compaq? Let’s hope they have learned from past mistakes.
2. Big, wide ranging companies have trouble being all things to all people. Carly Fiorina (now replaced by Mark Hurd) got into corporate trouble by trying to build a company spanning consumer to enterprise. Trying to run a company that ranges from printer ink to big corporate service contracts can tax anyone’s resources.
3. IBM has services in its genes. IBM has been racing to becoming primarily a services organization for at least ten years. HP has a lot to learn about jugging business application development, channel services and hardware development.
4. Hardware companies and technology service organizations have an inherent conflict. Can Hurd keep EDS from simply becoming an organization that always recommends HP hardware as the solution to every problem?
5. HP is technology and IBM is business. The biggest issue for customers is to engage with a vendor that understands their business and then makes tech recommendations from that understanding. HP has not shown that capability while IBM is all business all the time.
What do customers get from an HP purchase of EDS? A bigger stack but can a hardware company find happiness in also offering business services?