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Understanding the HP-Microsoft deal

CNET's Ina Fried tries to cut through the jargon and explain just what is new in this three-year, $250 million deal.

If you had trouble decoding what was new in Hewlett-Packard and Microsoft's partnership based on Tuesday morning's announcement, you are not alone.

Nearly all the time on a conference call with reporters about the news was spent with the press asking for specifics and the companies offering more adjectives than details about the three-year, $250 million deal.


HP CEO Mark Hurd assured reporters that he and CEO Steve Ballmer wouldn't be taking the time if it was "just another press release" and stressed that the deal, which cuts across sales, engineering, and marketing was the tightest tie-up since Bill Hewlett and Dave Packard got together (OK, maybe now I am exaggerating).

This blog post from Microsoft does a somewhat better job of explaining, noting that there will be work across virtualization, management, business applications and the cloud, but HP and Microsoft have already been doing work together in most, if not all of those areas.

Fortunately, I had a chance to talk with Microsoft server unit boss Bob Muglia and HP's Dave Donatelli to get a little more concrete information on just what the two companies are doing.

Among the first fruits of the deal will be bundled products aimed at small businesses. A pre-configured HP server with Microsoft's SQL Server database software is already on the market, while the companies will have a Microsoft Exchange Server product ready soon.

"A little further out this year we will be delivering with HP a next-generation data warehouse (product)," Muglia said. That offering, which bundles tens of servers and can hold hundreds of terabytes of data is based on technology Microsoft got as part of its Datallegro acquisition (The software is now dubbed SQL Server Parallel Data Warehouse.)

And, although they didn't break out the $250 million in joint spending, they stressed it was new money and boils down to additional headcount in engineering and sales as well as joint marketing and incentives for resellers of their joint products.

Down the road, though, much of the joint work is on getting businesses ready for a new kind of world in which more of their data is stored in the cloud, necessitating new kinds of applications and services.

"The key thing that created the imperative to broaden the relationship is the recognition that the cloud is an inflection point," Muglia said. The shift means customers need a new application model, a new operational model and essentially a new way of thinking about their technology. "The kinds of things we are doing is understanding how we can work together to enable developers to build systems that are cloud-based, always available and can scale out."

As for the business environment in which the two companies will be selling, Muglia said things seem to be better than they were some months ago.

"We think things are getting better," Muglia said. "We definitely saw some improvement from customers in last calendar quarter," he said, adding that the company has yet to see IDC's server sales figures, however. "I think we're cautiously optimistic."