(Co-authored with Charles King of PUND-IT, Inc.)
Microsoft and HP announced a new investment of $250M into their Frontline Partnership, designed to deliver integrated stacks supporting applications from Microsoft’s Exchange and SQL Server and beyond into the cloud. As part of this effort, the companies plan to deliver solutions built on what they defined as a “next generation infrastructure-to-application model” which will help speed implementation, eliminate IT management complexities and lower overall costs by automating manual processes. With this strategic partnership, HP and Microsoft will also collaborate on an engineering road map for joint products including data management machines using the new SQL Server MPP database option when it is announced, pre-packaged application solution bundles, comprehensive virtualization offerings and integrated management tools.
To achieve these ends, the pair intends to collaborate in the design of pre-optimized solutions for Microsoft’s SQL Server and Exchange, virtualization and datacenter management. They will also develop SMB Smart Bundles which will be sold through their 32,000 common Frontline channel partners. In addition, Microsoft and HP will promote these mutual efforts by citing one another as “preferred partners” in virtualization and datacenter/IT infrastructure management solutions and scenarios. As a result, Microsoft and HP said their customers will enjoy increased business efficiency, improved application performance, enhanced operations and investment protection.
Microsoft and HP hope to find solutions, sales and safety via collaborative efforts and mutual self-promotion.
Readers should be forgiven if Microsoft and HP’s new announcement elicits a sense of déjà vu. After all, the two companies have worked closely for years, share tens of thousands of common customers and channel partners, and have long supported one another’s best interests. The partnership has been in place for over 20 years and has been well regarded. But this latest announcement suggests that the pair’s already considerable collaboration is deepening monetarily via their combined $250 million investment, technologically through the code-level system integration/optimization they plan and strategically with their new, mutual preferred partner status.
How important or notable are these elements? That varies. While a quarter of a billion dollars spent over three years is hardly chump change, it does qualify as small potatoes for a pair of companies whose combined annual revenues are well north of $150 billion. The technological collaboration is more interesting, since it will occur at a fundamental code-level. The real question—and one that will not have concrete answers for some time to come—is just what sort of granular system benefits will result from those efforts.
Equally intriguing to us is the pair’s plan to confer preferred partner status on one another. In a way, this move was highly predictable. For well over a year, vendors that own an entire datacenter stack of hardware, middleware, virtualization and management technologies (i.e. IBM and, more recently, Oracle/Sun) have begun focusing on developing datacenter solutions optimized for specific applications and workloads.
More recently, creative collaborations including Cisco, EMC and VMware’s VCE Coalition demonstrated how vendors with more specialized offerings could effectively play the same game. The new Microsoft/HP new partnership fits firmly in this latter category, and provides some competitive remediation for both companies: HP’s software stack is riddled with holes when compared to IBM’s and Oracle’s; Microsoft has no enterprise hardware play at all.
But while the effort could well provide both companies new benefits and opportunities, it is also likely to result in significant challenges, especially concerning their other critical partners. How will Dell, IBM, etc. react to Microsoft’s declared preference for HP? Should VMWare go out of its way to support HP when the company is promoting Microsoft’s Hyper-V virtualization platform? Just as important, how will the thousands of Microsoft and HP channel partners who earn their daily bread by integrating and optimizing SQL Server, Exchange and other Microsoft solutions feel about those processes being incorporated into manufacturing?
In the SMB market, the value-add is often the degree to which those partners handle installation and integration. Today’s message seemed to imply that much of this business might go to HP’s services organization in the more simplified world of fully integrated SKUs offered as a single purchase. The specific focus of the announcement on Exchange and SQL Server deployments strikes directly at the heart of two of the most lucrative solutions offered by Microsoft’s channel partners, and suggests that many may find themselves increasingly competing with HP.
Certainly the two vendors’ partners have a formidable array of resources at their disposal. Microsoft’s Worldwide Partner Group VP Allison Watson was already prepared with a crisp, actionable message. Her pitch: As a result of the deepened alliance with HP, Microsoft partners will be able to deliver solutions faster and more easily. Can they improve their margins in the process? That will depend on what HP will charge for similar implementations, one assumes.
Watson’s message points to tools for easily sizing systems running SQL Server either for transaction processing or for business intelligence. It has also offers links to HP Insight orchestration templates for HP’s BladeSystem Matrix and white papers. Assets in place like Microsoft Sales University will accelerate partners’ ability to get tools and training—free—that ensure their ramp is as fast as possible. Still, HP’s teams in the field will likely have the inside track, so the underlying message is clear: move fast, or be left behind.
Overall, we consider Microsoft and HP’s new partnership an intriguing collaboration that could broaden and deepen the two companies’ ongoing efforts. If it performs as advertised, it could also deliver significant dividends to the pair’s business customers. Certainly it provides a partial competitive answer to the full-stack stories of their large competitors and other collaborative partnerships. But we remain uncertain and wary of how so exclusive a relationship will sit with and play among the industry and channel partners critical to Microsoft and HP’s overall success.
As for delivering the new “applications” model, this announcement fell far short. The only applications mentioned were Microsoft’s SQL Server, Exchange and System Center (the latter of which will be integrated with HP Insight), already focal points for the Frontline Partnership. Microsoft’s business applications for CRM, ERP, etc were not mentioned. And building credibility for pre-integrated infrastructure solutions, even for relatively simple SMB deployments, will require discussion of other applications from other vendors. As interesting and promising as Microsoft and HP’s announcement was its scope is far narrower than the companies’ “Next Generation Application to Infrastructure” messages imply.
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