When HP bought EDS for $13.9bn in may most people understood that HP needed to buy a services company. IBM was then the biggest computer company in the world and had been greatly helped by IBM Global Services. HP needed something similar and so it bought one of the largest IT services companies to help it compete.
Any doubts about the sale centred on a simple question: what was HP going to do with EDS? Or put another way, what was the plan?
At HP's Software Universe in Vienna this week we find out what that plan was. It can be roughly summed up in one word, the cloud. Although, HP's head of software, Tom Hogan does not like the word the cloud is where HP is looking to devote quite a lot of resources. A number of executives at Software Universe spelled it out at different times. One essential ingredient of the cloud is an infrastructure. The cloud is about applications working across the internet. To be considered cloud applications they have to work in special ways but fundamentally that is what the cloud is about. To run huge traffic across the internet with applications constantly communicating with each other, you need an infrastructure. Whenever you asked a HP executive about how they would get this infrastructure the replies varied in detail, but fundamentally the answer was the same, every time: EDS.
As a huge services and outsourcing company, EDS has the infrastructure to go with it. Thanks to EDS, HP already has a $3bn services business. Much of that is tied up in software-as-a-service applications which feed into HP's vision for services.That vision is to have many companies around the world with their applications running on HP hardware and running as SaaS applications.
For HP, those elements all combined together spell an end to worries about competing with IBM. Or so the company hopes.