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HP and EDS wed: Australian rivals to get a piece of the cake?

Observers predict that Hewlett-Packard's acquisition of global outsourcer EDS for US$13.9 billion this week will bring a boost to the Australian integrated services market, but also warn the new Australian entity that its rivals will try to take advantage of the transition here.
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Written by Marcus Browne on

Observers predict that Hewlett-Packard's acquisition of global outsourcer EDS for US$13.9 billion this week will bring a boost to the Australian integrated services market, but also warn the new Australian entity that its rivals will try to take advantage of the transition here.

"Their [HP's/EDS's] competitors will try to exploit the disruption," said Rolf Jester, research VP at analyst firm Gartner.

"IBM and CSC in particular will be watching this closely in Australia, but HP and EDS do compete with a lot of different players because they've got such a broad offering, including smaller local organisations," he said.

On a positive note, the union between the two companies will bring a much needed boost to Australia's systems integration market, according to Tim Sheedy, senior analyst at Forrester Research, offering increased choice for large-scale end users.

"It should definitely boost that part of the business," he said, "Australia has needed some better integrators for some time ... we've been dominated by IBM and Accenture almost entirely up until now".

"HP doesn't have many large contracts at all in Australia, so acquiring EDS definitely gives them much stronger presence in the top space here," Sheedy said.

EDS currently holds contracts with a number of Australia's largest government departments, such as the Australian Tax Office (ATO), and the Australian Customs Service, although the company lost ground with ATO last year after the taxation body ended its 10-year, AU$1.8 billion exclusive relationship with the outsourcer, opening its services up to multiple vendors.

The Texan services giant was also a notable omission from an AU$385 million managed network services vendor shortlist revealed by the ATO in March.

ATO CIO Bill Gibson told ZDNet.com.au this week that the agency "is currently assessing what impact this may have in terms of our current contract, and from a future sourcing perspective".

Australian Customs CIO Murray Harrison said he was unable to comment on the merger.

"Both HP and EDS will be working as hard as they can to make sure that very little disruption occurs with their major partners ... it's going to be their number one priority," said Forrester analyst Sheedy.

HP Australia declined to comment when contacted by ZDNet.com.au.

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