Microsoft and HP: Data-center BFFs – Quick Analysis

Overall, our intent is to deliver no less than a next-generation computing platform. The goal is to lead the adoption of cloud computing while helping companies realize immediate business benefits through IT. With this partnership the two companies are working toward new models for application delivery, hardware architecture and IT operations. —Brad Anderson, Microsoft

While there wasn’t much meat on the bone, HP and Microsoft’s partnership pushes the industry towards clearer vendor silos for next generation IT management and helps out Azure.

Partners

Microsoft and HP’s much Twittered about announcement this morning was a partnership and integration announcement in the area of data center management, with a sprinkling of cloud. The partnering situation between elder companies (large, long-lived tech companies) now-a-days is disrupted with Cisco and VMWare trying to grow out of the britches they’ve been assigned since the last shake up, and new entrants from the cloud (Amazon, etc.), the ongoing Oracle/Sun drama, and customers being pulled every which direction by blue-skiers, your truly included.

At a time like this, you can’t fault a couple of tech-giants for thinking its time to call up the press and run down to the court-house to get hitched up. The goal of the event is put pretty plainly by the press release:

This agreement represents the industry’s most comprehensive technology stack integration to date — from infrastructure to application — and is intended to substantially improve the customer experience for developing, deploying and managing IT environments.

Desire Never Sleeps

As Microsoft’s Brad Anderson put it, customers keep asking Microsoft for faster, better, more real-time, etc. technology. To hear Brad tell it, IT is up to their eye-balls in requests for more computational help from the business. In the past year, the budget certainly hasn’t been there, but the demand for business to keep doing what it does – deliver new products and services for its own customers to buy – doesn’t go away because of some bad mortgages and investing decisions made on Wall Street. We still need those damn iPhones to upload video and those grocery store loyalty cards aren’t going to target coupons themselves!

In other words, companies are asking IT is the same question it always is at the beginning of a spending cycle: “what have you done for me lately?” Microsoft and HP hope that their partnership and the “stack” that results from it will help IT start to answer that question, minus all those other elder companies and doe-eyed new comers scrambling to do the same. (As a competitive comparison: any time IBM slaps the word “Smart” in front of something, you’re hearing IBM’s answer to that question.)

There’s really two parts to the answer from announcement: technology integration and go-to-market integration. In the glass-half-full analysis, the two companies are making sure their technologies work best, most optimized on each other’s platforms. There’s HP systems optimizations to work with new Exchange 2010 features; pre-bundled stacks using Hyper-v virtualization to make deploying new applications easier; sales-force incentive jiggering to get the HP and Microsoft fields pointing to each other; and the same for services.

The issue, as James Governor‘s questioning on the analyst call this morning got to, is figuring out how this is different than existing partnerships and integrations. The feel you get is that this is, you know, really a partnership this time. A deep partnership. And there’s also the optimization exchange between the two of them along with the pre-configured bundles of software. These bundles are easy to overlook, but if done right can actually be very helpful for IT.

The Cloud

On this cloud angle, I suspect this relationship will give both Microsoft and HP the breathing room needed to get a private cloud solution out there. Microsoft had no hardware, so couldn’t deliver on its, while HP certainly has the hardware, but had no application development layer and aside from some retro-fitted IT Management offerings, didn’t seem to be moving the IT Management tool-chain to cloud-based ITSM. From an “on paper” portfolio perspective, they do really seem to compliment each other, if only in a mix of here-and-now and road-maps.

There’s a promise of, essentially, a private cloud stack down the road, which would be great: Microsoft and HP teaming up to be your one-stop shop for private clouds. Between all the hardware and software they have, they’re a few OpsWare re-labelings away from having the start of a private cloud portfolio like IBM has, but then you throw in Azure with a PaaS, and you’re talking not only IaaS, but PaaS: you’ve got pretty good marketplace CYA there. You know, if you go in for the whole private cloud thing – which most seem to be doing.

Action Plan: IT

For IT, the questions here are:

• Does this make running my existing IT (never mind all that cloud crap) cheaper, easier, and more flexible? For example, can these pre-integrated bundles help me out?
• How does this effect decisions to host email and other applications in the cloud?
• What does this mean for replacing HP systems management with System Center? (the biggest competitive snag in this partnership.)
• Can I get a better deal on HP hardware now if I bargain sticking with Microsoft software? And vice-versa?

The point is, until further, new technologies come out, the benefits are mostly in optimizing rather than delivering new features. There’s certainly planning and RFP’ing to take into account – private cloud and Big Data offerings seem the most attractive on the horizon for HP and Microsoft – but here and now it’s about cost savings and road-map risk management.

Action plan: Competitors & co.

While I don’t really see this announcement as an event that demands immediate response from competitors, it is a data point in the ongoing trend I mentioned at the start: vendor alliances are more up in the air at the moment than they’ve been in a long time. The pea under the mattress here is VMWare which has used its strong-hold on virtualization to toe-hold into everything. If virtualization is the new operating system, then you can see how powerful that position – check out Windows’ history.

This partnership does force the question for Dell, who’s sort of left alone at the moment, but who’s been mounting up to deliver on those new IT needs over the past year. I suspect there’s something of a shrug from Dell at the moment, but the question for Round Rock is pulling the lever on acquisitions or partnering more to get more virtualization, data center management, or something more turn-key in the private/hybrid cloud area. Dell also needs a bit more on the Big Data front, or “analytics” as the space is more commonly being called

IT Management start-ups looking to get acquired – or just partner for channel access – need o figure out how their offering fits into a private cloud frenzied 2010. If you look at all your potential suiters, how can you technology fill a technology hole or help them buy into the “next generation IT management” market? As recent example, BMC buying Phurnace is instructive, while Microsoft buying Opalis fits the good, old fashioned IT management space well.

And then there’s IBM, Cisco, VMWare, Citrix…and our innovation lottery winner friends in the public cloud like Amazon, Google, Rackspace, and so on. All of this is about setting up the context for the next 10 years of IT spending: every vendor wants to stretch it’s nets over the prime fishing spots and catch as much of those dollars flying around as possible.

More

From others:

• HP’s press and links round-up page, including this PDF on the optimized/bundle narrowed down to Exchange.
• The Microsoft virtualization angle from Microsoft’s Edwin Yuen.
• HP’s Smart Bundles page, helpfully pointed to by Edwin above.
• Fellow Austinite Stacey Higginbotham’s initial Twitter reaction probably sum up what most people will think. Stacy’s GigaOm piece covers the 6 pronged partnership and spells out cloud lock-in angle too.
• Straight-up news coverage from Brandon Bailey at the San Jose Mercury News.
• Microsoft’s Allison Watson spells out the Microsoft partner implications and action plans.
• If there’s anyone who can crack-wise on this topic, it’s probably @vambenepe.
• In Fried tries to dig out more from the announcement over on CNET.
• Timothy Prickett Morgan, as always, sums it up well, with some attention to partner margins.

Disclosure: Microsoft, HP, IBM, and others mentioned above and related are clients.