Hewlett-Packard Co. and Microsoft Corp. on Wednesday agreed to jointly invest $250 million over the next three years to develop inexpensive online computing services, a move designed to better compete against offerings from International Business Machines Corp., Cisco Systems Inc., and others.
The tech titans said they plan to spend the money to develop new products around Microsoft\'s Windows Azure, software for creating software and services that can be accessed from the Internet, and to enhance existing products to operate more efficiently.
H-P and Microsoft each will invest in new services while Microsoft will continue to invest in H-P hardware for the Azure infrastructure, the companies said. Microsoft said it will begin charging for the software tools to create new business services on Feb. 1.
The agreement also calls for a much tighter integration of the two companies\' sales forces. Some 11,000 H-P salespeople will be dedicated to selling products that are part of the effort.
H-P and Microsoft \"have worked together so extensively for many, many years,\" Microsoft Chief Executive Steve Ballmer said on a conference call. \"We\'re moving to get closer and closer.\"
\"I\'m not aware of any two companies on the planet ever integrating products at this level,\" added H-P Chief Executive Mark Hurd. \"Steve and I wouldn\'t be on this phone call if this was just another press release.\"
The deal represents a new attempt by the pair, which long have cooperated on development, to better compete for data center customers against companies selling hardware and software combinations such as Cisco Systems and the combination of Oracle Corp. and Sun Microsystems Inc.
In the last year, there have been a series of alliance among computer hardware, software and service provides targeting corporate data centers. Last April, database and applications developer Oracle proposed buying computer maker Sun for $7.4 billion. A month later, H-P agreed to acquire computer-services supplier Electronic Data Systems for $13 billion. Dell Inc. followed with a $3.9 billion deal to buy computer-consultants Perot Systems Corp. in September.
Some products are available immediately, and new ones will be introduced throughout the next three years, the companies said.
In May, H-P and Microsoft disclosed a four-year global initiative to streamline digital communications among messaging, video and voice technologies.
At the time, both companies said they expected to invest an additional $180 million in product development, professional services, joint sales and marketing.