As CEO of International Business Machines Corporation
(IBM), Samuel Palmisano has all the reasons to be worried. HP, which is already numero uno in personal computers in the world has recently joined forces with the Electronic Data Systems Corporation (EDS) in a $13.9 billion deal (valuing EDS at $25 per share), ostensibly in its bid to end IBM’s dominance in IT consulting services space.The takeover is being considered a landscape changing deal for HP. On being asked about the strategic significance, sources from HP explain, “The acquisition will expand important services offerings for HP such as IT outsourcing, application outsourcing and business process outsourcing and will further extend HP’s reach into key vertical industries.” EDS accounts for almost 3% of the global IT services market pie and is number two in the business. IBM, at present, is the sure shot market leader with a market share of 7.2% in the $748 billion worth of IT services global market. HP’s main focus for its services division (which generated barely 16% of total revenue of $104.3 billion in 2007) is small and midsize businesses. IBM’s services business is much stronger and accounts for almost 50% of its revenues. Added sources from HP, “This deal will strengthen our ability to compete in the important services segment. By using our technology to automate, we will be able to drive greater efficiencies on a global basis while expanding our offerings in key segments.”
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Source : IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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