What HP-EDS Could Mean for Dell

What's it mean for Dell?

It's not like Dell isn't completely familiar, from the top to the bottom, with EDS. Michael Dell plucked Stephen Schuckenbrock to be his services chief a little more than a year ago; Schuckenbrock had previously worked as Co-COO of EDS and was considered a hands-on guy at the company. In fact, Dell's hiring of Schuckenbrock caused minor speculation that Dell would buy EDS. In the end, Dell decided to move in another direction: buy smaller companies like MSP technology provider SilverBack and partner with the channel.

If Michael Dell had the counsel of a well-placed EDS expert on board like Schuckenbrock, and decided to partner with resellers rather than make a bid for EDS, there may have been good reasons. After all, for all its failings over the years, cash has never been a restraining factor for Dell if it wanted to make such a deal.

And then there's another issue. The last time HP made a King Kong acquisition, when it bought Compaq, it caused so much disruption (some might say distraction) at HP that Dell picked up significant market share from its Palo Alto, Calif.-based competitor. If the integration of EDS causes a similar amount of disruption this time, Dell now has official channel partners on its side to cause HP additional chaos in the market.

HP may be seeking to bring new data center business in through the front door, but, if Dell leverages partners correctly, the Round Rock, Texas-based company could steal it out the side window.

If, however, HP executes well on this deal and minimizes distraction (HP executives are already talking about finding cost synergies, which is often corporate speak for headcount reductions), then they could further push back Dell's long-held plan for building itself into a $10 billion-a-year services company.

The devil is in the execution and whether Dell's new relationship with VARs can make a difference.