HP Partners Wary Of Impact Of A Potential EDS Sale


Despite fears of channel conflict that arose prior to Hewlett-Packard's 2008 Electronic Data Systems acquisition, channel partners contacted by CRN said they do not want HP to sell off the EDS business.

Channel partners generally have had little interaction with HP's Enterprise Services business unit, of which EDS is a part. That said, some partners feel an EDS sale would have a negative psychological impact on Palo Alto, Calif.-based HP because it could create the appearance of further turmoil at a company that has seen more than its fair share over the past few years.

"I think anything else that shows that HP is weaker is a bad thing for HP, and probably the HP channel," one HP partner told CRN, speaking on condition of anonymity. "They have had enough problems over the last 18 months or so. Hopefully they can stick with their current strategy and come back."

[Related: HP Denies EDS Business Is For Sale]

As reported earlier Wednesday, sources familiar with the matter told CRN HP has considered selling its EDS business and has made overtures to potential buyers, including private equity firms. An HP spokesperson denied the business unit is for sale.

EDS, which HP acquired in 2008 in a blockbuster $13.9 billion deal, operates more like a standalone business within HP and is not integrated with the rest of its business units, sources told CRN.

While EDS is in some ways a competitor to HP's channel, there appears to have been little friction between the two groups over the years. "From a partner perspective, we haven’t really seen the addition of EDS provide much value to our company," another HP partner told CRN. "For the most part, EDS has run very autonomously from the channel."

However, Bob Venero, CEO of Future Tech, a Holbrook, N.Y.-based HP partner, believes selling off EDS would send a confusing message to the channel.

"If HP gets rid of EDS, what does that mean? Will Technology Services disappear too? Perhaps HP will become just a product company, as it was before the EDS deal," Venero told CRN.

Venero, who has worked with EDS in the past, said the unit has played a key role in helping the channel. "EDS is an extension of the channel services arm. When we go into deals, we can bring in EDS to help close them," he said.

HP combined EDS with its own smaller services business and rebranded it as HP Enterprise Services in August 2009. The unit was led by longtime HP executive Ann Livermore prior to her ouster last June.