According to new reports Microsoft and HP are expanding their 25 year partnership. According to the briefing (which we were not part of) over the next three years, the two companies will invest $250 million to help customers and partners improve the customer experience for developing, deploying and managing today’s IT environments, and building next generation cloud applications.

From the Microsoft TechNet blog here are the details:

Customers will see this investment spent in three key efforts:
· Joint engineering roadmap and set of technology offerings.
· Joint sales and marketing to help educate customers and arm the channel.
· Joint professional services to aid customers in getting the most out of their investments.

As part of its joint engineering roadmap and joint offerings, Microsoft and HP will collaborate on:

1. Virtualization:
· Microsoft is now a preferred provider of virtualization solutions for HP, which will make it easier for a broader set of customers to deploy virtualization solutions that can improve server utilization by as much as 10x and reduce provisioning ties from months to minutes.

· Microsoft and HP will deliver ‘Smart Bundles’ for small and medium businesses. These are a combination of hardware and software, including HP server, storage and networking solutions, coupled with Windows Server Hyper-V and HP Insight software, delivered in a single, cost-effective package.

2. Management:
· HP now has the rights to resell and ship System Center as part of HP’s solutions. This solution will be tuned, integrated and ready for customers.

· And coming soon, HP’s Insight Software and Business Technology Optimization solutions will begin to integrate and interoperate with Microsoft’s System Center suite of products. This means that customers with heterogeneous computing environments will be able to more easily and more cost-effectively manage hardware and software from Microsoft and non-Microsoft operating systems and applications.

3. Business Applications :
· The companies will deliver a set of pre-packaged and pre-configured data management and email solutions (‘machines’) that will deliver data warehousing, business intelligence, online transaction processing (OLTP) and messaging solutions.

4. The Cloud:
· HP and Microsoft will collaborate on the Windows Azure platform, with HP offering services, and Microsoft continuing to include HP hardware for Windows Azure infrastructure.

Microsoft and HP detailed plans to increase opportunities for its 32,000 HP and Microsoft Frontline channel partners through extensive joint sales and marketing programs.

These plans include a 10x increase of investment by both companies to help partners modernize their customers’ environments through a combination of software and hardware packages and services. Just a few of the benefits partners will receive include:

· Simplified sales cycles resulting from Smart Bundles and all-inclusive packages will increase time-to-revenue and create add-on application and service sales opportunities.

· Flexible financing options through HP Financial Services, will enable resellers to make technology solutions more accessible and easy to acquire.

· Support from dedicated field resources will help with pre-sales initiatives and partner training.

· Jointly funded worldwide marketing campaigns, lead generation programs and sales tools, available at www.hpmspartners.com.

Finally, Microsoft and HP detailed plans to provide an integrated portfolio of joint professional services. Through more than 11,000 Microsoft-certified HP professionals worldwide, HP Services organizations, in partnership with Microsoft Services, will support the integrated hardware and software solutions from simple implementations to the most critical enterprise infrastructure. Just some of the service offerings include:
· Strategy workshops, ROI and business value services.

· Architecture, design, pilot, global implementation, support for server virtualization and management solutions, client virtualization, data management, and cloud computing.

· Per-seat fixed price Microsoft Exchange Server upgrade/migration services.

· Assistance for customers who seek to run their technology on-premises, outsourced or via the cloud.

To sum it up, this agreement represents the industry’s most comprehensive end-to-end integrated technology stack across hardware and software — from infrastructure to application. Through this long term partnership, Microsoft and HP are helping customers reduce costs and get the most of their investments today, as they prepare for a future of business computing in the cloud.

For HP the cloud is a natural area to expand into since they have asset across the enterprise, SMB, and consumer. For Microsoft this is a lift to the Asure and other new cloud initiatives of which industry insiders have not been bullish on.

At CES it was apparent that there is a inherent conflict between cloud services and hardware manufactures. Cloud in essence preserves the life of a device (software and capabilities upgraded in the cloud) verses traditional hardware models (refresh units and turn inventory).

Can HP and other hardware developers find a profitable and scalable cloud and hardware model that works? Hopefully they will.