HP Microsoft Announcement on Cloud Computing – Do You Believe?

On Wednesday, January 13th, 2010 HP and Microsoft made a joint announcement covered in this BusinessWeek article  stating that both companies “will spend $250 million over three years to combine some research and development efforts and deliver prepackaged servers, storage, software, and networking gear. According to Steve Ballmer, “cloud computing is the driving force” behind the initiative.

Stacey Higginbotham, with GigaOM, wrote a good summary of the announcement claiming “…this announcement is HP’s and Microsoft’s strategy for taking on Cisco’s servers and its alliance with VMware, but it’s also a blow to companies without such partnerships, primarily Dell.”

Finally, according to BusinessWeek, “HP says its partnership with Microsoft is more than just an effort to bundle services the companies already offer. Hurd said the companies will dedicate 11,000 service reps who will be responsible for testing, loading, and providing services for products sold under the partnership, which will also have its own dedicated sales force.”

On the face of it, it sounds like the big players “get it” and are gearing up to make significant plays in the Cloud Computing market transformation. However, I suspect if you look inside these organizations you will find rather than creating truly innovative new products and teams to leverage and attack the emerging “Cloud Computing” market, these companies will attempt to take existing products and personnel and repackage/redirect them.

True innovation almost always destablizes the status quo of organizations, toppling current executives, organizations and products. There are a lot of ’antibodies’ (e.g. powerful managers and product lines, compensation plans, Wall Street expectations, revenue recognition policies, etc.) inside large organizations that always seem to quell real innovation. 

If HP and/or Microsoft create new Independent Business Units (IBUs) with an EVP/GM who reports to the CEO with his/her own large, dedicated product, marketing, engineering, sales and financial personnel whose objective is to compete and cannibalize existing internal businesses then I think I might begin to be a believer. Even then, it may be a toss up.

So, for now,  I think my money is on the “antibodies”. There are too many HBS case studies which prove that “antibodies” win the majority of the time.

You might feel different. If you think I’m wrong this time, I’m interested to hear evidence to the contrary.