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Another Big Win for Hewlett Packard Services in Europe

Nokia Dials HP

IBM and HP in Role Reversal at Finnish Company

PHOENIX, Feb 3 - Can you imagine Shaq O'Neill playing the point guard, while Jason Kidd takes the center position?  Well, Nokia could.  So the giant Finnish telecommunications company dialed HP for data center, and IBM for help desk.  No Kidding!

[Nokia outsourced its data center operations to Hewlett Packard Services (Kidd), a PC and midrange server maker, while letting IBM (Shaq), the company that practically invented the mainframe data center, manage its desktops with a help desk].  

And it appears that HPS got the better of the deal.  Its five-year services contract that could be worth some $400 million, according to today's (Feb 3) Reuters report, filed out of Amsterdam.  Last month, Nokia entered into another five-year outsourcing contract with HP's rival IBM that was worth about 200 million euros ($248 million).

The new HPS deal is an extension of an existing three-year contract that the two companies signed in 2001.  It was estimated to be worth about $260 million. 

As you can see from the above chart, HP doing very well in Europe which is now comparable to the U.S. in terms of revenues.  

HP is also doing much better than IBM in the lower end of the customer pyramid. Its consumer and small and medium business (SMB) revenues account for more than 50% of the corporate total ($73 billion in FY03).

At IBM, the SMB market accounts for only 23% of IBM revenues, with enterprise accounts representing the remainder (see the above chart).  Big Blue has virtually no presence in the consumer market.

Perhaps the most interesting part of the latest HPS deal is that Nokia will pay for the computer services it actually uses, as opposed to a fixed amount.  So it appears that the value-based pricing of the Nokia deal is yet another signpost on the IT industry's Holy Grail quest (see "IT Industry: Whither Goeth It?", Jan 26).

More to come?  You bet.

Happy bargain hunting!

Bob Djurdjevic

For additional Annex Research reports, check out... 

2004: "China Now Bigger Than U.S.!" (Jan 26); "IT Industry: Whither Goeth It?" (Jan 26); "IBM: Hype Exceeds Results" (Jan 15); "Five Most and Least Likely Forecasts for 2004" (Jan 2004);

2004 HP: "Nokia Dials HP!" (Feb 2004)

2003 HP: "IBM vs. HP: And the Winner Is..." (Nov 2003); "Strong Finish Not Enough" (Nov 2003) "An HP Hat Trick (March 2003);   EXCERPTS - Analysis of Hewlett Packard Services FY02 results (May 2003);  2003 Global IT Services Heptathlon (May 23, 2003)Analysis of “Top 10” IT Leaders’ Market and Business (June 2003)

2003 IBM: "Small Is Now Big at Big Blue" (Oct 15); "A Passage to India" (July 22),  “On the Nose But No Cigar” (July 16), “A Paler Shade of Blue” (June 2), “Save, Spend and Split” (May 8), “Shrunk by the Marketplace” (Apr 17), “Turnaround Continues...” (Apr 15), “Start of a Real Turnaround?” (Jan 17).

2002 IGS: "Half or Double Trouble?" (Aug. 12, 2002), "IBM to Take $500M Charge" (Sep 3, 2002), IBM-PwCC Update (Oct 2, 2002), Analysis of IBM Second Quarter Results (July 17, 2002), IBM Layoffs Confirmed! (Aug 14, 2002), Analysis of IBM Third Quarter Results (Oct 16, 2002), Boom Amid Gloom and Doom (Oct 10, 2002)

Or just click on and use "financial engineering" or similar  keywords.

Volume XX, Annex Newsflash 2004-03
February 3, 2004

Bob Djurdjevic, Editor
(c) Copyright 2004 by Annex Research, Inc. All rights reserved.
e-mail: annex@djurdjevic.com

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Home | Headlines | Annex Bulletins | Index 2004 | About Founder | SearchFeedbackClips | Activism | Client quotes | Workshop | Columns | Subscribe