Microsoft Teams Up with HP to Conquer the Enterprise Cloud

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Microsoft (NASDAQ:MSFT) and HP (NYSE:HPQ) announced a new initiative to deliver Microsoft’s productivity and collaboration applications like Office 365, Sharepoint, Exchange Server and Lync, via private and public cloud services. [1] Microsoft competes primarily with Oracle (NASDAQ:ORCL), SAP (NYSE:SAP) and Salesforce.com (NYSE:CRM) in enterprise software. Microsoft launched Office 365 to compete with cloud based productivity software offerings like Google (NASDAQ:GOOG) Docs and Zoho Docs.

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Microsoft and HP Collaborate to Boost Enterprise Cloud Software and Hardware Sales

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Under the agreement, HP and Microsoft will launch a series of new combined offerings:

  • Private Cloud: HP will offer Microsoft Exchange Server, Sharepoint Server and Lync Server as a hosted service powered by HP’s data-centers.
  • Public Cloud: Microsoft will offer Office 365, Exchange Online, SharePoint Online and Lync Online
  • Hybrid Solution: HP will offer Microsoft’s Office 365 along with the HP Enterprise Private Cloud detailed above.

This move is expected to be beneficial for both Microsoft and HP and will improve the adoption of their software and hardware offerings among enterprise customers. Almost all enterprise software companies, including Oracle, SAP and IBM, are now launching cloud based versions of their applications and trying to capture market share in the growing on-demand software space.

Microsoft’s Office suite currently has close to 95% market share in productivity software. We expect it to decline marginally in the forecast period, primarily due to increased competition. You can check the impact of any increase in its market share on its Trefis price estimate using this chart. Office 365, Exchange, Sharepoint and Lync are all included in Office, which is Microsoft’s most valuable business division.

It accounts for more than 30% of Microsoft’s $32 Trefis price estimate, which stands nearly 25% above its current market price.

Understand How a Company’s Products Impact its Stock Price at Trefis

Notes:
  1. Microsoft, HP team to sell public and private cloud services, ZDNet []