September 23, 2009, 4:31 PM — HP Wednesday announced it would leave the EDS brand behind and rename its IT services provider business HP Enterprise Services.
All eyes on HP-EDS integration plan
FAQ: What does the HP-EDS deal really mean?
The name change comes a year after HP acquired the market-leading outsourcer for $13.9 billion in a deal that shot HP to the top of the IT services market, right behind its largest competitor IBM. HP is also renaming its Technology Solutions Group to HP Enterprise Business, a portfolio that includes servers, storage, software, networking and technology services.
The company reported the groups comprising the now HP Enterprise Business accounted for 47% of the HP’s revenue and 60% of its non-GAAP operating profit in the third quarter of the company’s fiscal 2009. According to HP executives, the brand changes reflect HP’s technology strength going forward.
“We are combining the strong services brand equity that EDS has built over the last 47 years with HP’s technology leadership to become the leading IT services provider,” said Joe Eazor, senior vice president and general manager of HP Enterprise Services.
HP still trails IBM in the services market, but the company’s confidence in its own brand in part drove the decision to drop the EDS brand, analysts say.
“This is a fairly significant bet for HP. They are continuing the integration plan to bring EDS into the HP culture but also taking a bet that the HP brand will be better at bringing in business than the legacy EDS name,” says Mark Mayo, partner and president of global resources management at TPI, a global outsourcing industry research firm. “HP is betting this will be a positive move, and it’s too hard to tell yet if it is a brilliant or a bad move to leave the EDS brand behind.
While the name change was expected as a logical next step in HP’s integration plans by industry watchers, Mayo says the event should still be viewed as marking the end of an era. EDS was founded in 1962 and in a sense established what became known as the IT services market, dominating for 25 years, Mayo explains, alongside IBM and CSC. Then in the late 1990s and early 2000s, global outsourcing emerged and players from India and Europe changed the IT services landscape. Now with companies such as Dell acquiring Perot Systems and other industry consolidation, Mayo says the EDS name change is “truly a watershed event.”
“If you take a step back and look at how the marketplace has changed, the loss of the EDS name is indicative of the whole global play that today’s outsourcers must tackle,” Mayo says. “The market is consolidating and Dell’s news is part of that greater trend. It’s all an evolution, but EDS pretty much founded the outsourcing industry and that name is very well known. It’s definitely a loss.”
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