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Microsoft Corporation (MSFT) Strikes Deal With Hewlett Packard, Gains Win in Cloud Wars

Microsoft Corporation (MSFT)

Microsoft Corporation just got a boost to its cloud computing business as news broke that the firm has struck a deal with Hewlett Packard. News has it that Hewlett Packard Enterprise Co  has chosen not to go on a heads-on rivalry with Microsoft, Amazon, and Google in the cloud space. Instead of entering the cloud space as another rival, Hewlett-Packard has chosen to partner with Microsoft to sell Microsoft’s cloud Azure.

Microsoft (MSFT) and Google (GOOG) End Battle

Microsoft has been trying hard to push its cloud business forward and the firm has made some decent headways. Yet, Microsoft still plays second fiddle to Aamazon’s AWS cloud business. In May, Fortune reported that Amazon was the clear leader in the cloud business. The report noted that AWS cloud service has about 10 times the combined capacity of remaining 14 cloud companies. Now, Microsoft has a deal with HP – and its cloud business might benefit from the synergy.

HP Partners with Microsoft

Until last month, Hewlett Packard Enterprise was a part of HP that offered public cloud services to business. However, the business segment was shutdown last month, probably because it can’t compete with the likes of AWS, Azure, and GCP in the cloud space. Meg Whitman, CEO of HPE said her firm has “reached an agreement with Microsoft” in which HP will sell Microsoft Azure as its “preferred cloud alternative.”

Many players in the cloud space are conscious of the strong lead that Amazon’s AWS has in the market. AWS would earn more than $2B for Jeff Bezos as it boasts more than $500M in operating income each quarter. The deal between Microsoft and HPE provides a win-win situation for both firms. A statement from HPE reads, “Microsoft shares our view of a hybrid IT approach for enterprises, and we both see opportunity to simplify hybrid infrastructure for our customers. ”

Microsoft’s deal with HPE is the latest in a series of deals that the firm has been making in the cloud space. Earlier this month, Microsoft signed a deal with Red Hat to unite in creating common solutions for clients in the cloud space.  Last month, Microsoft signed a deal with Dell – the deal will be the basis for a new cloud platform standard. Microsoft and Dell have had cloud-related deals in the past and the latest deal only serves to strengthen the offering of both firms.

Can Azure overtake AWS with deals?

Microsoft’s Azure is still behind Amazon’s AWS in the cloud space, but Satya Nadella thinks that it can alter the balance by working with rivals. The firm has a long list of deals with other players in the cloud space – it even went as far as working with AWS to secure a $108M FAA cloud contract, close sources said the contract could be worth $1B over the next 10 years. It is obvious that Microsoft would make a deal with any firm, inasmuch as the deal will bring some money to the firm.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.