HP's $1bn technology investment reflects customer demand

Forrester analyst John McCarthy describes how HP’s datacentre rationalisation process, which will lead to 9000 job losses, is a refection of how the market is moving.

He says suppliers are moving away from custom offerings because customers are demanding software as a service and prices are dropping.

“HP is applying the lessons learned from their own data center rationalisation process to EDS and its customers,” he says. “In the long term, this is indicative of the market’s movement away from custom offerings in the light of ‘as-a-service’ pricing and deflation.”

Will this shift benefit the big product based companies that have acquired specialist service providers? They can use their skills to build infrastructures that can support the move to commoditised services.

As well as HP’s acquisition of EDS in 2008, Dell bought Perot Systems for $3.9bn and Xerox spent $8.7bn provider Affiliated Computer Services (ACS) last year.

Will technology play a more important role in IT outsourcing, as IT as a service grows, while people and relationships take a back seat?

Does this leave gaps in the market for the mid sized suppliers?