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HP, Microsoft deals aimed at stretching IT dollars

By Patrick Thibodeau and Eric Lai

March 16, 2009 12:00 PM ET

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Computerworld - Looking to make its outsourcing and IT services more affordable in a down economy, Hewlett-Packard Co. last week said it was adopting variable pricing that will be based on the service levels users choose.

For instance, customers of HP's EDS unit will be able to specify different support service levels for individual applications based on their importance -- with HP's pricing varying accordingly.

The new approach could lower application support costs by up to 40% for some users, said Jeff Womack, vice president of product marketing at EDS.

John Madden, an analyst at consulting firm Ovum, said HP is clearly being driven by the recession. "If you have customers that are hurting financially," Madden said, "do you pound them over and over with the same terms?"

But, he added, HP also may be looking at the competitive challenges that vendors like EDS face from cloud computing services.

Microsoft Corp. also is offering some price breaks, through deals that let users save up to 26% on software licenses and the company's Software Assurance support contracts.

"One reseller I talked to says he has never seen Microsoft doing this level of promotion and price-cutting in the enterprise space," said Paul DeGroot, an analyst at Directions on Microsoft.

This version of the story originally appeared in Computerworld's print edition.

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