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HP taps the taxman to knock IBM and Dell

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HP seems to be hung up on rivals IBM and Dell of late.

Earlier today, HP issued a statement in tandem with partner PlanetGov, saying they will replace "a percentage" of IBM and Dell gear in Internal Revenue Service (IRS) data centers. The deal has an estimated value of $50 million and will see HP chip away at the rival gear over the next four years. HP plans to ship the IRS 3,000 ProLiant servers, 30 StorageWorks boxes and wrap it all with professional services.

This new agreement builds on a 2002 $100 million contract to equip the IRS with Compaq Evo desktops and notebooks.

Vendors rarely have the opportunity to gloat about displacing a rival in a customer win statement, as users tend to shy away from wanting to anger potential partners. In this case, however, HP got the go ahead to rail on IBM and Dell.

"Under the terms of the contract, the IRS expects PlanetGov and HP to replace a percentage of the 4,400 IBM and Dell servers and approximately 30 storage area networks currently in use at the IRS during each of the next four years," HP said.

All of this IBM and Dell attention arrives with purpose. This week, HP CEO Carly Fiorina tried to defend her company against the cries of analysts who say HP is locked in a swamp between the two competitors.

"I know it is popular these days to describe HP as stuck between IBM and Dell," Fiorina said, at the time. "It is particularly popular for our competitors, IBM and Dell, to say we are stuck between the two. The facts don't support the thesis."

But as much as Fiorina tries to dismiss this unhealthy focus on IBM and Dell, it is she that seems most fixated on the companies.

"It's very good that Carly Fiorina is paying so much attention to her shareholders," said James Governor, analyst at RedMonk.

The funny thing here is that by shareholders Governor likely means to the fine fellows at Merrill Lynch, Fidelity and Putnam that are often the very ones suggesting HP is lodged in a lose-lose situation between services/software giant IBM and low-cost machine Dell. You can understand investors' concerns with HP by tracking its share price since Fiorina took over as Chief.

"If you go back and look at the justifications given when the (Compaq) acquisition was going through, it was all about, in fact, those vendors (IBM and Dell)," Governor said. "I don't know why that is now is someone else's head."

The truth is that HP is indeed positioned between IBM and Dell. On one hand, HP is scrambling to announce services deals to compare favorably with IBM, while at the same time touting its cost reductions to try and match up with Dell. And no one sees this more than Fiorina. That's why she brings it up do darned much.

If the analysts are the ones making the comparisons popular, it's Fiorina giving cause for these moves. ®

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