Hewlett Packard today confirmed that it is in negotiations to buy IT services giant Electronic Data Systems (EDS) for an undisclosed amount.

Major hardware vendors from Dell through IBM have been working to beef up their services portfolio in recent years, clearly with an eye on balancing the hardware-light practices of virtual machines and cloud computing with a revenue stream which could be in great demands as companies make the transition from traditional in-house client/server models to newer paradigms. HP has made a number of other acquisitions in this line and looks to be one of the stronger players in the combined hardware/services market. But if the EDS acquisition is completed successfully, the company may leapfrog traditional competitor Dell into an entirely different level of market. Larry Dignan is of the opinion that the new rival may turn out to be IBM, which currently has a stronger services portfolio than a hardware one. He may well be right; after losing their hardware market share to the likes of HP and Dell, re-casting itself to that market as a services company has played well for Big Blue, and HP has enough ins already that the addition of a respected services unit such as EDS could represent a powerful force in the market.

Although such a combination represents a situation which I frequently vilify, in that a company purporting to deliver unbiased consulting services has a vested interest in pushing certain hardware and solutions, I nonetheless believe that the one-stop shopping potential afforded by such an arrangement can be beneficial to CIOs who can cut a good deal. Provided the integration between the hardware and services side of the business is sufficient, the ability to pick up the phone and dial a single number for any problem, and the inability of the people answering the phone to point any fingers outside their own company, has all kinds of upside for CIOs who want to use their time to focus on strategy rather than tactics.