Under the alliance, HP will embrace Microsoft's Windows NT operating system and provide service and support for major customers during implementation. Microsoft will share technologies and work closely with HP on future product developments.
As industry attention moves from installing high-powered PCs on every desk to the more difficult task of lowering their running costs, the two companies have developed a range of initiatives around NT to help organisations achieve this goal.
PC running costs are a major concern for large companies and have been estimated by the research group Gartner to be around pounds 7,000 per machine per year.
Two rival camps have been established offering different solutions. In one corner, Sun Microsystems and software giant Oracle are promoting the so-called network computer. This low-cost device is maintenance free and uses the processing power of the network's central server to function.
In the other corner are Microsoft and HP with their NetPC. This newly unveiled device is a slimmed-down version of a conventional PC which retains its own processing power, but can be managed and maintained from a central point. According to Microsoft, this can reduce the running costs quoted by Gartner by between 25 and 30 per cent. NetPCs are expected to retail for around $1,000 and be available in the second half of this year.
Both approaches focus heavily on the network server and it is this device which Microsoft has firmly in its sights. With Windows NT, the company is determined to extend its dominance from the business desktop to the server.
The alliance with HP is an important step in this plan. HP has agreed strongly to endorse NT as part of its core offering to customers. At the same time, Microsoft has given HP access to training and technical details about its products through intellectual property cross-licensing.
Speaking at the announcement of the alliance last week, Bill Gates, Microsoft's chairman and CEO, said it represented a big step for both companies. "We are excited to be working more closely with HP and look forward to this enhanced collaboration better serving our customers' needs. We are both companies that take a long-term view and feel that the way we interact with the PCs today - as nice as it is - is not the way it will be 10 years from now. We think that, working together, we can make this happen even sooner."
While the fact that HP will promote Windows NT as a server operating system worthy of consideration by large companies is important for Microsoft, the access the alliance gives to HP's worldwide service and support organisation is vital. HP will provide customers with the technical support and advice they require while working to reduce their PC running costs - something which could entice many to opt for the software. Trained HP staff will advise companies on how best to use NT to reduce costs.