Hewlett-Packard Takes On Amazon to Tap Demand for Cloud Services

Hewlett-Packard Co. (HPQ) is unveiling a tool that will give companies access to computing power over the Internet as an alternative to buying expensive servers, taking on Amazon.com Inc. (AMZN) in the market for cloud services.

A test version of the so-called public cloud offering will be available on May 10, the Palo Alto, California-based company said in a statement. Hewlett-Packard, the world’s biggest personal-computer maker, didn’t disclose prices, though it said small computing jobs may start at a few pennies an hour.

Hewlett-Packard is seeking to compete with Amazon and other companies that have used data centers to make headway in cloud computing, including International Business Machines Corp. (IBM), Rackspace Hosting Inc. (RAX), Verizon Communications Inc. (VZ)’s Terremark unit and AT&T Inc. (T), said Frank Gens, chief analyst at market- research firm IDC. Cloud computing has become popular because of its convenience and low cost, and Amazon is a leader, Gens said.

“Amazon’s now setting the benchmarks” in terms of pricing and simplicity, Gens said. For established technology vendors such as IBM and Hewlett-Packard, “if they can’t compete with that toe-to-toe, they’re really boxing themselves out of a large part of the market.”

Forrester Research Inc. has estimated that the market for cloud-computing services will reach $61 billion by the end of this year.

Public Versus Private

The difference between a public cloud and a private one is that companies can buy chunks of time on a public cloud, sharing computing resources. It’s similar to the way companies rented time on mainframes decades ago, before computing power became cheap and widespread.

“The market for public cloud is large and will continue to grow,” Hewlett-Packard Chief Strategy Officer Bill Veghte said in a telephone interview.

Hewlett-Packard’s “converged cloud” is a package of software and other products that will let companies choose from public, private and “managed” cloud services, Veghte said.

Seattle-based Amazon started its Amazon Web Services business in 2006, and it has been a “blockbuster success,” according to IDC’s Gens.

Cloud computing is used by application and website developers to test their products, for example. It can also be used by corporations and the U.S. government to crunch large data sets, or by medical providers and other organizations that have big data-storage needs.

To contact the reporter on this story: Jordan Robertson in San Francisco at jrobertson40@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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