HP Picks Up Amazon.com Biz, Beats Out Compaq, Sun

HP scored a big victory over rivals Compaq and Sun last Wednesday by announcing it will become the primary Internet infrastructure provider for Amazon.com and will supply 90 percent of the dotcom's applicable infrastructure requirements. HP will supply Windows, HP-UX and Linux servers, storage, printers, and services to Amazon.com. It will also supply PCs to Amazon.com employees. The deal makes Amazon one of HP's top five customers.

HP is also obtaining access to Amazon's 20 million customers by becoming an "anchor tenant" in Amazon's Electronics Store. That opens up a huge market for HP's PCs.

"Each agreement—for infrastructure and for retail products—is strong in its own right, but together they represent a powerful strategic partnership," says HP President and CEO Carly Fiorina, who announced the HP win in a meeting with security analysts.

The news is a blow to Compaq and Sun Microsystems, whose systems Amazon.com is replacing with the HP products. It also gave HP a much-needed win over Sun, which has wrapped up server deals with a number of dotcoms. Sun's most recent triumph took place only a few weeks ago, when online auctioneer eBay, despite last year's service outages, reaffirmed its commitment to Sun as its main supplier of servers, software, storage and services.

Fiorina wouldn't comment on the terms of HP's deal with Amazon.com, fueling speculation that HP had offered steep discounts or other incentives to land the high-profile account. That's not so, according to Fiorina, who claimed, "We didn't give anything away. We gave appropriate value for value given." Whatever carrots HP dangled in front of Amazon.com, the deal is a big plus for HP, giving the company credibility in the dotcom/Internet space.

In other good news, Fiorina presented a rosy financial picture, telling analysts that she expects HP to sustain a 15 percent year-over-year line growth rate.