HP beats IBM in Army virtualization tender

IBM has been supplying the IDF with virtualization products until now.

Sources inform ''Globes'' that Hewlett Packard Co. (NYSE: HPQ) has beaten IBM Corporation (NYSE: IBM) for the installation of VMware Inc. (NYSE: VMW) products in the three-year IDF virtualization tender, worth an estimated $15 million. The tender has a two-year option to extend. This is the IDF's first virtualization tender, will now be added to the IDF regular tenders for PCs and servers, which are held every three years.

IBM has been supplying the IDF with virtualization products until now.

Virtualization systems virtualize computer activity regardless of the hardware on which it runs. In this way, a single computer at an organization can obtain all network resources, even if the programs are not installed on the computer itself.

In 2008, the IDF completed a $60 million three-year tender for servers, which was won by IBM. The tender included virtualization servers of VMware, worth $6-7 million.

The virtualization market has undergone major change in the past two years, changing from a market dominated by start-ups and VMware, into a market dominated by the world's large computer corporations. Most VMware products are the subject of the IDF tender.

HP beat both IBM and Dell Inc. (Nasdaq: DELL) in the IDF tender. IBM's loss not only affects it in the virtualization field, but also for physical servers, since the IDF will replace them with virtual systems.

The Ministry of Defense said in response, "HP won the tender by offering a substantial discount on prices paid prior to the tender. The agreement between the Ministry of Defense and the company is a framework agreement that does not include a specific amount, but a pricelist and discount at which procurements will be made when needed."

Published by Globes [online], Israel business news - www.globes-online.com - on July 15, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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