HP-EDS Deal Jars BMC Software

By buying EDS, H-P, a hardware vendor with a growing portfolio of middleware, is emulating IBM's vertically integrated business model. But the buyout also makes both H-P a competitor of other integrators, and EDS a competitor of other equipment and software sellers it has worked with.

Other integrators and vendors see "that H-P is suddenly much less friendly to them" as it shifts to competing with them in some respects, Beauchamp said. "We hope to capitalize on that."

BMC has to take an aggressive stance, as it sees some of its market opportunity dry up from H-P's move into the outsourcing arena. The company competes with H-P in the market for software that manages IT systems.

"We are much less likely to totally replace the H-P software that EDS has been using," Beauchamp said. But hopefully we'll continue to work with them on software that does not compete."

"I believe we will get some sales as a result of this merger," Beauchamp said. Outsourcers and integrators that were previously neutral toward software vendors, "will now take a position toward BMC," he predicted.

Goldman Sachs analyst Derek Bingham agreed with some of Beauchamp's assessment of the merger. H-P's proposed acquisition of EDS could move third-party integrators away from recommending H-P software and aligning more closely with BMC, he wrote in a note Friday.

But BMC is finding it harder to win against H-P and others, Bingham noted. "Our checks continue to suggest increasing focus and competition from CA(CA Quote), H-P and IBM."