HP acquires Neoware 23 July, 2007 By Vanessa Ho

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"This acquisition is part of HP's ongoing strategy to expand in growth markets and further our leadership in PCs," said Kevin Frost, vice president of business desktops in the Personal Systems Group at HP, in an audio conference announcing the merger.

He added that the thin client market is attractive to HP because the unit growth rate is expected to be over 20 per cent over the coming years and that the market is moving towards the use of thin clients.

"Thin client computing is simpler, lower cost computers that rely on servers for a lot of the computing power and for a lot of the storage. In the desktop market today we are seeing a broad shift across many regions and across many customer segments towards thin client computing and for customers it offers a lot of benefits in terms of more security, easier management and lower costs," said Frost. "The economics in the thin client market is very attractive and the profit potential is [also] very attractive [to HP]."

What sold HP on Neoware, said Frost, is the company's expertise in Linux.

"Neoware is the number one provider of Linux thin clients and HP is the number one provider of Windows-based thin clients so there is a natural synergy there," he added.

In addition to providing Linux proficiency, HP also found Neoware's ability to provide customized software to enterprises attractive. As well, Neoware has software assets such as its device management software and server-based computing software that compliment 15 HP hardware products and has a mobile thin client that also compliments HP's existing thin client portfolio.

"Together, [this] portfolio will provide significantly increased product opportunity for our customers," said Klaus Besier, president and CEO of Neoware during the same audio conference.

He added that the merger with HP gives Neoware the global breadth and depth of the HP brand, which is attractive to the company's customers. "This reach will help us deliver the customized software capability that enterprise customers are looking for as a requirement to continue to evolve especially with virtualization," said Busier.

In terms of the channel, Frost said that he expects no change in Neoware's channel strategy as it is complementary to HP's channel strategy of having both a direct and channel presence.

"If there are channels, VARs or solution providers that Neoware is using to reach customers that we are not using today at HP, then we anticipate leveraging those partners."

Following completion of the transaction, HP plans to integrate Neoware into the business desktop unit of HP's Personal Systems Group.