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Information and Shipping Containers: Lessons for HP and EDS

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(By Info-Tech Analyst George Goodall- Printed with permission from Processor Magazine www.processor.com).

On May 12, 2008, HP announced its intentions to acquire EDS. At $25 per share, the deal is worth $14 billion. In many ways, the deal makes sense. It's about industry consolidation. It's about shifting to services and improved margin. It's about reconciling customer portfolios to facilitate the cradle-to-grave experience. But this deal is also about something far more interesting. It's about economies of scale that occur when services become generic.

Lessons From Shipping Containers

Commoditization removes competitive advantage. The formula is basic: The cheapest supplier that meets the required level of quality wins. Once the standards for product and service are established and agreed to by all parties, then the only way to profit is scale. The best example comes not from the world of technology but from the decidedly low-tech world of containerized shipping.


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