Both HP and EDS taken separately were giants; their combination is a mega-giant. That said, the acquisition might make more sense from a shareholder’s point of view than from a customer’s perspective. This impression is confirmed by the structure of the official press release, which focuses first on the benefits for the shareholders, and in terms that are much more positive than for the benefits for the customers:

“First and foremost, this is a great transaction for our stockholders, providing tremendous value in the form of a significant premium to our stock price.”

The benefits for the customers look way less tremendous:

“It's also beneficial to our customers, as the combination of our two global companies and the collective skills of our employees will drive innovation and enhance value for them in a wide range of industries.”

This merge comes at a time where US companies are spreading mega-deals from large single contracts over multiple, smaller providers. Customers are looking for better reactivity and responsiveness, not necessarily larger size.

I am willing to bet that the real winners in today’s market are not going to be the largest suppliers, but the ones that are focusing their efforts on their customer’s satisfaction.

When I first saw this deal announced I began to look at how it would effect smaller companies that compete in the space. Companies such as my own, SmallCart Systems, would see business as usual. The reason being, as the last comment states, as HP and EDS grow larger the competition (IBM, Accenture, CA, etc) will be forced to consolidate as well to gain potential market share.

However, as these companies consolidate they will lose customers in the shuffle. Some customers may lean towards working with smaller consulting firms because they won't feel like they are lost in the shuffle. In the past, I've spoken with many clients that are really fed up with the red tape and bureaucracy involved with big vendors. They prefer to begin a relationship with a smaller vendor. So from my perspective the companies that will benefit the most from fleeing customers would be the Bearing Points, Column Technologies, Compucom, Unisys.

It has also been apparent that in consultation services the talent is usually better from the boutique firms than from the larger vendors. Large vendors often hire college graduates and put them in client serving roles right away. Boutique firms often do not have the ability to rely on branding and are forced to hire experienced candidates from the get-go. So in short, the collaboration and talent of two large vendors usually leads to more red tape, less collaboration amongst teams, and increase internal politics to move up the corporate ladder.

I see more customers moving from the larger vendors to the smaller sized vendors over the long term.