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HP teams with Amazon
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November 30, 1999: 3:08 p.m. ET
Industry giants strike Web-infrastructure, consumer-retail pact
By Staff Writer Richard Richtmyer
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NEW YORK (CNNfn) - Computer-maker Hewlett-Packard on Tuesday sealed a deal with Amazon.com under which the Internet giant will use HP equipment to power its e-commerce site.
As part of a broad technology and product-marketing agreement, Amazon (AMZN) is installing high-end HP 9000 "V-class” enterprise servers, which, the company said, have the computing power necessary to support the demands on its systems, which it expects to be three times greater this holiday season compared with past seasons.
Beginning in January, Amazon said it also will begin sourcing HP (HWP) products for sale on its site directly from the company, instead of using a third-party distributor as it currently does.
"They had been offering some of our products through their consumer-electronics store, but that was through a third-party reseller,” said Atchison Frazer, an HP spokesman. "Now they have a direct relationship with HP, so they in effect become a reseller channel for us through the Internet for all of our consumer products.”
Amazon and HP also agreed to undertake joint sales and marketing activities that support the HP consumer-products store at Amazon.com, including participation by Amazon.com in HP’s e-services and consumer-related advertising.
On the equipment side, the deal should result in revenue of as much as $10 million for HP over the next three years, including the hardware, software and services it will provide, according to Frazer.
Both HP and Amazon declined to provide a specific number of servers expected to be incorporated into Amazon’s infrastructure.
But, the deal does give a lift to HP’s struggling server division, which has languished over the past year and has been pointed to by analysts as one of the critical areas for the company in 2000.
And, according to Frazer, HP will likely be inking similar accords throughout the year, as the company’s investments in developing server systems -- that are optimized for e-commerce and guarantee the availability and performance of the entire hardware- and software-environment across all points of the transaction -- begin to pay off.
"You can expect to see more,” Frazer said. "The infrastructure becomes the value proposition in the Internet era, and with Amazon expanding beyond books into power tools and consumer electronics and what have you, they’re going to be drawing more traffic, and they need to have a more stable, robust, secure platform on which to run those transactions. That’s really where we’ve made our investments and it’s starting to pay off now.”
The company on Monday is hosting an analysts’ meeting in Palo Alto, Calif., and Carly Fiorina, HP's president and chief executive, is expected to unveil similar Internet-related business initiatives later that day.
In afternoon trade on the New York Stock Exchange, HP shares were up 1-3/8 at 97-3/8. Shares of Amazon slid 4-5/8 to 85-13/6 on Nasdaq. 
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