Microsoft, HP Forge Separate Japanese Partnerships

Further fueling the Asia-Pacific region’s high-tech boom, Microsoft (Nasdaq: MSFT) and Hewlett-Packard (NYSE: HWP) announced separate partnerships with major Japanese companies Thursday.

The Redmond, Washington-based Microsoft is teaming up with Hitachi to focus on the development of a core set of replicable Microsoft 2000-based enterprise solutions. The software giant and the Tokyo-based electronics company also plan to start a joint venture later this year to provide Windows 2000-based solutions and consulting services.

Meanwhile, computer manufacturer Hewlett-Packard is teaming with Softbank E-Commerce Corporation, a division of major Internet investor Softbank Corporation, to create a new e-commerce company to sell HP computers and printers to Japanese consumers.

Microsoft and Hitachi

The Microsoft-Hitachi union brings together two of the world’s biggest players in the Information Technology (IT) market. Microsoft officials confirmed that Asia is its fastest-growing sector, with sales expected to increase by 30 percent this year, to more than $2 billion (US$).

“There isn’t a weak spot in our business now, which is fantastic,” Microsoft Asia president Pieter Knook told Reuters.

As part of the deal, Hitachi will train approximately 10,000 engineers for certification on the Microsoft enterprise platform. Hitachi is also planning to open 10 customer solution centers throughout Japan that will promote Microsoft to Japanese businesses and support middleware and industry applications on Windows 2000.

For its part, Microsoft says it will cooperate with Hitachi in the development of set models utilizing Microsoft software and Hitachi’s hardware, such as high-end PC servers and large capacity storage systems for storage area networks.

The companies expect to launch a yet-to-be-named joint venture in October that will develop solutions and provide consulting and support services.

Executives from both firms will fill executive positions in the joint venture.

HP and Softbank

The HP deal calls for the Palo Alto, California-based powerhouse to be the new firm’s main supplier of products and services, while Softbank E-Commerce Corp. will handle the development and management of the Web site.

HP and Softbank expect the new venture to be up and running by the fall, in time for the peak selling season. Softbank is an investor in online brokerage E*Trade Group, Inc. (Nasdaq: EGRP), and has reportedly agreed to buy a failed Japanese bank.

With investments in such companies as Yahoo! (Nasdaq: YHOO) and Toysrus.com, Softbank has been successful in its global ventures. The company also has joint ventures with Microsoft, Cisco Systems and News Corp., and is building Internet ventures in Latin America.

The companies also said that they are looking to form other ventures together, which could include forays into online financial services.

Potential in Asia

Analysts around the world seem to agree that Thursday’s deals are another sign that the market potential in Asia is virtually unlimited. The international wholesale circuit market in the region, for example, is expected to grow from $1.15 billion in 1999 to about $5.78 billion in 2003, according to U.S. market research firm the Yankee Group.

Asia has the highest percentage of new online users in the world, and another market research firm, GartnerGroup, has projected that the region’s business-to-business (B2B) e-commerce revenue will leap from $9.2 billion in 1999 to $992 billion by 2004.

Those numbers are expected to grow larger with China’s impending entry into the World Trade Organization (WTO).

The good news for Microsoft is that most Asian businesses tend to use personal computers instead of investing in more costly mainframes. Microsoft, which is in the midst of a bruising antitrust battle with the U.S. government, is responsible for about 80 percent of the software in the world’s personal computers.

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