HP Logo (Silver)Hewlett-Packard is negotiating to buy technology services provider Electronic Data Systems Corp. in a deal that could help the planet’s largest personal computer maker usurp more of the data management and consulting contracts from competitors such as IBM, Dell, and (potentially) Google.

The story broke on Monday shortly after the Wall Street Journal reported a deal could be reached as early as Tuesday. They went on to say that HP may be willing to pay between $12-billion and $13-billion, which would make it the company’s largest acquisition since it bought Compaq in 2002.

HP has been trying to expand its technology consulting and data management business for years, as the demand for these services have steadily grown since the advent of the internet. On top of this, there are more consumers and small businesses discovering just how important data can be, which is promoting them to find solutions that can offer reliable access to information while on the road.

Why Focus On Data?

Data is an amazing thing. Though composed of finite strings of 1’s and 0’s, the decoded results can do everything from boring us, to entertaining us. It helps us earn money, and answers the difficult questions in both business and science. Data can consist of massive amounts of raw information, and knowing how to ask questions from that information can change our perception of any event or trend. So if something as intangible as data can be so critical in our lives, why not try to capture some of the market?

HP has offered online storage services for both consumers and businesses for a little while now and, though there have been quite a few hiccups with the system, the service is still quite promising. Called the hp upline, the service allows us to put our data in a secure, online location. What we choose to do with the space is up to us, of course. We could store our critical file backups there, have scheduled backups get placed there, or even use an account as a central file sharing location for friends and family. The service isn’t free, but for as little as $5 a month, people can have peace of mind knowing that their information is stored safely by one of the planet’s largest and most reliable server manufacturers. Naturally, the data is encrypted before it’s sent to HP, which makes our critical information almost impossible to directly access.

But This Is Just The Beginning

HP UplineThere’s more to online storage than just storing files, though. If HP can corner the market as the place to go when consumers or small businesses want to safely and securely store files for easy access anywhere on the planet, and to keep their critical file backups (you do backup, don’t you?), then they can enjoy an incredible competitive advantage over other online providers.

It’s a simple matter of gaining enough base customers early in the game to spread the word about what you can offer and what advantages you provide over the competition. So long as it’s done right, and so long as you don’t slack off the same way Yahoo! did when Google was starting to make waves, then customer retention becomes a whole heck of a lot easier.

Think of online storage as you would a bank. Most of us are not happy with our bank due to the ridiculously high monthly fees they charge for seemingly nothing, the piddly amount of interest they pay regardless of our decades of patronage, and the number of times they reject our requests for extra services (like having your daily ATM withdrawal limit raised or otherwise removed). However, despite these injustices, 95% of us will keep our money in the very same bank.

The same can be said about online storage. If enough people are storing tens of gigabytes of critical or otherwise often-shared files in a central location, how many would go through the hassle of changing storage providers and letting all of their friends or colleagues know about the change? Chances are, 90% of the market will just grumble about any hiccups that might occur without actually jumping ship … until something better comes along, that is.

HP is in a great position to make themselves the central online storage company and, with the pending acquisition of EDS, they will gain a wealth of knowledge with data management and consulting. All of this will be in HP’s favour, and all of this could have huge returns with the consumer and small-business market. Heck, if they can tie the upline into their Home Server devices, then they’ll have the opportunity to integrate themselves into our homes as well as Microsoft has.

If they play their cards right, that is.

What do you think of online storage banks? Would you use them to store backups or share files with friends and co-workers?