Clouds provide a service rather than a product. For companies it provides convenience, efficiency and cost savings. Even though the concept was initially talked about as early as 1960s, widespread use of cloud started in early 2008.

Corporations are increasingly unloading their data centers and IT operations to service providers who are performing more efficiently. This cloud computing phenomenon is threatening servers, storage and networking products marketed by conventional behemoths such as Hewlett-Packard (HP).

Increasingly, cloud computing facilities are looking for parts that they can assemble and operate on their software. Cloud service providers are also looking for bundles that can be put into service immediately. This has been a problem for HP. HP needs to grab the trend in order to become a super power in this arena. HP currently generates $22 billion from selling servers, storage and networking products. It has a giant share of the server market.

HP also needs to get into the production of data-center switches used by cloud computing services. Cisco is the leader in this area. HP attempted to enter into this market by buying 10% of 3Com in 2010. However, they are in a struggle with Cisco for control of the new acquisition.