The three-year deal, announced at a news conference by Microsoft Chief Operating Officer Kevin Turner and HP Executive Vice President of Technology Ann Livermore, will focus on developing, servicing, and marketing enterprise technology.

Microsoft and HP plan to invest at least $300 million over the three years to extend their partnership into new business areas, with the goal of helping their customers incorporate new technology, including business intelligence and collaboration software.

"Extending our strategic alliance with Microsoft strengthens HP's enterprise strategy, which is focused on empowering CIOs to align I.T. with business by delivering more cost-effective, scalable, secure ways of enhancing employee productivity," Livermore said during the conference.

HP also will grow its core group of Microsoft-trained professionals from 22,000 to 30,000 over the duration of the agreement and develop a new, dedicated Microsoft services practice, Livermore said.

Enterprise Collaboration

The collaboration, geared toward enabling enterprise customers to shift toward the next generation of data centers, will focus on five key areas: messaging and unified communications ; content management; business intelligence; business process integration ; and core infrastructure .

The new program is called Microsoft and HP Solutions for the People-Ready Business. While that label might sound like a marketing strategy, the stakes for this sector are indeed high. Estimates put the software markets in business intelligence, content management, and infrastructure software running on Windows at close to $50 billion for 2007.

"Add in communications, hardware , and services, it is easily over $100 billion," said John Gantz, IDC's chief research officer, who joined the Microsoft and HP executives at the conference. However, Microsoft and HP declined to say how much of that market they planned to bring home when asked directly.

The big idea, said Microsoft's Turner, is to help enterprise customers create greater value from their existing I.T. assets while capitalizing on next-generation technologies.

Fighting Big Blue

Laura DiDio, an analyst with the Yankee Group, called the deal a win-win and noted that the partnership is likely taking aim at IBM's On-Demand business services offerings, which also targets large enterprises.

"It gives HP more ammunition against its chief rival IBM and it extends and expands Microsoft's already deep and powerful OEM reseller channel. The HP brand has a lot of cachet," said DiDio.

"HP and Microsoft have a very longstanding, close-working relationship that is mutually beneficial -- although HP's Linux and HP UX offerings do compete with Windows," she concluded.

Indeed, the two computer industry titans already have a close relationship as a result of partnerships extending over the past two decades.