HP's Software Ambitions Grow As It Closes Mercury AcquisitionHP's Software Ambitions Grow As It Closes Mercury Acquisition

Hewlett-Packard closed the deal on its acquisition of Mercury Interactive on Tuesday, and a senior HP executive called it a "game changing" move for a company that has long been known mainly as a hardware giant.

While HP continues to hold a strong position in the hardware market, it never gained much of a foothold in the software arena. Company execs hope the Mercury acquisition will cause people to look at the company in a new light.

"According to IDC, the combination of our revenue streams lands us as the sixth largest software company," says Tom Hogan, senior VP of HP software. "If you polled customers and the press two months ago and asked them to rank the top 10 software companies, it's doubtful HP would be ranked at all, forget about sixth. This move has the potential for being a landmark in [the history of] Hewlett-Packard."

The PC maker bought the software company for about $4.5 million in stock, which works out to $52 per share. It also marks HP's largest acquisition since it bought out Compaq four years ago. Mercury, known for its application management and IT governance software, is now a wholly owned subsidiary of HP.

Hogan says HP has no plans to change Mercury's product road map. "There was virtually no product overlap and no rationalization that needed to occur," he says. "The synergy of what Mercury brings and what HP brings was abundantly clear. Our strategy is to protect and extend their assets, both the people and the technology."

HP plans to unveil a schedule for integrating Mercury products into the HP product line at HP's European user conference in Vienna, Austria, in December. "None of this will be a shock," says Hogan of the upcoming announcements. "People have a pretty good idea of where we'll be going."