Hewlett Packard Enterprise (HPE) Teams Up With Dropbox (Revised)

Hewlett Packard Enterprise Company (NYSE:HPE) is leaving no stone unturned to expand its business via strategic partnerships. The recent partnership with Dropbox Inc. should contribute to the company’s overall growth.

As per reports, Hewlett Packard Enterprise has improved some of its computers to provide hardware infrastructure to help Dropbox build its own data centers and store customer data in its own amenities.

Dropbox is a file backup service that offers cloud-based file management, storage systems and client software. So far, these files were being stored in Amazon.com Inc.’s (NASDAQ:AMZN) Amazon Web Services facilities instead of the machines owned by Dropbox.

But given the size and nature of its operations, management felt it could more efficiently run operations using a hybrid model. Since this isn’t something Amazon provides, the company has decided to go with Hewlett Packard Enterprise, one of the companies offering the facility.

The partnership will help both Hewlett Packard Enterprise and Dropbox to leverage each other’s resources. Dropbox, in addition, will be able to expand beyond casual consumers and small enterprises as HPE will also try to sell Dropbox services to its enterprise customers.

A lot of corporate workflow is headed toward the cloud, and therefore the Dropbox integration will enhance user experience, expanding Hewlett Packard Enterprise’s services across all devices. The integration will make it easier for Office users to edit and share files across different devices and software.

None of the companies revealed the financial details of the partnership. However, according to The Wall Street Journal, “Dropbox "drove a hard bargain" to lower the cost.”

Last Words

Keeping in mind the ever evolving needs of customers wanting to transact business on-the-go, the alliance appears to be a sensible move by Hewlett Packard Enterprise. Also, a number of businesses use Dropbox as their de facto document storage service. Adding to the positives, the company recently took a step toward restructuring its struggling IT services business as it announced the spin-off of the Enterprise Services segment, following which the segment will merge with Computer Sciences Corporation (NYSE:CSC) . The transaction is expected to allow Hewlett Packard Enterprise to focus on faster-growing businesses and unlock value for shareholders.

Furthermore, Hewlett Packard Enterprise’s strategic divestments and initiatives to return value to shareholders in the form of dividend and share repurchases are positives.

However, macroeconomic challenges and tepid IT spending remain near-term concerns. Competition from International Business Machines (NYSE:IBM) and Oracle (NYSE:ORCL) further add to its woes.

Currently, Hewlett Packard Enterprise carries a Zacks Rank #3 (Hold).

(We have revised this article to correct a mistake. The previous version, published on Jun 8, should not be relied upon.)