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EDS Signs With Opsware, Again

Global IT services powerhouse EDS extended it contract with Opsware for data center automation software and services, the company said Tuesday.

The deal may be worth up to $145 million over the next five years. Opsware currently has a 3-year agreement worth $52 million that concludes in August of 2005. Under the terms of the deal, EDS signed for an additional $50 million with $95 million in incremental renewable options that will extend the commitment to Opsware until at least March 2008 and with renewals as far as 2013.

EDS originally engaged Internet wunderkind Marc Andreessen's Opsware back in 2002 as part of a larger deal when the firm was called Loudcloud. At that point Opsware (then Loudcloud) sold EDS its' Loudcloud Managed Hosting business. The managed hosting business is the one that then signed a deal for what was then called Loudcloud Opsware Automation Software. As part of the announcement made at the time, Loudcloud also changed its corporate name to Opsware. It was reported at the time that EDS paid $63.5 million for the Loudcloud business.

Since that time, the two companies have enjoyed several joint projects including the launch of a utility computing language -- Data Center Markup Language (DCML) -- to reduce the complexity of data center environments, where several layers of computing exist.

The managed infrastructure that EDS maintains now includes 15 data centers and 140 client owned/regional data centers consisting of more than 50,000 servers. Opsware said it intends to help facilitate the efficient automation of service delivery and application management within the EDS managed Web-hosting infrastructure.

"The fact that EDS has renewed its commitment to Opsware demonstrates the importance of IT automation and the value they've already realized with the Opsware software," said Ben Horowitz, president and CEO of Opsware Inc in a statement. "Opsware is enabling EDS to provide superior service and respond more rapidly to their customers needs. With this agreement, EDS' deployment of Opsware continues to be the largest commercial deployment of IT automation software."

Opsware did not reveal what impact the agreement will have on earnings, though it's expected to be included in the company's Q2 report will be issued Wednesday after the market close.

EDS shares fell 33 cents to $18.07 in midday trading on the New York Stock Exchange, while Opsware shares rose 9 cents to $5.72 on the NASDAQ.