Clearly influenced by the feverish growth of cloud computing, Hewlett-Packard and Microsoft this week announced a $250 million deal (over three years) to develop both hardware and software focused on management and virtualization solutions for data centers, pre-packaged solutions for data warehousing technology and the Windows Azure platform.

In a conference call with reporters, Microsoft CEO Steve Ballmer said, “The cloud is the driving force behind this deal.”

The relationship will work this way: software maker Microsoft will use hardware technology developed by HP in data centers run on Microsoft’s Windows Azure cloud. And for its part, HP will develop data centers that will be sold and pre-loaded with the Azure infrastructure.

In a BusinessWeek
article, I read that by 2011 companies are projected to spend $95 billion on cloud computing, or about 60% of the deal’s total, according to Merrill Lynch estimates.

HP says its “smart bundles” of products will help companies lower IT-related energy consumption, and they’ll be designed so they can be managed remotely – all positive aspects of cloud computing.

I’m struck by this deal’s financial price tag and the heat generated – in this very cold winter – by the competition in the cloud industry. (Remember Oracle’s announcement to buy Sun Microsystems, a move designed to bolster Oracle’s cloud offensive? And then there was the recent Cisco partnership with storage vendor EMC and software vendor VMware that’s supposed to produce packages of servers, networking equipment, storage, and virtualization software.)

Another thing I’m impressed by: in a huge nod to concerns that cloud customers have about SLAs, the two companies said they’ll put 11,000 service reps to work testing, loading, and providing services for products sold by the partnership.