Compaq exec insists merger with HP is on track

Peter Blackmore, a member of the HP/Compaq integration team, sees the light at the end of the tunnel, but he can’t necessarily tell you how to get there.

“Obviously we’re still in the pre-merger stage, and the rules are, you can plan as much as you like but you can’t execute,” says Blackmore, executive vice-president of sales and services for Compaq Computer Corp. Blackmore was in Toronto Tuesday to meet with Canadian customers.

What Blackmore will say is that HP/Compaq (or whatever the combined company will eventually be called) is fully on track and has near-unanimous approval from the boards of both companies.

Until the merger goes through, both companies are legally bound to operate as competitors, but the integration team is putting the pieces together. The list of considerations is a litany: “Their job is to prepare all aspects of planning — how you operate in the field, where the P&Ls are, the product roadmap (and) the go-to-market model,” says Blackmore, adding that the goal is to make sure this is all clear to customers and partners on Day 1 of the merger’s completion.

There are guarantees in place to protect customers in the interim, he said. PC products will complete their current lifecycles and “if you’re in the middle of a project rollout over the next 12 months you’re protected. After that, there will be a surviving product family.”

HP/Compaq will be strong on services, he added, bringing a combined total of 65,000 service professionals to market.

There has been criticism, however (notably from the family of co-founder William Hewlett), that a merger will dilute the respective companies’ market share. HP/Compaq, the family contends, would be unable to compete with the likes of Dell in the low end of the market and IBM in the high end.

Blackmore counters this by saying HP/Compaq will operate in four different divisions — printing, PC systems, services, enterprise systems — and attack each market segment accordingly. “Each group has a clear go-to-market strategy and a business model relative to the type of business it’s in. That way you can ensure you have a very effective organization depending on the product segments you’re addressing,” he says.

Regulatory stipulations prevent Blackmore from revealing specifics of the merger. Al Toews, sales manager for Regina, Sask., reseller MicroAge, says he has spoken to both Compaq and HP representatives in the field but isn’t sure they know any more than he does. They speculate about potential job layoffs as much as re-branded products, he says.

Toews believes “there are some advantages to having less product numbers to worry about” should the merger be completed, but he isn’t so sure it will be. “I don’t think the powers that be checked with enough people before they decided to start baking this cake, and I think there’s a few ingredients missing,” he says. “I think the powers at the top end made a big (mistake) by bringing this thing out to the public as quick as they did.”

IDC Canada Ltd. server and storage analyst Alan Freedman disagrees, since both sides have already committed time and money to the project and could be on the hook for stiff financial penalties if the merger fails.

He isn’t sure, however, how customers will receive the merger. “It could mean a reduced number of choices. Another way you could look at it is (that it offers) a simplified number of choices,” he says. But both Compaq and HP may have already alienated some of their server customers by phasing out their reduced instruction set computing (RISC) processors and moving towards Intel’s Itanium platform.

In the absence of concrete information, merger speculation abounds. “It’s playing out almost like a soap opera,” notes Freedman, “where every day you’re getting a different message.”

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Jim Love, Chief Content Officer, IT World Canada

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