I think it’s a good opportunity for them to take the strengths of both organizations and do more. I look at the relationship we have with them and I expect to be able to pick the great things that work at Compaq and the great things that work at HP and get more out of it. I think our customers and
the industry should expect the same thing as well.
Both were great partners at the XP launch, for example. I’m asking both teams, “”OK, let’s go. Let’s have two plus two equal five on this thing and get more out of it.””
Frank Clegg, president, Microsoft Canada Co.
I certainly will take a very positive approach to the whole exercise and be very supportive as I suspect most will be. There’s obviously no sense in fighting it. I think there’s been a lot made of the overlap areas and not enough positive mention made of the fairly significant differences in the two companies.
Both have been extremely good channel partners. We’re quite optimistic that they’ll be a much stronger company when they come out the other side of this thing. It’s probably going to take them 12 months to get there, though. It’ll be a lot of turmoil. There’s lots of superb people in both companies . . . who probably won’t like the new role they get, even if they get one. That will potentially be a short-term weakening of the company. But they’re strong and they’ll come back. One plus one will ultimately equal two-plus, but certainly not in the short term.
I’m certainly concerned about their candid comments about direct versus indirect (selling). We have to continue to work with the new HP company to show the value that comes out of a distribution logistics engine like Tech Data.
Rick Reid, president, Tech Data Canada
They will leave certain markets to IBM or white box (vendors) and then we will gain. One plus one does not equal two with mergers. It will equal one and a half. The other half goes to someone else.
Frank Luk, president, Supercom
If you look at the performance of the stocks, I guess that would be one indication of whether it’s a good move or not. Mergers and consolidation have been going on for a long time in our industry, (but) not all consolidations in the industry have been a result of mergers or acquisitions. For example Dell has become No. 1 in the industry not because of mergers or acquisitions but because we delivered more value to customers. In the case of these two companies, both of them have their struggles in terms of cost structure and that sort of thing to get their cost down. Perhaps combining them will help them do that faster, perhaps it won’t. That’s what we’ll have to see.
Michael Dell, chairman and CEO, Dell Computer Corp.
I think, from a merged entity perspective, it’ll allow them to provide their customers a lot more value-add. I really don’t see any negative perspective at all, because they’re complementary in terms of the customer sets they would be looking after. There’s certainly some cross-over, but it’s minimal, so I think it’s positive. I haven’t heard any negative feedback from any of our customers that use Compaq or HP. We have a good relationship with both of those companies and look forward to the long-standing relationship continuing and being enhanced through HP’s wider product offering.
Bob Pozzobon, vice-president and general manager, J.D. Edwards Canada Ltd.
Thank goodness it’s over and let’s get on with business. I think it’s a big question mark. I think there’s a great deal of anxiety. At a high level, I think people understand what Compaq/HP were trying to do. It’s when you execute on the ground — who are the people who will be running key pieces of the organization? For example, the sales side. Who’s facing the customer? Who’s going to be running the channel side? How are they going to merge all of the different product offerings? There’s just a long laundry list of questions that hopefully people can get answers to fairly quickly. The devil is in the details now.
Harry Zarek, president and CEO, Compugen
I do see (a continuation in the mergers trend). Certainly a number of our smaller partners that we have worked with who use our technology have been bought by American companies. You have to lament, I guess is the word, the loss of those headquarters and business leadership moving from Canada to the United States. I understand there will be job losses (as a result of the HP/Compaq) merger, so we don’t know who stays and who goes.
Is it better to have two strong partners or one even stronger partner? I don’t know the answer to that. What they have told us is there isn’t as much overlap in their product as you’d expect.
Rick Terry, director of channels, Oracle Corp. Canada Inc.
It’s inevitable. We’ve been talking about convergence and globalization for a decade and this is a perfect example of what happens when you go down that road. It’s inevitable that more major PC suppliers are going to merge. This is the beginning, this is not the end. I think it’s the end for the next couple of years, just because there’s been so much activity out there that the market needs time to adjust.
In the same way that we’ve been seeing manufacturing shake out, that’s what we’re going to see happening to the PC market. The margins are down to the point where there’s nothing there to be made. This is the shakeout that’s happening in the market. It’s not that it’s good or it’s bad, it’s inevitable.
Gaylen Duncan, president and CEO, Information Technology Association of Canada (ITAC)
Everything I see suggests they are doing a good job in pulling the two organizations together and capitalizing on their different strengths. I believe from what I have seen so far that they will be very clear and concise in their communications throughout the process. They will make changes and get to the ultimate organizational structure very fast. I am very pleased to see this transaction from a Synnex Canada perspective and I think we’ll work very productively with the new organization.
Mitchell Martin, president of sales and marketing, Synnex Canada Ltd.
I think any time two businesses see themselves as well-aligned or well-suited, they make an effort or an initiative to come together. I think increasingly we see businesses aligning for the pursuit of an opportunity. With the complexity of deals now, sometimes it makes a lot of sense just to partner up and go after something together. I see more of that than I’ve seen in the past, even for big firms. So it’s not unusual to see firms line up and do things together. It is kind of unusual to see a merger of this size. It’s two very large companies and Compaq has just gone through consuming Digital.
It’s probably a good thing, from a couple of different perspectives, to have those capabilities combine like that and have broader footprints as a company. If I was working for that company, I’d think it would be a good thing. As a competitor, I’d be a little nervous about it, for sure. It’s a bit scary in some respects, because it means some people are potentially going to be at risk from a job perspective, but also it means that hopefully once it all shakes out they’ll be stronger and more vibrant.
Vice-president, Canadian Information Processing Society (CIPS)
Director of business development, Deloitte & Touche
This is part of a trend of rationalization. What we ask is, when these sort of business arrangements are concluded that they be done quickly so there is not the uncertainty that hangs over the market. Obviously one of the difficulties with the merger was that it was very protracted. But now that they’ve actually consummated the business deal and everybody’s on side, that removes one element of uncertainty in the marketplace.
You’re left with, I must say, a gorilla, but a dominant player. A dominant player can then make decisions with respect to investment. I guess the key in Canada is how successful we can be in encouraging and motivating as much Canadian activity as possible — whether that’s R&D or other aspects of the business.
Combining the two companies . . . I don’t think it’s a negative indicator for the Canadian economy. You look at Ericsson, Pratt & Whitney, IBM — these are significant contributors to the Canadian economy.
John Reid, president, Canadian Advanced Technology Alliance (CATAAlliance)
— With files from Paolo Del Nibletto and Sandra Bolan