We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
 
74,944 News Articles

News feature: Merger most torrid

HP Compaq deal has many obstacles, and benefits

Most people shouldn't expect any near-term technology or price and performance gains from HP's planned purchase of Compaq, announced last week.

The benefits are going to be far more evolutionary in nature and will depend entirely on HP's ability to cherry-pick and integrate Compaq's rich but overlapping technology portfolio.

"Certainly, there are some very interesting possibilities resulting from the merger," said Joseph Pollizzi, president of Encompass, a Chicago-based Compaq user group.

"The part that really scares me is when you look at the huge boatload of systems" that a merged HP will have to carry, he said. "We need to know what is going to win and what's going to lose."

In the aftermath of the announcement, users and analysts agreed that, in the short term, a merged HP is unlikely to look very different from an independent one, except on the services-delivery front.

"It's not like the two companies were yards and yards apart" in terms of their technologies or customer bases, said Laurie McCabe, an analyst at Summit Strategies in Boston.

Servers and Unix

At the very highest end, Compaq's NonStop Himalaya platform will give HP a well-proven and profitable fault-tolerant technology to pitch at enterprises, said Jonathan Eunice, an analyst at Illuminata. But those businesses will likely comprise a very narrow segment of the high-end market. To truly take advantage of its technology, HP will need to migrate bits and pieces of it downstream to its Unix and Windows servers, he said.

On the server front, few people expect a merged HP to support both its own HP-UX and Compaq's Tru64 Unix for long. Instead, look for a new generation of HP-UX that integrates elements of Tru64 Unix, most notably its advanced clustering capabilities, said Rich Partridge, an analyst at New York's DH Brown Associates.

Such a merged operating environment should be a lot more scalable and reliable than today's HP-UX, and support more applications.

"I expect that their Unix offerings will end up being much stronger, which would be nice; I'm happy to stay away from the proprietary Sun world and the sketchy support of the Linux world," said Sean Nolan, chief information officer at online retailer Drugstore.com.

On the other hand, a combined HP and Compaq should have a more immediate and significant impact on the Intel server front, said Edward Witkow, president of Interex, a California HP user group and director of IT at metals firm Metaldyne.

Compaq has already announced its intention to phase out its AlphaServers and standardize its enterprise architectures based on Intel's emerging 64 bit Itanium processor family. And HP, which is one of the co-developers of Itanium, is well along in its own plans to move everything over to Intel's platforms.

Storage, desktops and other front desk units

Because of overlap, only one company's notebook, desktop and PC server line-up will survive the merger, Witkow said.

According to Partridge, Compaq's core strength in the commodity, mass-volume hardware business, combined with HP's sizable presence in the Intel market, should let the merged entity compete more effectively against rivals such as Dell Computer Corp.

"They should be able to offer some real innovation here that goes beyond the repackaging of a commodity bag of parts," he said.

HP/Compaq will also be able to offer better storage options than either company can offer on its own.

"The joint NAS (network-attached storage), SAN (storage-area network), communications and storage-management offering will rival that of EMC and IBM for completeness of solution," according to a report on the merger published by The Yankee Group, a research firm in Boston.

Integration — something both firms know

But for all this to happen, HP first needs to successfully integrate its behemoth acquisition, said Pollizzi, who is also deputy head of the Science and Engineering Systems Division at the Space Telescope Science Institute in Baltimore.

"The only real concern I have is how smooth a transition can they make this," agreed Witkow.

When Compaq acquired Digital Equipment Corp in 1997 and Tandem before that, the company was in a similar position to take advantage of a range of enterprise technologies. While Compaq continued to support its acquired products, the company did little to commercialise core technologies, such as Tandem's NonStop Kernel, that would have helped differentiate it in the server market, McCabe said.

HP should do a better job than Compaq in absorbing and exploiting the technologies that will be at its disposal, said Terry Shannon, editor of the "Shannon Knows Compaq" newsletter.

HP's core strength lies in its willingness to listen to users' demands and in crafting its products to suit their needs, Eunice said. It's an approach that may have cost the company its technology lead in almost every segment it competes in. But it has won the company a fiercely loyal user base, Eunice added.

The merger's success will also depend on how well HP takes advantage of its larger service-delivery capabilities, which will swell to 65,000 service professionals from HP's current 27,000, McCabe said.


IDG UK Sites

Netflix to introduce price increase: New subcribers to start with

IDG UK Sites

How to join Apple's new OS X Beta Seed Program: Run pre-release versions of OS X on your Mac

IDG UK Sites

Twitter - not news

IDG UK Sites

See Moo Studios' new animated advert for Blue Moon beer