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Analysis: Compaq lives on

Desktops, notebooks, mobiles and servers keep the brand

PC Advisor's editor has been in the business long enough to know what the HP/Compaq deal means

Compaq has been subsumed by HP, but the Compaq name lives on among the new company's 10,000 products, mostly on desktop and notebook PCs and handheld devices.

Desktop and notebook PCs sold to businesses will carry on the Compaq name, but HP's OmniBooks and Vectras will die.

Consumers who pine for a Compaq Presario, HP Pavilion or HP e-PC won't be disappointed, because all are being retained.

In mobiles the Compaq iPaq becomes the HP iPaq, but the HP Jornada goes for scrap.

The new HP will put more welly behind printing and digital imaging — scanners and digital cameras — keep the HP brand and make the products more mobile.

In the short term, prices of HP and Compaq products are likely to stay stable, despite the boast from HP executives that they can chop 10-15 percent off the cost of components because they will be buying in even bigger bulk. Over the long term, prices will fall, say industry analysts, but computer prices fall anyway, so no news there.

Expect the number of products to thin drastically over the next year or so, say analysts; not even the biggest IT company in the world can maintain 10,000 product lines.

The two operations will take nine months to integrate, reckon company executives, which essentially means nine months to get rid of the 15,000 people whose jobs will disappear from the current 100,000 headcount. Some 9,000 people are expected to leave of their own accord.

Both companies' chief executives have stayed — for now — HP's Carly Fiorina remains chief executive, while Compaq's Michael Capellas becomes president and chief operating officer.

Capellas is a mate of Microsoft's chief executive, Steve Ballmer, and for many years Compaq has enjoyed the fruits of that alliance in terms of Windows licensing and product development. This is expected to continue.

The biggest high-profile casualty is Walter Hewlett who opposed the merger and wasn't re-elected to the HP board in April.

More dramatic changes have occurred among the big stuff that both companies have sold in fierce competition to lucrative corporate accounts.

Before they even talked of merging, HP and Compaq decided they would adopt Intel's forthcoming Itanium 64bit processor for network servers and high-end desktop PCs. So Compaq's Proliant network servers will live with Itanium inside and run Linux or Windows operating systems, but HP's NetServers will die.

HP will adopt the high-reliability non-stop Himilaya servers that Compaq inherited when it bought Tandem.

HP/UX — the HP version of Unix — will plunder all the best bits from Compaq's Tru64 Unix and sweep the rest into the software pedal bin.

The Alpha processor (used in mainframe-class servers) which Compaq acquired when it absorbed Digital will get one more iteration before it hits the buffers. Alpha hardware and OpenVMS — a derivative of Digital's (née DEC's) proprietary operating system widely used by Federal and State government in the US — will continue to be supported by HP because the company wants to keep such customers and their very profitable service revenues.


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