IBM, Dell Seen as Big Winners in HP Mega-Merger
As HP focuses on organization, competitors plan to grab customers.
Matt Hamblen and Marc L. Songini, Computerworld
Monday, September 10, 2001
Industry analysts seem to agree that Hewlett-Packard's planned acquisition of Compaq Computer is good for just about every big IT hardware and services company around--except HP and Compaq, that is.
Their reasoning goes like this: If the deal wins approval, HP/Compaq will drag itself through the quagmire of a months-long reorganization, laying off thousands and discontinuing one product line after another. During this chaos, the thinking goes, customers would lose their service and support connections and would flee to another vendor.
The choice alternatives, many analysts predict, are IBM, mainly for services, and Dell Computer, mainly for hardware, especially PCs and servers.
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Sun Microsystems, meanwhile, touts itself as able to attract the potentially estranged hardware and services customers with perfect timing, as it's slated to roll out a high-end server product line based on the UltraSPARC chip at the end of this month.
Problems Ahead?
One of the most negative reactions to the deal comes from Martin Reynolds, an analyst at Gartner.
"The product lines of both HP and Compaq cannot continue," Reynolds says. "What this means to IT managers is that you cannot count on long-term availability, giving IT managers an incentive to move to IBM or Dell, where you know there's a future."
Competitors such as IBM and Dell will "have a happy feeding ground," adds Frank Dzubeck, an analyst at Communications Network Architects.
The deal is really beneficial only to top executives at HP and Compaq, not to customers or employees of the two companies or even investors, says analyst Roger Kay at IDC.
"Mergers are a demotivation for the employees of the companies involved, which is bad for customers, including IT managers," Kay says. "IBM and Dell should make as much hay as they can out of this."
Product Plans
The products that remain from the combined company "might not be the best products" but will survive based on whether a product group is located in a new plant or a low-cost market or a country where labor laws restrict layoffs, adds analyst Rob Enderle at Giga Information Group.
IBM officials won't comment, but Sun and Dell officials crow.
"It's hard to imagine two weak players making anything more than two weak players," says Shahin Khan, vice president of marketing for computer systems at Sun.
Dell spokesperson Mike Maher calls the deal the "latest iteration of a market consolidation that's been going on a long time," adding that Dell's success has been in keeping its operating expenses and components inventory well below Compaq's or HP's.
The merger "leaves a good window [of opportunity] for us that we've already been climbing through," he says.
Story copyright 2001 Computerworld Inc. All rights reserved. |
