HP/COMPAQ: Vendors refine product focus, say best will win
By Ashlee Vance
March 13, 2002 3:50 pm PT
THE PROSPECT OF a combined Hewlett-Packard and Compaq may be murky, but the two companies are already looking to the future for ways they can combine their product lines and research and development operations.
HP and Compaq will center their efforts on those products that show the best current market penetration and technology, instead of supporting two sets of complementary gear from both vendors, executives from both companies said during a Wednesday conference call. While both companies refused to specify which products have been picked from various hardware and software lines, the companies have drawn up a list of the products that will survive the merger should it be approved by shareholders next week.
"Rather than try to blend the two technologies (of similar and overlapping products), we have chosen the one that is technically superior and the one with the more advanced market position," said Shane Robison, chief technology officer at Compaq on the conference call.
Dick Lampman, vice president of research and director of HP Labs, would head the combined company's research and development operations. The deal between HP and Compaq would open the doors for close to $4 billion total investment in post-merger research and development to bolster hardware and software lines. HP currently runs seven research labs, which would be boosted by another four research centers from Compaq.
"As we have looked at the portfolios, they are very complementary, and we are looking forward to the blending of the two labs (units)," Robison said.
Both companies have faced criticism that their companies sell very similar products and, in particular, that combining their PC lines would create a large but unprofitable business. Lampman and Robison shirked this issue, choosing to focus instead on server hardware.
HP and Compaq sell Unix servers, but Palo Alto, California-based HP was said to have solid performance in this market, possibly making its products the choice moving forward, the executives said. Compaq's higher end fault tolerant systems used by many financial institutions were mentioned on the call as another plus for the merged company, hinting that they would likely make the cut.
The executives on the call also touted Houston-based Compaq's strong working relationship with Microsoft on lower end servers, and said it would be pursued, if the deal closes. This could provide a boon for HP in this space, as the company has struggled to compete against Compaq, Dell, IBM and others on the market for smaller Intel-based servers.
Both companies intended to share their technology for servers based on Intel's 64-bit Itanium chips and running the Linux operating system, the executives said.
In addition, the vendors will "cherry pick" some hardware products that show promise for continued development even if the product is part of a larger line that would be cancelled.
As with any recent discussions about the merger, HP executives had to answer questions relating to objections to the deal made by lead dissenter Walter Hewlett, an HP board member and son of one of HP's founders.
Hewlett said Tuesday that he expected most of HP's senior management to remain in place, if the deal fell through.
HP's Lampman, however, was quick to question Hewlett's assessment of the situation.
"I think it is a little presumptive to assume that he understands what everybody is thinking right now," Lampman said. "Everybody will have to evaluate their situation, once this is decided."
Ashlee Vance is a San Francisco-based reporter at IDG News Service, an InfoWorld affiliate. |
