March 15, 2002 03:10
Customers Weigh In on HP Deal
By Therese Poletti, San Jose Mercury News, Calif.
Mar. 15--Like the shareholders of Hewlett-Packard and Compaq Computer, customers seem to have mixed feelings about the two companies' proposed $21 billion merger.
Their biggest worry: Most technology mergers are turbulent, leaving customers to wrestle with abandoned product lines and erratic customer service.
"Every time there is a mega-merger in the computer industry, it's talked up like it's going to be the second coming, and it's a bunch of baloney," said Maryfran Johnson, editor in chief of Computerworld. "Users know this. They are not going to tear out and throw away their HP and Compaq systems, but they are going to worry about it the next time they are going to buy something."
Both HP and dissident board member Walter Hewlett, who is opposing the merger, have touted various customer surveys on the deal that support their respective positions. This week alone, at least three customer surveys were released, and other dueling surveys have surfaced in previous weeks.
Palo Alto-based HP, for example, cites a recent survey done by Deloitte Consulting, which surveyed 2,354 information technology managers and concluded that 57 percent had a positive view of the merger, 13 percent had a negative view and 27 percent expected no impact from the deal.
Meanwhile, Johnson said that the percentage of IT managers and chief information officers who oppose the deal has been rising since Computerworld took its first surveys of the deal when it was first announced in September.
In it most recent survey of 129 information technology managers, the weekly trade publication found that 49 percent believed the deal would be good for their companies, and 47 percent said it wouldn't be good and 33 percent did not know.
Also this week, Merrill Lynch analyst Steve Milunovich released a survey of 100 chief information officers, 75 in the United States and 25 in Europe.
"More HP and Compaq users are against than for the merger," wrote Milunovich, who nevertheless supports the deal. "Both vendors look to suffer spending declines this year, with Compaq worse off than HP."
"We talk to people all the time, and for every one that likes it, there is one that doesn't like the deal," said Don McDowell, a vice president at Forsythe Solutions, a company in Skokie, Ill., that resells products from IBM, HP, Sun Microsystems and Compaq.
Forsythe said he remains committed to all of his partners, but he recently devoted more resources to IBM through a new partnership program recently started by the computer giant.
So far, both HP and Compaq have said that they have not had huge customer defections because of the deal, although competitors such as IBM and Dell Computer claim to be stealing business from the distracted merger partners.
IBM said that as a result of its new partner program for resellers, code-named "Bluer Pastures," it has gained 56 new business partners, 14 from HP, 8 from Compaq and 18 from Sun.
If the merger does go through, customers say it's important for the companies to quickly unveil their product road maps and merge their sales forces.
But Craig Conway, the chief executive of PeopleSoft, which buys products from both HP and Compaq, said he isn't worried about how the integration will affect his company.
"Companies don't fail or succeed because they could not integrate," said Conway, who is promoting the deal. "They fail because their joint solution is not attractive in the marketplace, and that is not the case here."
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