ANALYST: COMBINED HP-COMPAQ SHOULD ALLY WITH MICROSOFT 03.29.02
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Robyn Weisman reported: With general agreement that the merger between
Hewlett-Packard and Compaq Computer may well have been approved in the recent
proxy vote, analysts are now questioning the market position of the combined
entity.
In particular, they are asking how -- or whether -- the new company can
reverse the declining revenue streams of some of its brands.
Neal Goldman, director of Internet competitive strategies at research firm the
Yankee Group, told NewsFactor that while HP, in particular, offers good and
often innovative products, neither company has proven its ability to lead in a
market.
With respect to specific sectors, Goldman mentioned Dell in the PC business,
Sun Microsystems and IBM in the hardware business, and IBM in the IT services
arena as leaders.
None of HP's or Compaq's offerings is as strong as products made by their
direct competitors, Goldman said, adding, "A bunch of weak pieces do not a
strong foundation make."
Fighting the Wrong Battle
Focusing on the server space, Goldman contended that HP-Compaq is fighting a
hardware war while competitors IBM and Sun are fighting -- and winning -- a
software war.
"In the server market," Goldman said, "both Sun and IBM know that software
drives hardware, and that the piece of software they create for developers and
for the infrastructure is key" to selling their hardware.
He called the marketing and selling of a given software platform evangelical
in nature.
"You could call it dogmatic in a way," he noted.
Battling Microsoft
According to Goldman, the marketing methodologies of both Sun and IBM are
framed as an old-fashioned battle between good and evil.
Sun frames the battle between its Solaris enterprise software and Microsoft's
.NET in terms of "Java the Good" versus the Evil Empire. IBM takes the battle
one step further with Linux, pointing out that while Solaris is proprietary,
open standards darling Linux is the only true freedom fighter.
In contrast, both HP and Compaq serve up hardware that will run on any
Intel-based enterprise platform. This tactic, while perhaps accommodating,
does not inspire people to switch to their brand of hardware.
The Need To Evangelize
Goldman said that neither HP nor Compaq is an evangelizing company, though he
added that the combined entity must figure out how to do so to remain in the
game.
"They have done nothing to ensure that top-line revenue would continue to
grow, and there's no reason to assume that two companies with declining
revenue streams would stream up" due to sheer size, Goldman said.
What HP-Compaq needs to do is team up with a huge evangelist to help it sell
its servers, Goldman explained. And that company can only be the biggest
evangelist of all: Microsoft.
Joining the Dark Force
Microsoft currently lacks a firm alliance with any hardware vendor to sell its
.NET products and services. Both Goldman and his Yankee Group colleague Rob
Perry argued in a research note released early this year that "HP and Compaq
[need to] merge and tighten their relationship with Microsoft, dumping J2EE
[Java 2 Enterprise Edition Platform] middleware products.
"Compaq convinces HP that Bluestone is a black hole, and that to win in the
market it must pick a side. The combined company uses Compaq's strong
Microsoft relationship to become the primary server platform for .NET and
Biztalk," the analysts wrote.
While Goldman said such a scenario may be unlikely, a merged HP-Compaq joining
forces with Microsoft would push the server and services markets into three
distinct camps: Sun-Java, IBM-Linux, and the high-tech Darth Vader,
HP-Compaq-.NET.
According to Goldman, "HP-Compaq can offer Microsoft that honking big hardware
it needs for [both companies] to win." |
