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Technology Stocks : Hewlett-Packard (HPQ) -- Ignore unavailable to you. Want to Upgrade?

To: Elroy who wrote (154)	5/8/2002 3:46:26 AM
From: BelowTheCrowd	Read Replies (1) \| Respond to of 4345

There's another thing that neither HP nor anybody in this thread is talking about, and that's the way corporations buy PCs. Usually there is an "approved supplier list" from which you can choose. While it is not completely unheard of for somebody to buy something elsewhere, that's usually a very special occurance. Typically, you won't even solicity bids from anybody off that list. For efficiency purposes, that list rarely has more than three suppliers on it. And most companies try to keep the lists full and current. If a supplier disappears, they will qualify a new one to add to the list. What is going on right now is that the HP Vectra and Netserver lines are disappearing. The Compaq products will continue to exist, although under a new corporate name. I expect that something similar will happen in notebooks too. When that happens, lots of IT managers will suddenly find themselves with one less "approved" supplier and will try to fill the spot. They will not necessarily fill it with the new "Hewpaq" product, and in some cases (where Compaq was already an approved supplier) they will be forced to fill the spot with somebody else's product. In short, it means that IT managers will be looking for other suppliers and you can bet that every IBM and Dell salesperson has already made a list of all the places that is taking place. This is one of the reasons I've tended to think that 1+1 = 1.5 in this case. Eliminating product lines makes sense for the new company, but it also means that some sales will inevitably be lost, as the disappearance of an existing product line will force IT managers to seek bids elsewhere. No IT manager in his right mind will commit to a major purchase without getting 2-3 bids. With HWP and CPQ now combined into HPQ, that means there will inevitably be more competing bids. From my perspective as the purchaser, I cannot see this situation failing to hurt the combined company. Capellas' "ranking" of the combined company is based on what two seperate, competing companies with seperate competing salesforces were able to achieve in the past. I think that in this case there will be inevitable losses due to the nature of the purchasing system. And before anybody starts talking about how "quality" and "corporate reputation" and other stuff is going to sell the boxes regardless, let me assure you that in PCs today (and I include everything up through mid-range servers) the ONLY criteria anybody looks at is price. mg