HP-Compaq: Time for Leadership

By any reasonable measure, the battle for the future of Hewlett-Packard and Compaq is over. Now the real work begins.

The plans, although heretofore undisclosed, should be ready.

HP CEO Carly Fiorina and hundreds of staffers from both companies operated in a "war room" studying the integration puzzle for the past six months. Now she and Michael Capellas must see that some 148,000 employees, who generate about $78 billion in revenue, are integrated quickly, seamlessly and as painlessly as possible into one company.

Its a mind-boggling task. Nothing like it has ever been successfully attempted in the IT industry. Although we were among those who did not see the sense to the merger, now that its all but a certainty, we recommend that HP take rapid and decisive action to meet the needs of customers.

Theres plenty of overlap between the two companies product lines, and the calls as to which will stay and which will go must be made immediately. Selling Jornadas side by side with iPaqs just doesnt make any sense; development and marketing resources must be focused on the products with the greatest market share. Reasonable migration plans for users of the discontinued lines must be laid out and clearly explained.

Without a thriving services and systems integration business, the new company will never play on the same turf as archrival IBM. Thus, considerable resources must be applied to blending the HP and Compaq (formerly the Digital Equipment) services units. But here, growth is whats important. HP must find a way to acquire new customers. This will mean hiring the best people and developing new areas of expertise.

The final piece of the puzzle can be summed up in that mantra repeated endlessly by Fiorina over the past six months: The deal is about the customer. Delivering the goods to—and engendering the confidence of—IT buyers will be the most important challenge, because ultimately it is they who will vote on this megamerger—with the budgets of corporate IT.