Now Merger Must Prove Good for Customers
Now the hard work begins for Carly Fiorina and the HP-Compaq integration team.Now the hard work begins for Carly Fiorina and the HP-Compaq integration team. If the thin margin of victory that HP proclaimed holds up through the counting process, the speed with which the two decidedly different cultures can be meshed will dictate the success or failure of the merged entity. Wooing shareholders is easy work compared with wooing customers that have lots of vendor alternatives. If the first half of the HP-Compaq merger game focused mostly on why the deal was good for investors, the second half of the game will hinge on convincing customers that the deal is good for them also. As Paula Musich states in her article on the future of HP-Compaqs service operation in this weeks issue ("Integrating Services to Be Key"), the best way to integrate the two companies may be to separate the services business. IBMs Global Services organization has wisely been careful to avoid being viewed as a company that in the end recommends only IBM products. The combined HP-Compaq service operation represents a new $15 billion player in a business dominated by IGS and Electronic Data Systems. The service business is not one that allows many miscues or false starts.
While much of the merger focus this week was on HP-Compaq activity, the buying activity in the software industry is of equal interest. Companies such as Titan Ventures and Divine have been busy scooping up lots of software companies at bargain rates. For the latest on the great software roll-up, see Dennis Callaghans article "Firms Acquired as Value Falls".