Steady as She Goes

HP-Compaq merger sailing smoothly for customers.

Matt Merrick was worried.

In the fall of 2001, Merrick, executive vice president of IT at The Merrick Printing Company Inc., was deep into the process of standardizing his data center on NetServer systems from Hewlett-Packard Co.

HP, of Palo Alto, Calif., then announced its intent to buy Compaq Computer Corp. for about $19 billion, and, suddenly, Merrick was like many HP and Compaq customers, unsure whether the investment was for naught and whether there was going to be support for it. "At the time it happened, we were adding on multiple servers, at that point with [HP]," said Merrick, in Louisville, Ky. "I was just waiting to sit back with an iced tea and smile—then they announced this."

But after Merrick aired his concerns in an eWEEK article and in e-mail to the company, HP executives called Merrick Printing and offered to send sales representatives to answer his questions. Now Merrick, who stuck with HP, is breathing easier.

"The service continues to be excellent on the NetServers," said Merrick, whose company employs about 110. "Their customer service has been good. They didnt act as though we were too small to worry about. They came through."

Most users interviewed by eWEEK said the first year of the industrys largest merger has gone smoothly for them, with little interruption of service and support. HP officials said the merger has done what they wanted it to do: move HP up the industry food chain, compete with IBM and cut expenses.

At least one industry observer said that as HP continues down the road, its weakness in the middleware area—relying on partners rather than its own technology—could hinder it in head-to-head competitions with IBM.

Ron Acker, director of the data center at Dallas-based Atmos Energy Corp., which runs HP-UX on Compaq Intel-Corp.-based servers, has seen little change since the merger was completed, and, in some cases, hes still dealing with two vendors.

"The main thing weve seen on the maintenance side is that we have one person handling the contracts from both sides [HP and Compaq]," said Acker. "They havent been able to merge the contracts, but they are giving us some discounts based on the two."

Carly Florina

HP officials said the merger has been a boon for the company. After a grueling proxy battle with heir Walter Hewlett that was eventually settled in a Delaware courtroom, HP moved aggressively to put the new company in place, rolling out product road maps and cutting expenses as the two became one. "This was a bold move," said Jeffrey Clarke, former Compaq chief financial officer and now HP executive vice president for supply chain and customer operations. "The industry truly needed consolidation, and [HP Chairman and CEO] Carly [Fiorina] (pictured) called it."

The result has been a company that is No. 1 in many markets, including Unix servers and storage. It is in a two-horse race with Dell Computer Corp. for the top spot in the PC arena and is No. 3 in services. HP officials predicted savings of $2.5 billion by the end of next year, but officials said HP has already saved $3.1 billion.

The merger has given the company a better set of products and enabled HP to bid on projects that neither it nor Compaq could have before. The companys recent services win with The Procter & Gamble Co. is a good example, Clarke said. "That was a bid that neither Compaq nor HP chose to bid on before the merger," Clarke said. "It was out of our reach."

For Jeff Reed, it was important getting to know the new company team that was put in place after the merger. Reed is chief technology and marketing officer at Logical Networks Inc., in Bellevue, Wash., which is HPs largest Unix and high-end storage reseller in the United States and an OpenView customer. "The biggest change to customers is the account teams," Reed said. "It was inevitable there would be a sales force reduction and account teams would be switched around. Thats a painful process, but, all in all, HP paid particular attention to that. Thats behind them now. That was the No. 1 big change."

Additional reporting by Paula Musich