HP/Compaq saga did not damage business

8 May 2002 Merged computer giants Hewlett-Packard (HP) and Compaq Computer finally launched the new company yesterday, outlining product plans and insisting that customers kept buying despite months of uncertainty over the $18.7 billion (€20.5bn) deal.

The merged company will drop the Compaq name, although some of Compaq’s hardware brand names will live on under HP.

HP said it booked more than $5 billion (€5.5bn) in orders to major corporations in the last three months. “We think customers understand this merger very well,” said CEO Carly Fiorina. Michael Capellas, former Compaq CEO and now the president of new HP, added: “That is a lot in a market where IT enterprise spending has been depressed.”

HP rolled out merged product plans yesterday, which surprised analysts by including a line of consumer PCs branded as both HP and Compaq. Compaq-branded computers will be aimed at the home-office sector while HP computers will be directed at home-entertainment users.

HP is dropping its Jornada handheld computer in favour of Compaq’s iPaq model. HP’s Intel-based servers will disappear in favour of Compaq’s. Elements of Compaq’s Unix operating systems will also be folded into HP’s HP-UX.

Executives said they would cut most of the 15,000 jobs that are set to go within the next nine months. The first notices will go out next week. HP now hopes to reduce costs by more than the planned $2.5 billion (€2.7bn).

Notwithstanding the chequered history of IT mega-mergers, Fiorina yesterday repeated her view that it is necessary for technology suppliers to consolidate in order to survive long term. “The IT industry will never return to the heady days of 20% and 30% and 40% growth,” she said. “It is an industry that will consolidate and HP is leading the consolidation.”

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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