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HP/Compaq: CTOs predict merger will happen

As Hewlett-Packard shareholders vote today on the proposed merger with Compaq, a straw poll of US chief technology officer and IT directors indicates the deal will go through, but with mixed results for users.

Of the 175 respondents, almost 75% believe HP shareholders will accept the proposed £15.4bn merger.

"Yes [the merger will be approved]. But it will have some serious negative consequences for the next two years. Long term it makes sense, if you can survive the short term," said Rajeev Bharadhwaj, chief technology officer of Ejasent, a California company.

Others weren't as optimistic. "I hope that the merger won't go through, but I fear that it will be approved in a very tight vote. I don't believe that the merger will make either company more competitive," said one CTO, who asked to remain nameless.

Some CTOs, however, responded that they believe the merger is a good idea.

"[The merger will go through], and it should. The shareholders against the merger have a status quo attitude about technology. I think the combined company will have the opportunity to compete with the likes of IBM and Microsoft, with the added risk of maybe becoming a total failure. But without risk, technology innovation does not happen," said Jon Williams, CTO of Grey Healthcare of New York.

Dan Woods, CTO of CapitalThinking, also of New York, echoed William's sentiments. "I believe the merger should and will go through. The combination of assets will provide a strong competitor to IBM, Microsoft, Sun, and Oracle. Strengthening HP's place will benefit customers," Woods responded.

As well as believing the merger would go through, Woods did not stop buying equipment from both vendors.

"I have not held off purchasing HP, Compaq, or any other related systems," Woods said, and he was not alone. Some 80% of those respondents, who had previously purchased from the vendors before the merger talks began, continued to do so. Michael Dunn, CTO of Encoda Systems said: "We haven't held off at all [on purchases]. Mergers are a fact of corporate life. The viability of the pre-merger products still need to be able to stand on their own prior to, during, and post-merger."

"[In the post merger] if we see shortcomings, we'd then look to their competition, who we already have relationships with anyway," he added.

Some CTOs, though, have already written off HP and Compaq completely. "We lived through the disintegration of DEC [Digital Equipment Corp.] services and expertise when it was acquired by Compaq. We expect even worse from this merger. Our past standard was Compaq for servers, and we run about 300 NT servers, but we are seriously looking at alternatives," responded a CTO, who declined to be named.

"Of course [I've stopped purchasing from both vendors]. It's a shame that two of the most popular systems are involved in a predicament, which has placed both companies in a situation of instability," said Duane Ebesu, CTO of HousingWorks, a New York non-profit organization that provides housing for people with AIDS and HIV.

Ebesu went on to add, "We're moving to Dell for our current needs, and if service is good, we will never go back to HP or Compaq."

Another CTO was even more matter of fact. "[The merger] is quite obviously one of the worst ideas I've ever heard," he said.

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