HP merger to create confusion

Hewlett-Packard's planned $25bn (£17.2bn) acquisition of Compaq, the largest-ever IT merger, will only create confusion for...

Hewlett-Packard's planned $25bn (£17.2bn) acquisition of Compaq, the largest-ever IT merger, will only create confusion for business customers, analysts warned.

HP announced this week that it has agreed to buy Compaq, in a bid to cut costs by up to $2.5bn a year. The companies promised to offer businesses and consumers "the industry's most complete set of IT products and services". Compaq said the two firms expect to cut 1,500 jobs worldwide.

However, analysts warned that the move will result in confusion both on the services and products side, as customers and account managers will be unsure of the direction the new company will take.

"Initially, this is likely to create more confusion for both users and sales people," said Pascal Matzke, an analyst at Giga Information Group. "This is likely to last for at least 12 to 18 months until the new company is streamlined and has a common look and feel.

"If a customer is in a room with an HP or Compaq sales person they are going to question this person's motivation - the new company needs to make clear what its position is very quickly," added Matzke.

Customers also expressed concern. Dave Berwick, IT operations manager at Mitsubishi Motors UK, said, "We are customers of both HP and Compaq and I see the major concern as uncertainty over support services. Obviously there will be some streamlining so I just have to wait and see if it causes us any problems. It will be exciting if it improves efficiency and brings down cost. If we don't like the way they come together, I'm sure we will look elsewhere."

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