Users 'satisfied' with performance of new HP

Six months after Hewlett-Packard closed its Compaq Computer acquisition, are content with most portions of the reconstructed...

Six months after Hewlett-Packard closed its Compaq Computer acquisition, are content with most portions of the reconstructed company, but feel there is still work to be done before the merger can be called a success, according to a survey by market research company IDC.

"After one of the most contentious mergers in history, HP has made impressive progress," said IDC senior vice-president for communications and hardware research Crawford Del Prete.

Several different IDC analysts participated in a press conference on Wednesday to discuss the state of HP's various businesses, including servers, storage, PCs, handhelds and enterprise software.

A clear product road map and a well-organised sales force contributed to the company's strong performance in maintaining its market share after the acquisition, Del Prete said. Most companies after a large acquisition see a mass customer exodus, but for the most part, this was not the case with HP.

However, vice president of hardware channels research Janet Waxman said the company needed to clear up some problems among its channel partners.

Resellers of Intel-based PCs and servers felt threatened by HP's desire to become more of a direct sales organisation, Waxman said. These partners were also afraid that the new HP will take away more of the services the resellers provide.

HP could have the best of both worlds with products sold through both direct sales and channel partners, Waxman said. But, she warned, the company needed to communicate this to its partners, especially those that sell Intel-based products, and might be inclined to switch ranks to a vendor such as IBM if they don't hear what they like from HP.

The storage business received high marks from HP's customers, said John McArthur, group vice-president of worldwide storage research. Less than 10% of those polled thought the acquisition has been bad for the storage groups at either company, he said. Customers from storage vendor EMC are waiting for new products to emerge from that company next year, and have made HP the market share leader by revenue in storage hardware in the interim, he said.

PC, handheld, and server customers are satisfied with the progress of the companies since the acquisition deal closed in May. The company needed to continue developing innovative mobile products, such as its Tablet PC, and offer better financing and pricing deals to its larger customers, said Randy Giusto, vice- president of wireless and mobile devices and PC technology.

The combined company briefly took the lead in worldwide PC shipments over Dell in the second quarter, but has since lost a little ground and is in second place as of the third quarter, according to research from both IDC and Gartner.

The challenge for HP's server group will be to consolidate its server lineup from six server lines to just two, said Jean Bozman, vice-president of global enterprise server solutions.

HP has also made a commitment to servers based on the Itanium processor it co-developed with Intel, but would continue selling RISC (reduced instruction set computing) servers as it supports its large install base, she said.

The services groups, seen as key to the deal six months ago, have performed better than expected, said Mike Melenovsky, senior vice-president of services research. IDC had thought there would be some overlap in the customer lists of Compaq and HP, but they were mostly made up of different companies. Because HP was not forced to compete against old Compaq accounts for the same business, the services organisation was able to avoid as many layoffs as were expected, he said.

HP is positioned well to compete among the larger players in IT services, including IBM, but needs to develop a closer partnership with some of the well-known management consulting firms, such as Accenture or BearingPoint (formerly KPMG), to develop its reputation as an infrastructure provider in more circles, Melenovsky said.

HP also faced challenges in moving from a leading-edge product-driven company to a services organisation with clients who do not always want the latest and greatest stuff, he added.

Del Prete said HP was off to a strong start merging the two organisations, partly because of the extensive planning undertaken before the deal closed.

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