Dust settles on post-merger landscape

Resellers reflect on the business opportunities as the implications of the new HP filter through to the channel.

Slowly, piece by piece, the new Hewlett Packard (HP) jigsaw is coming together following its merger with former rival Compaq.

The new firm was officially unveiled earlier this month and it has chosen to stick with the HP name, keeping Compaq as a brand name for selected products only.

It has not been an easy ride for HP chief executive Carly Fiorina. Not only was her career riding on the success of the merger, as was that of her Compaq counterpart Michael Capellas, she has had to put up with endless backbiting and serious opposition from Walter Hewlett, son of HP's co-founder, William Hewlett.

Fiorina has also had to stand up in court and deny accusations of vote rigging following a leaked voicemail to chief financial officer Bob Wayman in which she indicated that HP would have to do "something extraordinary" to win over major shareholder Deutsche Asset Management.

This incident triggered yet another legal challenge over the legitimacy of the original shareholder vote. However, now that the merger has been given the all clear, Fiorina has survived and keeps the same title, with Capellas holding the new title of president.

Quite how the merger is going to affect ordinary HP/Compaq employees and channel partners still remains to be seen.

Channel commitment

If early indications are to be believed, HP seems committed to the channel, and various sources have hinted at it driving more enterprise-level business through its partners, although Fiorina is sending out confusing messages.

"The reality is not a question of more or less. It is what kind of business goes through what kind of channel," she said. "The reality is that channel partners, the best channel partners, are changing the mix of business they do with us and for us. And that will continue."

Capellas revealed that the company is looking to target the small to medium sized enterprise space more aggressively, and that the level of channel business will be more or less determined by demand.

"On balance it will be pretty much dictated by the customer. But we are going to provide, in addition to our direct capabilities, far more capabilities for our partners to be more effective. That means driving lower inventory," he stated.

As revealed in vnunet.com's sister publication Computer Reseller News last week, the firm has split the business into four core groups: Enterprise Systems, Services, Imaging and Printing and Personal Systems. Each of the groups will have its own channel manager in the UK.

HP has also released lengthy three-year product road maps. Some of these changes include HP becoming the master brand for all server products and reaffirming its commitment to the Intel Itanium processor family.

HP-UX and StorageWorks

In the Unix market, HP-UX will continue to be the long-term strategic Unix platform and, in the storage space, StorageWorks will become the name for enterprise products and storage solutions. HP's storage software will fall under the OpenView brand, and Enterprise Network Storage Architecture will be used to describe HP's storage architecture.

The new company will adopt the OpenView name for all appropriate management software and will integrate TeMIP into the OpenView product family.

HP's will be the strongest Unix-, Windows- and Linux-based server brands on the market, which will require middleware solutions to support all platforms, the firm revealed. It will also consolidate both HP and Compaq telecoms software into the Opencall product family.

Consumers will still be able to buy both HP and Compaq branded PCs and notebooks, but the HP brand will be dropped for business users.

All imaging and printing categories and product lines will remain the same, with the exception of HP and Compaq digital projectors, which will be combined into a single product line under the HP brand.

With more business likely to go through the channel, partners are rubbing their hands together in anticipation of what is to come.

An Ideal hand

Mark Walker, director at Ideal Enterprise Solutions, a division of distributor Ideal Hardware, suggested that the merger has "dealt Ideal a nice hand of cards".

Previously the two vendors were structured geographically around country managers who were "responsible for hitting their numbers based on a quota of products" which made them more challenging to deal with, he said.

"But now the profit and loss account will be controlled by each individual business unit, not geographically, so the combined firm will be easier to deal with on a pan-European basis," Walker added.

The main benefits to resellers, according to Walker, will be the fact that the 'jump' from selling PCs and Proliant servers to selling high-end products such as StorageWorks, will be a lot easier.

"Previously there were different contracts and accreditations, and some partners found it hard moving from a Windows/Intel space with open standards into a Unix environment with proprietary chips and operating systems," he explained. But the new structure "aims to unify both channels with a seamless migration path to standardise on Itanium IA-64".

Walker thought it would take until the autumn before unified terms and conditions emerge and the firm adopts an homogeneous approach.

"The more I look at the deal in product sets the more it seems pretty straightforward that the two companies were a complementary fit," he said.

Gary Fowle, commercial director at broadline distributor Computer 2000 (C2000), indicated that the merger came as no surprise.

"We are interested to see how HP will support the channel following the merger and we are hoping to play a major part in its new strategy," he said. "C2000 will work with the new HP to make sure we get the new offering out to the channel as quickly as possible."

Merged product families

Tony Price, managing director of e-reseller WStore, said: "There will be a reduction in the number of different products our salespeople deal with, which is good.

"With merged product families we can now offer our customers a total solution from a single vendor, rather than a best-of-both mix of HP and Compaq. Providing HP gives its partners regular updates as to what changes to expect, there is no cause for concern.

"The merger gives us the opportunity to offer customers a real Dell-beating solution. I would argue that it actually makes it even easier for the channel to win customers away from Dell with a single brand that will offer the broadest range of products available in the industry."

Helen Slinger, product marketing manager at Dabs.com, was also positive about the merger. "Dabs has enjoyed long-standing healthy relationships with both organisations in the past, something we anticipate will continue under the new regime, especially given HP's historical support of the indirect channel," she said.

Slinger added that the combined product offerings is also positive news. "Consolidation of the two businesses will result in a stronger, more competitive and complete product set which brings the merged company so much nearer to offering a true, single-vendor solution," she explained.

"This has got to be good news to end users in simplifying their product selection and support strategies."

Channel consistency

John Dixon, managing director of systems integrator and HP partner Computime, also praised HP's indirect strategy. "HP has always been consistent with the channel and told partners where it stands in terms of direct sales, which is why we chose to be an HP partner. Compaq has always chopped and changed," he said.

Dixon did not expect any major changes to business as a result of the merger, apart from more competitive pricing.

However, some other resellers were less enthusiastic about the merger. Kevin Drew, managing director at IBM partner Triangle, suggested that it was bad news for customers.

"I hope [that HP and Compaq] continue to wallow in their own self-made mire. You can't bring two huge companies like that together. It is too complicated and the one who will lose out is the customer. But personally, I've never been worried about it," he said.

SUMMARY

• Early indications suggest that the merged HP/Compaq wants to push more enterprise sales through its partners.
• The firm has released a three-year product road map.
• Distribution partners feel that the merger will make business easier on a pan-European basis.
• Resellers believe that the ability to offer a broad single-brand range of products will give Dell a run for its money.