Channel shock over HP/Compaq deal

Resellers ready to 'wait and see' following take-over announcement.

Resellers face an anxious number of months as they wait to see whether Hewlett Packard's (HP's) proposed take-over of rival Compaq can go ahead.

Last week's surprise announcement of the companies' intention to form an $87bn (£59.7bn) powerhouse caught channel players on the hop. Account managers at one UK reseller spent last Tuesday trying to contact their counterparts at HP and Compaq, only to be told they had been given no information about the deal either.

The channel will have to wait until the $25bn all-share deal receives approval from shareholders, and is passed by the US regulatory authorities and the European Commission, which could take until the middle of next year. Until then, both firms have said they will continue to compete against each other.

While both Carly Fiorina, chairman of HP, and Michael Capellas, chairman of Compaq, were reluctant to be drawn on their plans for the channel last week, both said they remained committed to it. "The work both companies have done to drive velocity through our channel partners is just remarkable," said Capellas.

Reaction from resellers to the announcement has mainly been positive but cautious, with most following a 'wait and see' policy.

"This could be the boost the industry has been waiting for," said Julian Klein, UK managing director of distributor Computer 2000. "Resellers have to act as though it is business as usual. It is all they can do until they know differently."

Peter Dickson, managing director of HP reseller Tiedata, said: "It will open up doors and additional products where maybe HP hasn't been so good in the past. The support will be OK short term, longer term there may be teething problems."

However, Steve Brazier, chief executive of analyst firm Canalys.com, warned many channel players would lose out if the deal went ahead. "This is bad news for many resellers because a lot of co-operative support the firms give for the channel is going to disappear. Many resellers will have to go," he said.