• PC World
• »Tech Industry

Six months after Hewlett-Packard closed its Compaq Computer acquisition, customers polled by market research firm IDC 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, IDC said Wednesday.

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

Several different IDC analysts participated in a press conference 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-organized 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, that wasn't the case here, he said.

Potential Problems

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

Resellers of PCs and servers based on processors from Intel feel threatened by HP's desire to become more of a direct sales organization, Waxman said. These partners are also afraid that the new HP will take away more of the services the resellers currently provide, she said.

HP can have the best of both worlds with products sold through both direct sales and channel partners, Waxman said. But the company needs to communicate this to its partners, especially those partners 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, she said.

The storage business received high marks from HP's customers, said John McArthur, group vice president of worldwide storage research. Less than 10 percent 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 Plans

PC, handheld, and server customers are basically satisfied with the progress of the companies since the acquisition deal closed in May, analysts said. The company needs to continue to develop 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 Computer in the second quarter, but has since lost a little ground and is currently 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 execute its plan 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 will continue selling RISC servers as it supports its large install base, she said.

Selling Its Services

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 wasn't forced to compete against old Compaq accounts for the same business, the services organization 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, in order to develop its reputation as an infrastructure provider in more circles, Melenovsky said.

The company also faces challenges in moving from a leading-edge product-driven company to a services organization with clients who don't always want the latest and greatest stuff, he said.

HP is off to a strong start merging the two organizations, due in part to the extensive planning undertaken before the deal closed, Del Prete said. That vision for the new HP registered with the customers surveyed by IDC, who rated the vision above average on a scale of most favorable to least favorable, he said.

But those same customers said HP hasn't done a good job articulating that vision, or clearly explaining how the company will reach its vision, Del Prete said. "The company has to make decisions about where it wants to lead and where it wants to follow," he said.

IDC is a division of International Data Group, parent company of IDG News Service.

• See more like this:
• Hewlett-Packard,
• HP,
• Compaq,
• Dell,
• merger,
• customers,
• users,
• PC,
• Tablet PC