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Users have all but conceded Hewlett-Packard will acquire Compaq Computer in the wake of last week's shareholder votes, but there are still plenty of concerns about ongoing product support and the future of the merged company.

Users have expressed concerns that the merger--which is not official yet despite early declarations of victory by HP management--might mean an end to product lines in which they have a heavy investment. Users also wonder how the merged company will support the variety of gear and software it will own.

"The major impact will be in the very obvious product-integration issue," says Jeffrey Fritz, director of networking at West Virginia University. "Is the iPaq going to become a Jornada, or will the Jornada become an iPaq? How will Compaq and HP merge their competing product lines--and how will they support them?"

Product Problems?

User worries might be well-founded because HP and Compaq have overlapping products in the server and desktop arena. HP's NetServer line overlaps with Compaq's ProLiant systems. HP has developed HP-UX, its own flavor of Unix, while Compaq has Tru64 Unix.

"If the product lines are combined, will we see increased support because there will be fewer products, or an erosion if the support folks have to [handle] what currently are competing products?" Fritz says.

Rodric O'Connor, chief technology officer at Putnam Lovell Securities in San Francisco, says his company has HP and Compaq gear, and thinks his mix of products will keep him safe. "We use Compaq servers and HP printers and LAN switches. I don't expect any negative impact to our operations. [But], if I were using Compaq or HP desktops, HP Intel servers or Compaq Alpha I would have some concern about the change in product mix."

The product mix is a worry for some users who say a merger of the two companies could lead to a "dumbing down" of core technologies. In other words, they worry the new HP will focus on commodity products such as Intel-based servers and Microsoft software, instead of investing in high-end server systems. Others are concerned the company would quickly turn away from unprofitable server lines.

Reduced Selection

"Obviously, [the merger] reduces the number of vendors and limits the selection, but I don't consider Compaq to be a contender anymore," says Robert Currier, director of data communications at Duke University in Durham, North Carolina. "If HP can bring them into the 'HP way,' there may be a chance that Compaq will be able to regain some market share. [It] really depends on how willing the Compaq folks are to doing things in a different way."

That change will give corporate executives as well as technical engineers a "huge challenge," says Paul Edmunds, senior network analyst at Duke Energy in Charlotte, North Carolina, which uses HP's OpenView software. He doesn't expect the HP/Compaq merger to affect his company too much.

"The two companies have overlapping hardware lines, and they'll have a big integration project ahead of them," Edmunds says. "Never mind the cultural challenges, how do you keep the HP culture and motivate the workforce, especially if you lose something like 15,000 people?" HP has acknowledged that employee reductions of that magnitude will be in the offing upon merger agreement.

Looking Ahead

"The ability to execute the merger quickly with few missteps will be critical. We are skeptical [because Compaq may] have a lot of baggage from past acquisitions that is still unresolved," says Doug Cavit, chief information officer at McAfee.com.

By all accounts, Compaq is still suffering indigestion from paying $9.6 billion for Digital Equipment in 1998. For its part, HP tried to buy out PricewaterhouseCoopers last year but failed. So history isn't on either company's side, users say. Meanwhile, both companies still are smarting from $80 million-plus losses in the second quarter.

"The merger certainly opens up again any decision for a particular vendor potentially to the combined companies' disadvantage - basically that by having uncertainty or lack of product road map clarity, it opens up the field for competitors to move in and influence buying decisions," Cavit says.

Who Wins?

One IT executive says failure could leave two companies sitting pretty if HP doesn't handle the transition well. "Dell and IBM could be the big winners, not the merged company," says Chip DiComo, manager of global information systems at Hellman Worldwide Logistics, a transportation company in Miami.

Others disagree. "Servers are one of Compaq's crown jewels, so I don't think HP is going to do anything to screw that up," says Ed Mann, vice president of network planning for The Prudential Insurance of America, which uses HP printers and Compaq servers.

Compaq shareholders were a lot more optimistic about the merger, approving the company's planned acquisition by HP by a 9-to-1 margin last week. The official result of HP's shareholder vote is not yet known. HP said preliminary results show the merger has been approved by what Chief Executive Carly Fiorina termed a "slim but sufficient" margin.

Opposition leader Walter Hewlett, an HP board member and son of a company founder, said the results are too close to call and that he remains "optimistic" the acquisition will be defeated. IVS Associates is handling the vote tabulation and will certify HP's vote outcome, a process expected to take several weeks.

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