One year later, the jury is still out on whether the tech industry’s most contentious merger was worth the effort. The company still faces the same criticisms: Technology mergers rarely work.
HP-Compaq Merger: Worth it?
2002-09-03 In the News 8 Comments
One thing that has improved since the merger (at least a little) is the attitude towards VMS. Committing to a full migration to Intel-64 bit system as well as years of support after that is a good thing IMHO. VMS still offers features that you don’t find in any of the ‘nix; without having to go to S390 (Z-OS now). The ability to approach the ease of operations on S390 without having to spend extra millions for Z series hardware is a real plus.
A secure, easy to maintain, highly reliabile system for mid sized companies. I’m glad to see at least a little more support for VMS coming from the new merged company.
Wherent’t merged yet, in Compaq you’d found the compaq’s guys, the Tandem guys and the Digital guys.
Same thing goes for HP.
If the above news about VMS is true, how many OS will HP need to deal with ? One thing seems clear HP will be Intel Friend , they seem to want everything to go the Itanium/ IA-64 way , that’s good for them but it’s bad for the rest of the industry.
While it might have been 1 year since the announcement of the merger, it has been barely 100 days since the merger actually when through (when Compaq employees could actually talk to HP employees. Until that date, they were still competitors). come back in 6 months and see if it was worth it.
HP was honest enough to layout the os roadmap killing things that didn’t make sense from the start. Remember the netserver line? Well, you cannot even order one anymore. I’d say, thats pretty impressive.
How would teaming up with Intel be bad for the rest of the industry?
Mergers rarely work, especially tech mergers. However, the reason that most of them don’t work is that, chances are, one of the companies was on the brink of disaster anyway.
Look at Compaq and Digital. Digital missed the PC boom, then introduced their own PCs only by the time it was too late; Compaq bought them out, and in effect brought themselves down with Digital. Then a faltering Compaq got snapped up by HP; and now it looks like even that combined company is having troubles, as its sole profitable division is printing and imaging.
Suppose none of the mergers, and importantly, none of the spinoffs, had ever happened. Digital would have had problems, and would probably have gone bankrupt. Whether they did or didn’t, Alpha would have emerged either as a separate company, or bought by Intel. Compaq would have continued to be the low-price leader, would have proved a strong competitor to Dell, and would still be around, independently. HP would still be very large in the non-PC business (calculators, test equipment, all sorts of stuff that Agilent did), and, of course, the imaging business, and would probably have scaled down or eliminated its PC-based businesses, due to pressure from Dell and Compaq.
Possibly, all three companies would have been around for a bit, even if Digital only existed in a reduced form as the Alpha platform designer. Maybe Digital would have gotten bought out this year by Intel, or last by AMD, and would have remained alive until then. Now, Digital’s legacy is gone, and Compaq’s is all but. And the new HP will soon face pressure to increase profitability; that could mean nothing more than eliminating its PC line, or, in the most drastic scenario, it could mean HP spins off its printing-and-imaging business, like Hewlett’s plan called for, sell the calculator business to Agilent, and let the rest of the company die a slow and painful death.
If Digital hadn’t been having problems, it wouldn’t have agreed to a merger. Even though it did, it could have downsized and solved its own problems. Instead, Compaq bought it out, and Digital’s problems will be the “straw on the camel’s back”, that ruin the whole HPaq empire.
Compaq’s purchase of Digital was a terrible move. The company was far to pro PC to use digital technology. They had VMS which with Compaq’s money could have been a major player. They had Alpha which (expecially since at that point it ran NT and had good compatability) could have replaced x86 line. They had the GEM compiler which could have been the keystone to giving them a real edge in most benchmarks.
But to do that they would have had to alienate Microsoft by not buying into the “Microsoft Enterprise” nonsense; alienate Intel by pushing for an early transition to Alpha. The Compaq side of the business had too much to lose from really taking advantage of the Digital side of the business. When the made the choice to buy Digital they should have made the choice to bet the company on Digital’s technology.
Carly fiorina knows what she’s doing, she’s more inteligent than other corporate ceo’s [and lot more sexy too ]
Carly is a killer.
Look at the mess she left at Lucent.
Expect the same, on a larger scale, at HPQ.
LU is $1.79 a share. Less than a crappy burger.