CIOs divided over HP-Compaq

Technology executives are just as conflicted as shareholders about Hewlett-Packard Co.’s (HP) planned acquisition of Compaq Computer Corp., according to a Merrill Lynch & Co. Inc. survey released Monday.

Merrill Lynch queried 75 U.S.-based and 25 European chief information officers (CIOs) on a host of industry issues, including the HP/Compaq union.

Slightly more than three-quarters of those polled own Compaq equipment. Just over half that group is in favor of the deal or on the fence, the survey found: 25 per cent said they support the acquisition, while 29 per cent said they’re neutral. Forty-six per cent said they oppose merging the companies.

Less than half the survey’s respondents said they own HP computers. Of those that do, 42 per cent oppose the acquisition, 32 per cent are neutral and 26 per cent support it.

On average, respondents’ spending on Compaq products will drop 10 per cent this year, the survey found. The 100 CIOs’ spending with HP will decline an average of four per cent this year.

Other surveys have found similarly cloudy customer views on the acquisition.

A Technology Business Research Inc. study released last week found 46 per cent of surveyed HP and Compaq corporate end-users are undecided about the deal. Thirty per cent favored it, while 24 per cent opposed it. But even those against the merger don’t expect major problems for their company if it is completed: Only 10 per cent of respondents anticipate a negative impact on their own IT department, and just 14 per cent said they would consider switching vendors if the companies combine.

IBM Corp. could be a major beneficiary of customer disenchantment with HP and Compaq, according to Merrill Lynch’s survey. Thirty-eight per cent of those polled said IBM is gaining a larger share of their spending. Fifteen per cent said Big Blue is losing share within their company.

Sun Microsystems Inc. is losing nearly as much share as it’s gaining, the survey found. One quarter of respondents said Sun is gaining more of their IT spending, while 22 per cent said it is losing share. Ten per cent reported no change in their spending with Sun. Forty-three per cent said they don’t buy from Sun, and only 28 per cent of those polled said they would look to Sun for help architecting their IT infrastructure.

Among Sun customers, 38 per cent said their strategic commitment to the vendor is increasing, while 34 per cent said it is declining. Two-thirds of customers said their spending with the company this year will be up or flat; a nearly equal number said it will drop.

Linux may be in the headlines, but it’s not in the enterprise: Only 26 per cent of the CIOs said Linux is a strategic system for their company.

Tools for enterprise resource planning, customer relationship management, supply chain management, billing and data warehousing are the most in-demand software applications, the survey found. Sixty-six per cent of those polled said they need more servers to run their applications, and most are looking to control their server-farm growth: 56 per cent said they’re consolidating servers.

CIOs aren’t optimistic about economic recovery. More than half said they think meaningful improvement in IT spending won’t begin until next year.

Merrill Lynch’s survey is available to registered users of its research Web site,

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