Hewlett-Packard Co. and Compaq Computer Corp. have a detailed integration plan already drafted that will allow the companies to provide customers with clear product migration paths one month after the companies’ proposed merger closes, said Carly Fiorina, HP’s chief executive officer and chairman.
“You ought to expect that soon – about one month – after this merger closes everyone will know what their migration path will be,” said Fiorina. HP can’t at the moment legally provide specifics about the integration plans but Fiorina assured attendees at Gartner Inc.’s Symposium/ITxpo in Orlando yesterday that “customers will not be confused.”
“We won’t blow the integration,” Fiorina said of the proposed merger.
HP and Compaq announced their intention to merge in early September.
Fiorina also said that enterprise customers would be informed who their account representatives are within a month after the merger is approved.
One user doubted the merger’s promise.
“From what I can see, it sounds as though HP will be positioned in the middle between Dell (Computer Corp.) on one side and IBM (Corp.) on the other,” said John Thompson, president of Crossmark Performance Group, a Plano, Tex.-based business services consulting firm for the consumer packaged goods industry. “Being in the middle is never a good spot.”
HP and Compaq put together integration, business and regulatory plans before they met with banks regarding the merger, so that by the time the merger plans were announced, the companies had already hashed out detailed and specific plans for combining their operations, Fiorina said. She spoke in a question-and-answer session with two Gartner analysts.
“This isn’t about a deal or a transaction, but about creating a stronger company,” she said.
Traditionally, chief information officers (CIOs) have had to choose between buying the products they want from a variety of vendors and then integrating them in-house, or handing over the purchasing decision to a single vendor that will take care of implementing the products, a model embodied by IBM, she said.
“CIOs have been underserved by the IT industry,” Fiorina said.
The company that will emerge from the HP/Compaq merger will aim to offer a third option to CIOs: it will strive to be a vendor that allows customers to buy products from a variety of providers while also helping them put these multivendor systems together, she said. The “new HP” will focus on providing customers flexibility, lower prices and ease of use, she said.
“CIOs wish to remain in control of their own environment,” she said.
The merger will allow HP and Compaq to save billions by eliminating duplication in areas such as research and development, administration, sales and procurement, she said. These are savings the merged company will enjoy no matter what the economic climate is, she added.
“We have a pretty good handle on the duplication involved,” Fiorina said. By eliminating duplication, the companies expect to shed about 15,000 employees, a figure that was announced at the time of the merger and that, despite rumors to the contrary, hasn’t been revised to date, Fiorina said.
Regarding the integration of the companies’ product lines, Fiorina said that the process of delineating a product roadmap isn’t “rocket science.” To decide which products stay and which are phased out, HP is paying attention to what some of its biggest customers have been doing for years when using HP and Compaq products.
While HP will strive to protect customers’ investments in its products, customers should not expect all products to survive the merger, she warned.
“Don’t expect a blanket set of protections for every product we sell,” she said.
Fiorina does expect HP to become the largest PC vendor in the world. When asked for her opinion about PC maverick Dell, Fiorina said: “Dell is a formidable competitor … It has a very compelling distribution model. But Dell isn’t an IT innovator.”
After the merger, the new company will carry the HP brand, but some product lines in which Compaq is strong will carry the Compaq brand, she said.
HP views printing/imaging and services as two very high growth areas. It doesn’t expect to become as large a services provider as IBM, choosing instead to focus on specific areas of expertise and partnering with other consulting and services firms for other specialities, she said.