Despite pending merger, it's business as usual for some HP, Compaq customers

A pending merge has put two major storage companies in a serious state of flux, but there are users who continue to source from Hewlett-Packard and Compaq. Upshot: They can't wait for the dust to settle.

To say that Hewlett-Packard and Compaq are in a state of flux may be an understatement - given the pending merger. However, while some say they're holding off making major purchases from either company until the deal is final or unless they're convinced the products will be around after the merger, it appears there are some users who say they can't wait until the dust settles and have refused to divert from their purchasing plans.

"In an ideal world, I suppose I too would sit and wait," said Paul Herbst, network manager, Orillia Soldiers' Memorial Hospital, Ontario, Canada. "Yet, I might have a difficult time explaining this to all my users who are patiently waiting for new services and new computers."

In September, Hewlett-Packard announced its intended multi-billion dollar purchase of Compaq, making the combined company the world's leading maker of personal computers, servers and printers. But, the deal has raised countless issues including the possibility of layoffs, executive reshuffling, product consolidation, and dissension among board members. Some analysts and investors say it's simply a bad idea and speculate that the deal will not go through. Hewlett-Packard and Compaq continue to hold their ground.

Immediately following the merger, some storage administrators, particularly those running Compaq shops, were angry, even fearful, that the merger meant imminent doom for Compaq products.

More than two months later, however, many users say they simply can't wait until the deal is finalized and continue to purchase products.

One user who recently purchased an HP-UX server and SAN system for a major upgrade said the upgrade had been in the works for two years and if they didn't follow through, his applications would not be able to grow or even function. The user, who works for the government and did not want to be identified, admitted he wasn't even sure the deal would go through.

"The announcement caught us, like everyone else, of guard," he said. "But we went ahead out of necessity, more than anything else."

According to a recent searchStorage poll, 50% of the respondents either said they wouldn't purchase anything from either company until the deal is finalized or would only buy products they were sure would be around after the merger. However, 39% of the respondents said they had no plans to divert from their purchasing plans saying it was business as usual. (The poll did not identify specifically HP or Compaq users and was inconclusive.)

While some industry experts say it's smart to step back and examine all your options during a situation like this, there are some very attractive reasons to continue to source during a pending merger.

According to Tony Prigmore, senior analyst, Enterprise Storage Group, Milford, Mass., this interim period could actually be a good time to buy.

"In most mergers, the goal of the resulting company (in this case HP) is to maintain the combined installed base," said Prigmore. "That point isn't lost on customers and smart customers can use that to their advantage. Most educated customers are going to say 'I'm not afraid of this merger' and they know that the merger can benefit them in the short-term and probably the long-term. They could say [to HP or Compaq], if you can give me a deal, make some guarantees that make me feel secure, then I'll make that commitment to purchase today."

Both Compaq and HP have guarantees that products purchased now are protected with a 110% credit trade-in.

Prigmore added that enterprise customers expect that level of safety and would demand it even if it weren't offered. "I'm sure there are large scale customers that have bargaining chips on the table. And I'm sure HP and Compaq will respond," he said. "Compaq and HP have a pretty good service track record."

"Rather than stop everything, which is unrealistic at best, I chose to trust Compaq and continue with the expectation that I will be supported as always," said Herbst.

While there is some concern over product consolidation, particularly within the server group, there isn't much crossing of product lines in the storage divisions, said Prigmore.

From a storage standpoint, product consolidation is "not relevant," he said. "From a storage standpoint, users have no reason to be concerned."

HP's storage strategy, Federated Storage Area Management (FSAM), is compatible with Compaq's Enterprise Network Storage Architecture (ENSA) strategy since both strategies have adopted open architectures.

According to Mark Ducros Stouse, director, Global Communications, Compaq, a lot of storage customers are looking at the whole picture when selecting products. "Common sense is going to work out in this deal." Stouse added that his company was not "seeing any fall off" in sales of its StorageWorks line.

According to a statement from HP Network Storage North America in October, the company stressed its "unwavering commitment" to HP Surestore and HP OpenView storage solutions.

At this point, most users say they're not even concerned about support. They know they'll get support one way or the other, whether it comes from HP or Compaq.

Paul Glover, a LAN administrator, for Nashua Corp, Nashua, N.H., said where the support comes from doesn't make any difference. "Products have shelf life," he said. "They'll be support for these systems. No matter how you look at it."

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