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HP merger opens door for competitors

Users dismayed by HP's acquisition of Compaq consider jumping ship. To many, IBM, Dell and Sun look better everyday.

Skepticism over the merger between Hewlett-Packard Co., and Compaq Computer Corp., is running rampant in the storage world and many experts and end users feel that the newly formed HP will serve its competitors interests better than its own.

"Traditionally with large mergers companies tend to take their eye off the ball," said Jamie Gruener, senior analyst, E-Networks and Broadband Access for the Boston-based Yankee Group.

Rather than growing the business, delivering product or developing new technologies, companies tend to focus on building their new strategy while the competition pulls away, said Gruener.

Customers might look at HP and say "this isn't stable. I don't want to buy from them out of fear," he said.

While competition in the storage sector is getting tougher, the timing of the HP deal might give competitors like Dell, Sun and IBM a chance to shine.

"Companies like Dell and Sun need to grow and this is a perfect opportunity for them to do so," said Gruener.

Gruener, and others, believe the danger for HP will be determined by the speed with which they bring the two companies together and form a single storage vision.


"If it takes them two years to make the transition, whatever they've gained from each other will be lost," said David Frazier, senior project manager, Bayshore Technologies, Tampa, Fla.

Users posting to a searchHP discussion forum also feel that the merger will benefit HP's competition.

"Personally, I think that this is a great move for Dell, Sun and IBM," wrote one user. "While HP is working to digest Compaq and all it entails, Dell, IBM and Sun can continue on with their business."

Others, like SAN architect Wayne Rippy, may not be willing to hang around while HP gets all its ducks in a row.

Rippy, who builds SANs for Getronics Government Services Inc., a McLean, VA-based company that supplies information and communications technology to the U.S. Department of Defense and civilian agencies, feels that both HP and Compaq have been lacking in support and hardware in the past.

"They never had decent support or a decent hardware platform in my opinion," said Rippy.

Rippy said that since Compaq acquired Digital Equipment Corp. (DEC) and integrated it into its storage operation Compaq has fallen sharply in performance and support.

"When I [implemented] the Exchange system for the Treasury Department and called [Compaq] support to ask a few questions it was usually an 18- to 36-hour turnaround and about a three-day onsite response for failed hardware," said Rippy. Subsequently, the Treasury paid for around the clock support, which was never delivered, according to Rippy.

If users like Rippy had problems with HP and Compaq when they were stable, stand-alone companies, the consensus is that the confusion created by the merger might send the customer searching for a more secure storage buy.

Let us know what you think about the story, e-mail Kevin Komiega, assistant news editor


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