KeyLink Pushing Upside Of HP/Compaq

But as the two companies work to integrate their businesses and create efficient go-to-market strategies, strong channel relationships on both sides of the fence will become more important than ever, says the executive in charge of marketing for distributor KeyLink Systems' relationship with Compaq.

"Clearly there are some changes in the works, and it's too early to tell what the full impact on the channel will be," says Pat O'Connor, vice president of worldwide Compaq relationship marketing at KeyLink Systems, the distribution arm of Pioneer-Standard Electronics. "But we will stand with our resellers to make this transition seamless and successful. The key is making sure partners and customers are taken care of and we've got our arms around them during the transition period."

It looks as if KeyLink isn't the only party concerned with allaying the fears of Compaq channel partners in the wake of this week's shareholder votes. On Wednesday, Compaq chairman and CEO Michael Capellas reached out to the company's channel partners himself, sending a letter to solution providers shortly after company shareholders voted in favor of the merger. In it he assured them that the company's "commitment to your success is unwavering."

The distributor, which has been working with Compaq (and the former Digital Equipment) for the past two decades, has been in regular communication with the vendor's channel executives since the merger was first announced in September, gauging the company's long-term channel plans.

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"I believe they have done a fair amount of homework behind the scenes in terms of putting the plan together," says O'Connor. "We certainly believe the merger creates an abundance of new business opportunities for us and partners."

Over the last year, the distributor has seen strong business in its legacy Compaq accounts, which have traditionally bought both Alpha-based and Intel-based products.

"Those are still the mainstays of our business," he says, noting that clients continue to upgrade and install systems as they see new opportunities, particularly on the software side. "Oracle is one example. In the traditional spaces the whole information boom has caused them, through software-related solutions, to purchase upgrades and additional hardware."

That said, he believes from a technology perspective, the merged company will be a "force to be reckoned with," particularly because of the strength of Compaq's storage offerings being combined with HP's platform business.

"That makes a real powerhouse in terms of this new company going forward," he says.

O'Connor, whose company works with about 4,400 VARs worldwide, says the Compaq resellers he hears from are generally positive about the merger and recognize the new opportunities that will come from it.

"But they are suffering from what a lot of folks are right now--lack of information," he says, noting that the situation is more the result of legal restrictions surrounding the merger process than either company's intention for secrecy.

And while some solution providers have voiced concerns in the weeks and months leading up to the shareholder votes that a combined company--with a large consumer PC division and a significant direct services component--might be inclined to focus more on direct sales, KeyLink's position is that the combined entity will end up relying on the channel even more.

"I believe both Michael Capellas and Carly Fiorina have said that publicly," says O'Connor. "Certainly there are pieces of the business they are looking at and making some decisions around, but a strong channel is very important to them going forward. I believe that to be the case, especially from the conversations that we've had with Compaq."