Solution Providers Say Merger Vote Heightens Need For Urgency

Hewlett-Packard Compaq Computer

The channel's biggest concern is getting the post-merger information as quickly as possible, especially as HP's fiscal quarter comes to a close at the end of April, said Don McDowell, vice president of server solutions at Forsythe Solutions Group, a Skokie, Ill.-based Compaq and HP partner.

"Believe it or not, the customer has figured it out: Buy at the end of the quarter," said McDowell. "All manufacturers do special things then to boost sales. We need the last few weeks of the quarter to get our job done. We need to get moving on this so we can sell aggressively."

The vote battle is over, said Pat Edwards, vice president of sales at Alliance Technology Group, a Hanover, Md.-based solution provider working with both vendors. "We know what's going to happen," he said. "Now the big question is: What will stay, what will go away [and how will it affect me?"

Edwards said the reaction from customers so far to last week's merger vote has been one of, "Oh, yeah, I expected that to happen. . . . But Compaq [customers are concerned about things like what will happen to Tru64 and StorageWorks," he said. "They are more concerned than before. Compaq's letter a few months ago promising a 110 percent money-back guarantee to customers of any storage products that were discontinued as a result of the merger scared the daylights out of them. Their worries eventually fizzled out, but now they are scared again."

There is still a great deal of apprehension on the part of customers, said McDowell. "This won't change until HP defines its road map for its products," he said. "They also need to bring out their support products for phased-out products. I can understand them holding the information tight to their chest for now. But it has to be communicated as soon as possible."

McDowell said he understands that HP is preparing what the vendor calls a "Big Bang" of complete information once the merger vote is certified. "That would be impressive," he said. "But there's a second phase to that. For the products that will not be kept, HP has to tell us how they will support users."

HP Chairmand and CEO Carly Fiorina and Compaq Chairman and CEO Michael Capellas tried to clear up some of the confusion via a letter sent to employees of the two companies on Wednesday.

In the letter, the two executives said a majority of shares from institutional investors not affiliated with the Hewlett and Packard families and their foundations, along with a majority of shares held in the HP employee stock purchase plans, were voted in favor of the merger.

But until the vote is certified, the two companies remain competitors, and employees should continue to act as if they work for separate companies, the letter said.

In the meantime, plans are being finalized for the integration. "Putting anything on hold while we wait for a final proxy vote tabulation is simply not an option," the letter said. "Therefore, we will continue to move forward aggressively with the integration and launch planning, so we can hit the ground running shortly after the legal close. This will help ensure minimal disruption to as many employees as possible and allow us to get customer account assignments, product road maps and go-to-market structures in place as soon as we possibly can."

Next week, executives of the two companies will start making announcements about the new management team's direct reports. Also starting next week, details will be disclosed about the selection process the new HP will use to fill jobs.

In the letter, Fiorina and Capellas also reminded employees not to expect everything to flow smoothly. "We will try to do everything we can to minimize disruptions over the next several months," they wrote. "However, please keep in mind that we will be working to successfully implement what is arguably the most important merger in the history of the technology industry. It is a complex undertaking, and we may stumble occasionally. But we are highly confident in our ability to work together to succeed in the exciting task of turning two great companies into one unified."