HP-Compaq: Time to think what it means to you

Walter Hewlett may not like it and IT chiefs may claim not to care but barring any major disasters HP and Compaq will become one in less than two weeks.

While we can expect the bickering to continue until the shareholder vote on 19 March, HP boss Carly Fiorina has staked so much on this merger nothing will deter her now. Regulatory problems have receded and a 'yes' vote from the Institutional Investors Services group makes a shareholder revolt highly unlikely.

Fiorina may have failed to snare PricewaterhouseCoopers 15 months ago but it will be a major surprise if she doesn't succeed this time.

If you use either firms' kit (quite possibly both) now is the time to start thinking about what the merger will mean to you.

For starters, a merger means less competition in the PC and server markets. The hardware business still features giants such as IBM, Dell and Sun but a single HP/Compaq means one very big player has disappeared. Despite what Bill Gates and Steve Ballmer will have you believe, competitive markets do give rise to greater innovation, cheaper prices and better service than monopoly markets.

So if you chose a Compaq Proliant for one of those reasons above are you sure you will still get the same deal from HP-Compaq? Equally will an HP Vectra come with the same support and service you experienced before? (There's always a chance, of course, it will be better).

More immediately, are you sure either product will escape the axe post-merger?

The second issue corporate customers need to address is that of integrated services. Fiorina believes HP-Compaq can provide a fuller offering once they merge. To an extent that's true - there are holes in Compaq's networking and non-Intel server offerings that HP can fill, and Compaq's storage products complement what HP offers.

Critically, however, HP plus Compaq does not equal IBM or EDS. This is not, in short, a fully-fledged services company.

That's a problem for HP-Compaq, because the bigger margins are in the service. And that's an issue for corporate users who may chose to stick with an IBM for its Global Services or an EDS for its systems integration.

The challenge for the new company is to convince customers they will lose none of their favourite products and will gain something extra in terms of service and support. It's going to be a difficult case to make.