Compaq Vows Support for Himalaya Post-HP

By Maria Trombly | Securities Industry News | April 1, 2002

The final results of the HP-Compaq merger vote may not be in for a couple of weeks, but early results show it's a go-and Compaq has been working overtime to ease customer minds about the integration.

Some 95 percent of the world's securities transactions go through Compaq Himalaya mainframes, which power 106 of the world's 120 stock exchanges, the company said.

Compaq customers include some of the largest Street firms, including J.D. Edwards, Prudential Securities, and T.D. Waterhouse.

The company pledged that it will continue to support existing product lines after the merger. "We've already assured all of our customers, on every product front, that they can count on our ongoing long-term support," said Compaq spokesman Arch Currid.

One of those customers is the Nasdaq Stock Market. "Our CIO has been in discussions with Compaq and they have reassured us that they will continue to support and have direct investments in the Himalaya line," said Nasdaq spokesman Mike DeMeo.

HP officials wouldn't comment on particular product lines for this article, other than to say that the merger would benefit customers.

"HP can certainly stand there and say yes, we're committed to the server, yes, we'll keep it alive-but who knows what will happen?" asked Lance Travis, an analyst at AMR Research. "Although HP doesn't have anything directly to replace the Himalaya, there is a risk that it will get shoved aside and starved to death. I think it behooves people to start looking for alternatives."

In addition, he said, the merged company will be spending next year reorganizing-while competitors move ahead with new products and services.

"If I were IBM or Dell, or someone else they were allegedly going after, I'd be pretty happy right now that two competitors of mine are going to be going through this churn for the next 18 months," Travis said.

But most customers aren't too worried, according to two recent polls. About 70 percent of the of some 200 corporate users, including financial services firms, of HP and Compaq equipment and services, told Hampton, N.H.-based Technology Business Research last month that they were either positive or neutral about the merger.

Lindy Lesperance, the firm's director of research, broke the numbers out by industry segment for Securities Industry News: 31 percent of 32 financial services firms were in favor of the merger; 16 percent against, and 53 percent were undecided.

The TBR results supported those released in mid-March by Deloitte Consulting, which did not break them down by industry. According to the Deloitte survey, which polled 2,354 HP and Compaq customers, 84 percent said the merger would improve or maintain range and selection; 58 percent said the merger would lower or maintain costs; and 72 percent said the merger would improve or maintain the level of service.

In the TBR survey, respondents who supported the merger saw it as providing more resources for customers to choose from. Some of those who were against the merger said they were worried about the future of Compaq's products and services. "There were concerns about how Compaq equipment and contracts would be affected," Lesperance said.

It's the smaller customers who might suffer the most, said analyst Peter Kastner, of Aberdeen Group. "The top 500 combined customers of HP and Compaq should continue to see very high levels of sales and support," he said. "But those below the 500 who may have been higher up in the pecking order of the smaller company may see less support."

For example, he said, a smaller firm may see fewer visits from the direct sales force or the loss of an onsite sales and support office. "And the HP and Compaq sales forces will be combined and reshuffled-it's quite likely that at least some of the people assigned to an account are likely to be new over the next six months."

Kastner recommends that IT organizations at major financial firms plan on holding information exchange meetings so that the newly-assigned people can come up to speed on the present and future needs of that particular organization.

Compaq officials say that these concerns are overblown. "We have completely customer-focused priorities in terms of the integration process," said Currid. "We are involving customers in some of those decisions, such as who manages their account, for example."