Finally, the Confusion Ends

Phew, It's finally over. No more waiting for the final shot of the

HP-Compaq mega movie, running successfully for the past eight months. Finally

the audience has the answer to the Shakespearean dilemma 'To be or not to be'.

Yes, it is going to be. But the climax shot, which started with a bang, has

ended in a whimper.

After the voting on the merger came to a close on March 19 and 20 this year,

Walter Hewlett filed a lawsuit asking the courts to block the merger of HP and

Compaq. Hewlett claims HP pressurized a key shareholder into switching its vote

at the last minute.

But as Delaware Chancery Court Judge William Chandler says, "Walter

Hewlett just didn't have enough solid evidence to prove that HP misled its

shareholders." He threw out Hewlett's lawsuit against the HP-Compaq

shareholder election. Also, it seems that the US Justice Department and

Securities and Exchange Commission investigations into allegations that HP

manipulated the shareholder vote too will end in a sniffle given the outcome of

the Delaware lawsuit.

'All-clear' September 2001 Plans are revealed for HP to acquire Compaq in an all-stock deal worth $25 bn HP, Compaq announce they will save $2.5 bn annually by merging November 2001 David Packard, steps forward as an opponent to the acquisition, releasing a statement detailing his reasons, many of which coincide with Walter Hewlett's January 2002 Hewlett tells HP shareholders that the company has nothing to gain and will only be weakened February 2002 HP announces that shareholders will vote on its proposed acquisition of Compaq on March 19 at a meeting in Cupertino April 2002: Hewlett filed a lawsuit asking the courts to block the merger of HP and Compaq. Hewlett claims HP pressured a key shareholder into switching its vote at the last minute Delaware Chancery Court Judge William Chandler threw out Hewlett's lawsuit against the HP-Compaq shareholder election May 2002 Announcement of the new HP

While the good news did not last beyond the announcement of the new HP, the

bad news, read resumes and lay offs, will continue to haunt employees of both

the companies. And as auto responders at Compaq offices changed from

"Hello, Compaq here" to "Hello, this was Compaq, now this is

HP," Compaq is officially dead and reduced to Silicon Valley folklore. The

new HP has a daunting task of integrating the two companies and cutting down the

workforce by an estimated 15,000 to 24,000 people across the globe. With the

announcement of the New HP on May 7, 2002, HP is on the second phase of the

merger — integration, cutting manpower, rolling outs products and killing

brands among a 1000 other challenges thrown up by the merger. Already, the

company has announced its key people and the products that are being rolled out.

The Division Line-up Enterprise Systems Group Led by Peter Blackmore, ESG will market products in UNIX servers, fault-tolerant servers, Windows-based IA-32 servers, Linux- based IA-32 servers, enterprise storage, management software and high-performance technical computing space. In India, Balu Doraisamy will handle this portfolio HP Services Ann Livermore will be incharge of the services wing heading a team of approximately 65,000 professionals worldwide. Responsibilities include selling mission-critical infrastructure services, services for open IT environments and enterprise-ready Microsoft integration and support services. In India, Kapil Jain will move on to head the Services business from his current position of VP (Services) of Compaq India Imaging and Printing Group Vyomesh Joshi will be in charge of the global Imaging and Printing group and continue its dominance in printing and imaging solutions for consumer and business markets. HP's Ravi Aggarwal, who earlier led HP's Business Customer Sales Organization, will head new HP's Imaging and Printing Group Personal Systems Group Led by Duane Zitzner, PSG will be responsible for offering business and consumer notebooks and desktops, workstations, thin clients, handhelds and Internet appliances and HP's emerging technology business. In India Ravi Swaminathan, who oversees Compaq's Personal Systems division in India, is slated to take over as the head of the Personal Systems Group

Impact on India Welcome to the new Indian numero uno. For FY2000-01, the new

HP would have had a total revenue of Rs 3650 crore, including its software

exports revenues, and it is clearly way above software giant TCS's Rs 3142

crore. In terms of segments, it will occupy the top spot in almost all the

segments like desktops, PC servers...

While it might notch the top slot in the numbers game, there are bound to be

problems at the new setup in India. To begin with, the new HP is going to be led

by Compaq's MD Balu Doraisamy and sources say HP's president Arun

Thiagarajan is moving out of the company. Apart from Doraisamy who will be

looking after the enterprise system group, two other Compaq employees namely

Ravi Swaminathan and Kapil Jain will be heading two other divisions of the new

HP. Ravi Aggarwal of HP will be heading the printing and imaging group. In

India, against popular perception its not HP that has gobbled Compaq, but it

seems the other way round. Also in the short run, HP will have people problems,

as it is going to be more of a Compaq show. Will HP employees settle for this

trade-off? Says Balu Doraisamy, "We're not trying to recreate an old

Compaq or an old HP here. We're trying to build a company that will last

forever." Bad news could hit Compaq employees harder. With over 700 people

in Compaq against 320 of HP, the axe could fall on a majority of Compaq's

workforce.

Not to forget the uncertainty hovering around the software arms of the

respective companies. HP has HP ISO under its belt while Compaq has Digital

GlobalSoft under its wings with each having about 1,100 people in the fold. As

the merger takes effect, will the new HP create enough opportunities to take in

the available Indian resources? Or will the employees of Digital GlobalSoft have

to face more pink slips, as only a few Compaq legacies will be integrated into

HP research? In recent times, Digital GlobalSoft has been trying to get in more

of non-Compaq business and the share of this business has changed from 12% to

15% in FY 2001-02. How long will Digital GlobalSoft be allowed to continue with

this business or will all of non-HP business be totally discounted? So far there

have been more questions than answers shrouded by larger uncertainties. While

employees are waiting to see whose name will come up in the lucky draw, and how

the integration takes place, the top management foresees no difficulties in the

amalgamation process in India. Comments Doraisamy "Unlike other mergers

that I've lived through, this merger is amazing. There is no second-guessing

required. Nearly 100 HP and Compaq employees who were part of the Asia Pacific

integration team have put in 1,00,000 hours of work on this. All strategies are

ready. All we have to do now is to implement them and go to our customers."

Grab your seats and get your popcorn, the sequel is about to begin!

Yograj Varma In New Delhi

The Product Roadmap

Servers

HP will become the master brand for all server products, but product families

representing both companies will be kept. Compaq's ProLiant servers will be

marketed as HP ProLiant servers. In addition, the low-end HP Servers will

continue to be on the shelves but will not be re-branded as HP ProLiant servers.

In the RISC server space, HP will continue with its PA-RISC and Compaq's

AlphaServer systems. The PA-RISC servers will be targeted at the PA-RISC

installed base and all new business opportunities. AlphaServer systems will be

primarily focused on the Alpha installed base and high-performance technical

computing. Also the fault- tolerant NonStop server family from Compaq will now

be known as the HP NonStop Server.

UNIX

Advanced features of Compaq Tru64 UNIX will be integrated into HP-UX, as HP-UX

will be the long-term UNIX for the new HP.

Storage

Compaq's StorageWorks (re-named HP StorageWorks) will be used for storage and

storage solutions with HP OpenView as the name for storage software, and ENSA

(Enterprise Network Storage Architecture) as the name for storage architecture

Software:

HP's software strategy focuses on investments in OpenView management

solutions, the Utility Data Center (UDC), Opencall telco solutions and J2EE and

.NET middleware stacks.

Personal

Systems Given the strong Compaq branding, the new HP announced that

customers would be able to purchase both HP and Compaq-branded consumer PCs and

notebooks. In the commercial PC and notebook product categories, the Compaq

brand will be retained and the HP brand will be dropped. Brands to be phased out

include HP Vectra but the e-PC will be available under the HP brand. In the

handhelds Compaq iPAQ Pocket PC will be marketed as HP iPAQ Pocket while HP's

Jordana will be phased out of the market in 2002.

Imaging and Printing The all-out HP dominance will continue, with Compaq

brands being slowly phased out