HP’s merger goal remains unattained

Hewlett-Packard acquired Compaq Computer in order to “offer the industry’s most complete set of IT products and services for both businesses and consumers,” according to HP’s press release in September 2001 announcing its intention to absorb its rival.

One year after the acquisition legally closed, on May 3, 2002, this goal remains just that: a goal.

There have unquestionably been improvements resulting from the merger. It’s also clear that HP has managed to avoid a major disaster as it integrates these two giant companies’ cultures, product lines, philosophies and strategies.

But this mega union can’t be called a success yet. Here are a few reasons:

— IBM remains by far the largest provider of IT services, both in terms of size and revenue. It also is a mighty competitor in high-end servers.

— Dell Computer continues to be a thorn in HP’s side in the PC and low-end server business, and a rising threat in printers and handheld devices.

— It’s unclear whether HP did the right thing by betting on Intel Corp.’s Itanium chips for its servers, and whether its plan to migrate server clients to Itanium will succeed.

— HP’s relationship with the channel remains confusing.

— The company has met but not exceeded its financial expectations, failing to wow Wall Street.

So the Compaq acquisition and ensuing integration is, most say, a work in progress, which still holds the potential for big successes and big failures.

In other words, at the one-year anniversary of the acquisition, the jury is still out on whether the ultimate goal stated so clearly back in September 2001 will be attained.

HP is still struggling with its major competitors. It hasn’t lost the game, but neither has it won.