Industry experts doubt HP/Compaq success

Industry analysts polled by vnunet.com are already expressing serious doubts over Hewlett Packard's (HP's) plan to acquire Compaq, with many stating that the deal has little hope of succeeding.

Thomas Reuner, an analyst at Gartner Dataquest, said: "It will be a while before we can see who's winning and who's losing in this situation. The cultural background of both companies is quite different and integration will take a long time. Another big question is whether the merger will get regulatory approval. The deal is not done and dusted by any means yet."

The sentiments were echoed by Clive Longbottom, strategy analyst at Quocirca. "It is difficult to see any focused logic behind this move. What we will see here will be at least two years of bitter infighting during which time both companies will lose direction and lose good staff. The daggers will be drawn and it could be absolutely disastrous," he said.

"There is also a very big chance that it will not get over the regulatory hurdles. These are two real heavyweights and the regulatory bodies in both the US and Europe will look at this very closely," Longbottom added.

Analysts at Ovum Holway said that the merger would not present a serious challenge to rivals IBM and Sun Microsystems. "Putting together two ailing PC and mid-range manufacturers does not an IBM make!" the analyst told its clients on Tuesday morning.

The deal "falls at the first hurdle as there are no top-end systems. No matter what they say, neither HP nor Compaq [i.e. Digital] has high-end servers anywhere near as powerful as IBM's mainframe heritage systems," it said.

"This is great news for IBM, and indeed Sun et al. They will be able to pick off the market while HP and Compaq are distracted trying to get to the altar. We think there is a real risk the two will just implode, leaving - perhaps - a single PC and mid-range system supplier much the same size as either HP or Compaq," Ovum Holway added.