New HP exceeds company expectations

One year after the merger of Compaq and Hewlett Packard (HP), HP's European head has said that consolidation and cost cutting are ahead of schedule, and that the company is reaping the benefits of its scale.

Kasper Rorsted, HP's managing director for the EMEA region, told vnunet.com that HP has already taken $3bn out of its worldwide cost base through a combination of layoffs, office closures and procurement savings.

This outstrips its original target of $2.4bn in savings in the first 18 months after completion of the deal.

Product consolidation resulting from the merger is expected to continue until 2005.

HP's NonStop servers, currently using Mips processors, will move to the Intel Itanium architecture in 2004. All 64-bit enterprise server lines will move to the Itanium processor family by 2005.

AlphaServer systems, using Alpha processors, and HP 9000 servers, using PA-Risc processors, will merge into a single line of enterprise server products supporting both PA-Risc and Itanium, also by 2005.

Plans to shed 5,900 jobs and merge facilities in the EMEA region are well on the way to being achieved. The company has also succeeded in pushing its PC group into the black in the past year.

The Enterprise group is still losing money, but Rorsted explained that "the plan is to turn it around by the end of the year".

Rorsted is confident that disruption from the massive integration project has been minimal, and claimed that customers have responded well to the changes, although not without significant effort on HP's part.

Major customers have been eased through the merger process, and Rorsted personally met the company's 25 biggest customers in the region.

Dr John Owen, chairman of HP Works, one of five existing HP/Compaq user groups in the UK, indicated that the merger had been handled well.

"For old HP customers, it's very much business as usual with added benefits," he said.

The introduction of clustering technology from the Compaq camp had been very much welcomed by HP customers, according to Owen, who sees it as a significant enhancement.

"The feeling is that there's more of a customer focus now than 12 months ago," he said. "Compaq had a lot to teach HP about customer relationships, and the hope is that it's for the long term."