HP/COMPAQ: CTOs predict merger will happen

The US$100,000 question this week is whether the proposed merger between Compaq Computer and Hewlett-Packard will be accepted.

This question was posed to the 175 members of the InfoWorld CTO Network via an informal survey e-mailed last week, and the community has spoken: The merger will happen, but most have reservations.

Nearly 75 percent of the CTO respondents believe HP shareholders will deliver a decision on Tuesday to accept the proposed $22 billion merger between the two technology powerhouses.

"Yes [the merger will be approved]. But it will have some serious negative consequences for the next two years. Long term it makes sense, if you can survive the short term," responded Rajeev Bharadhwaj, CTO and founder of Ejasent Inc. of Mountain View, Calif.

Others weren't as optimistic.

"I hope that the merger won't go through, but I fear that it will be approved in a very tight vote. I don't believe that the merger will make either company more competitive," said one CTO, who asked to remain nameless.

A few CTOs, however, responded that they believe the merger is a good idea.

"[The merger will go through], and it should. I think that the shareholders against the merger have a status-quo attitude about technology. I think the combined company will have the opportunity to compete with the likes of IBM and Microsoft, with the added risk of maybe becoming a total failure. But without risk, technology innovation does not happen," said Jon Williams, CTO of Grey Healthcare of New York.

Dan Woods, CTO of CapitalThinking, also of New York, echoed William's sentiments. "I believe the merger should and will go through. The vast combination of assets will provide a strong competitor to IBM, Microsoft, Sun, and Oracle. Strengthening HP's place in the oligopoly will benefit customers," Woods responded.

As well as believing the merger would go through, Woods didn't stop purchasing equipment from both vendors -- a second question posed to the Infoworld CTO Network.

"I have not held off purchasing HP, Compaq, or any other related systems," Woods said.

And Woods wasn't alone. Approximately 80 percent of those respondents who had previously purchased from the vendors prior to the merger talks continued to do so, including Michael Dunn, CTO and executive vice president of Encoda Systems Inc. of New York.

"We haven't held off at all [on purchases]. Mergers are a fact of corporate life. The viability of the pre-merger products still need to be able to stand on their own prior to, during, and post-merger," Dunn said. "[In the post merger] if we see shortcomings, we'd then look to their competition, who we already have relationships with anyway."

Some CTOs, though, have already written off HP and Compaq completely.

"We already lived through the disintegration of DEC [Digital Equipment Corp.] services and expertise when it was acquired by Compaq. We expect even worse from this merger. Our past standard was Compaq for servers, and we run about 300 NT servers, but we are seriously looking at alternatives," responded a CTO, who declined to be named.

Not surprisingly that CTO was not alone.

"Of course [I've stopped purchasing from both vendors]. It's a shame that two of the most popular systems are involved in a predicament, which has placed both companies in a situation of instability," responded Duane Ebesu, CTO of HousingWorks, a New York non-profit organization that provides housing for people with AIDS and HIV.

Ebesu went on to add, "We're moving to Dell for our current needs, and if service is good, we will never go back to HP or Compaq."

Another CTO who is against the merger were even more matter-of-fact. "[The merger] is quite obviously one of the worst ideas I've ever heard," said a fellow CTO.

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