HP/COMPAQ: Compaq brand formula for HP success

The president of Hewlett-Packard's PSG (personal systems group), Duane Zitzner, on Friday reiterated the company's road map for integrating PC products from Compaq following the merger of the two companies.

Referring to the newly joined HP and Compaq as "HP New-co," Zitzner reviewed how Compaq's desktop PC systems, workstations, notebook PCs, handheld devices, and most importantly, brand name, will be dealt with going forward.

Interestingly enough, HP will covet the Compaq brand name across every PSG product group except workstations and handhelds, with the HP brand actually exiting from the corporate PC and laptop categories, according to Zitzner.

"We will have Compaq as the brand we will go forward with in the marketplace for the business desktop side. Likewise, for the business notebook side, I'm going to do the same thing. I'm going to merge the HP OmniBook line in with the Compaq line and have Compaq as the go-forward brand for business notebooks," Zitzner said.

The reason for this decision is Compaq's strength as a PC provider to the enterprise. During its autonomy, Compaq was the No.2 maker of corporate PCs behind only Dell, and HP wisely chose to maintain that brand recognition, according to Rob Enderle, a senior analyst at Giga Information Group Inc., in Cambridge, Mass.

Consumers will continue to have their choice of either an HP- or Compaq-branded PC from HP, Zitzner said. Of HP's Pavilion PC and Compaq's Presario, Zitzner said "both brands have different equity in different parts of the world and certainly we can leverage those strengths."

Workstations will remain an HP-only brand, and as for handhelds Zitzner said "we will merge the HP Jornada line in with the Compaq iPaq line and the go-forward brand will be HP iPaqs."

Although HP keeps its own brand on handhelds going forward, retaining Compaq's "iPaq" model designation stays in pattern with HP's effort to maintain all of Compaq's hot markets and make them HP, Enderle said.

"The iPaq is by far the market leader in the space and to switch over the other way would put them at risk of losing a lot of market share in the handheld space and probably never get it back. So they took the wise move and adopted the more powerful product," Enderle said.

But with one competitor now out of the way -- Compaq -- HP will still face the challenge of a competitive seat left vacant, Enderle explained.

"The difficulty they are still going to have, and where branding won't fix it, is in those cases where HP, Compaq, and somebody else were bidding. Going forward, clearly it's going to be HP and two other competitors bidding, so just by pure odds they are going to lose some of that business. But by branding with the Compaq name, they are gong to retain more corporate PC customers than if they had gone the HP route," he said.

Zitzner was optimistic, however, that HP would send a clear message to customers, preventing the company from losing any ground during the merger transition between HP and Compaq.

"We have a big outreach program making sure customers know where we are going and what they can expect from us," Zitzner said. "We are making excellent traction as we move ahead in merging these activities together."

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