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HP, Compaq Customers Eye Uncertain Future

Now that it's all systems go for the largest high-tech merger in history, Hewlett-Packard Co. and Compaq Computer Corp.'s corporate customers are preparing to make some big decisions and maybe even bigger expenditures if the new company kills off or stops supporting the equipment that runs their networks.

"I don't know what to think at this point," says Russ Schadd, network specialist at Lisle, Ill.-based Wallace Computer Services, Inc., a print management company with more than $1 billion in revenue. "We're apprehensive of a merger of that size and I wonder what the future will bring in terms of product."

Earlier this week, a Delaware Court rejected a lawsuit that Walter Hewlett filed to throw out Hewlett-Packard's shareholder vote in favor of acquiring Compaq. Hewlett, a former HP board member and son of HP co-founder William Hewlett, said he will not appeal the court's decision.

That moves the last stumbling block out of the way. Company spokesmen have said that shortly after getting the go-ahead for the merger, the new company would begin the complicated integration process and announce its product plans.

Power Struggle Predicted

Those are the plans most users are waiting to hear about.

"Users have to stop and consider a couple of things," says Dan Kusnetzky, vice president of system software research at analyst firm IDC. "The two companies have two different approaches to Windows 2000 Server and .Net Server. They have two different approaches to clustering. They have different Unix offerings -- It's very likely they're going to normalize that and come up with one offering in each category.

"Businesses that had made the decision to go with one approach, and they bet their business on it, will have to adapt or go to another platform with another company," Kusnetzky adds.

And that's exactly what Schadd at Wallace Computer Services, which runs 3,000 to 4,000 Compaq desktops and between 200 and 300 Compaq servers, is thinking.

"There will be a power struggle between the two entities and we wonder what products will remain," says Schadd, who also worries if his sales and maintenance reps at Compaq will be among the 15,000 employees expected to be cut during the merger. "If we have a part go, we contact our people there and we have it the next day. Will that change? Will it get better? Will it get worse?"

Schadd says if their products or service starts changing too much, they will be looking for a new hardware vendor. "Discussions about that have already taken place," he says. "I've heard names like Dell mentioned. They'd be the next viable manufacturer."

Time Running Out for Alpha?

IDC's Kusnetzky and Rob Enderley, a research fellow at Giga Information Group, both agree the signs are pointing to Compaq's Alpha technology -- which it picked up in its merger with Digital -- along with Tru64 Unix and OpenVMS, all to be dropped. HP UX, they say, is poised to be the big winner and maintain its position.

"With Alpha alone, you're probably not talking about more than 100,000 companies worldwide being affected," points out Kusnetzky. "But the applications they have installed on them are big and important to these companies. They aren't many but they are important customers doing important things."

A recent survey by Business Technology Research Inc., based in Hampton, N.H., shows that most of Compaq's and HP's customers are eager to stick with their installed lines and hold out hope for the merger, despite their anxieties, according to Dave Mack, president of the IT research firm.

The survey of IT executives at 243 Fortune 2000 companies showed that 46% said the merger would have no impact on their IT departments, while 9.5% said it would have a negative impact and 13.5% said it would have a positive impact. The survey also showed that 66.3% said they hoped not to switch away from HP or Compaq.

"I don't think they'd turn their back on their user base," says Noel Levasseur, executive vice president of First American Bank in Chicago, which runs 60 to 70 Compaq servers and a variety of Compaq and HP desktops. "Because of the application requirements, we'd like to stay where we are, but we could always consider IBM or Dell."

Gary Hartl, chief technology officer at MonsterHut, Inc., a Niagra Falls, N.Y.-based email marketing company, says he's looking forward to the merger, hoping it will make the integration of HP's management features with Compaq's hardware.

But Hartl will have to wait and see if the Alpha equipment he's been planning on buying makes the cut once the two companies come together.

"I would hope so," he says. "I adore the Alpha hardware. If I were to buy from Compaq, it would be Alpha equipment."