DELL is growing. They are pushing into business servers with a similar marketing and selling model that they've used successfully in the desktop market. Much like Microsoft did with Windows to Windows NT. Plus, DELL makes money.
I keep hearing about the costs being cut. I hope you don't believe it will be in PC component costs or assembly. That's such a slim business, a percent or two would be difficult to come up with. Certainly as two PC marketing organizations become one, etc some costs will be saved. HP is already quite slim in terms of headcount in these areas.
The problem with 7 operating system is that you have 7 ports of Oracle to deal with. Oracle is not going to fund it either. I use Oracle, but there are hundreds of software vendors that we will want to have, more everyday. Tough, knotty issue.
It really boils down to this: I don't see any synergy from HPUX-VMS-Tandem-Tru64 Unix being in the same company.
As for services, is HWP ready to alienate EDS, Accenture, PWC by becoming a direct competitor? If so, you can kiss all their business goodbye. Its a massive amount of business too.
I just don't see the glowing future. Could it work? Possibly. If it fails HWP will go into a Lucent-like death spiral. Its just not worth the risk.
When going through such a complex and massive integration as would happen with HWP/CPQ, even assuming a best-case scenario where everything is handled well, there still will be confusion, dropped signals, duplicate responsibility chains, overlapping sales, service, and even parts control - not to mention Re-orgs, Re-orgs, Re-orgs! Each one of these challenges will cause both HWP and CPQ customers to hesitate to make deep commitments to HWPQ & will look at alternatives (read: competitors). A customer, once lost to a competitor, is VERY, VERY difficult to ever recapture. It only takes one serious screwup for an IT manager holding the purse strings to decide to shop somewhere else. For at least the next 2 years, assuming that the acquisition goes through, the opportunity for errors will be multiplied and multiplied again. In this economy, where IT expenditures are very constrained, no competent manager is going to take a risk with a company in chaos.
Reviewing Compaq's quarterly figures for the last couple of years indicates to me that their business fundamentals are in trouble. A 35% drop in their sales is serious. I believe that Compaq needs the merger.
I also believe that the merger is NOT in the best interest of HWP, especially at a price of up to $25billion. HWPQ will suffer serious loss of its combined customer base as IBM, Dell, etc., focus on the customer base during the 2+ years of chaos. In the Technology world, 2 years is about 2 product cycles. By the time the merge sorts itself out, a LOT of the business customers will have jumped ship. HWP can't afford that.
My guess is that ISS will come out against the merger the first week of Feb., and that a number of the institutional investors will accept their verdict.
The personal attack on Mr. Hewlett in the HP letter to shareholders is the most vile public communication I've ever seen a corporation put out. I predict that it will backfire and reduce any support Carly has previously had.