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EDITORIAL: Who's holding Aces?

EDITORIAL: Who's holding Aces?

The cards are starting to fall into place for "the new HP" as it digests its enormous Compaq meal. There are not too many surprises in the product roadmap but when you look at the line-up of key executives in Australia, it's a good result for the old Compaq team.

Three of the top four positions formerly bowed to the big Q logo of Compaq, and Paul Chan, the new Singapore-based MD for HP Asia-Pacific, held that position for Compaq (although he has worked for HP in the past).

Of the four divisions within the company, only one - the imaging and printing group - is headed by a former HP employee, with Rebekah Flaherty getting the nod to sweet talk this channel-reliant product line.

Ex-Compaq personnel will take charge of the other three divisions in the form of Paul Brandling (enterprise systems), Tony Bill (personal systems) and Pathy Pathmanaban (services).

The sudden and unfortunate passing of HP's Australian managing directorNorman McCann in March means each of the above four will report directly to Chan.

With no single Australian MD appointed, it appears the rationalisation of staff numbers has already begun. Just where it will stop is sure to keep numerous former Compaq and HP staff biting their nails and wondering if they have earned a place in the sun.

Perhaps Chan himself summed up the coming cull best in an e-mail to all employees, a copy of which has been obtained by ARN.

"I know that many of you are concerned about your future with the company," the e-mail said. "I want to assure you that we will move with speed to complete the selection and integration process. We will be guided by our core values of fairness and respect for the individual."

I think it is fair to interpret that as meaning "some of you have to go". I suspect that former Compaq faithfuls will not be so successful in securing invitations to the new HP party.

There will be some nervous times for the channel too. Many resellers and distributors have a strong dependence on the HP or Compaq brand. When you consider the line up of distributors selling one brand or the other, it is impossible to believe that all will survive and prosper.

Just off the top of my head, distributors with a stake in one or both brands include Tech Pacific, Ingram Micro, Express Data, Digiland, Dicker Data, Avnet, Simms, BMS, Brightpoint, Daisytek, Dynamic Supplies, eXeed and Omega Technology.

Although some only concentrate on separate areas of the broad product range, this list includes most of the largest distributors in the country and then some. Not all will be happy to face such a large number of competitors, nor will they be keen to devote massive resources to a brand where competitive forces would eliminate margins and soft dollars will be limited.

No-one wins in that scenario, least of all the vendor. While a reduced workforce for the vendors is almost certainly on the cards, the rationalisation of channel partners is just as much a certainty. The big question is, ‘Who will go and who will stay?'Think also of the resellers who have built their businesses around Compaq or HP. I can think of a few large resellers with many years of experience selling PC-centric HP solutions that now have to introduce the Compaq brand.

Their continued success is not an impossibility as their businesses have always been about customer intimacy, which remains intact, but it is a distraction at a time when distractions are unwelcome.

Clearly there are many more cards to be dealt before the full hand is played. For many in the channel, it is yet to be determined whois holding the Ace and who is the Joker.


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