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Disties nervous over HP/Compaq merger

Disties nervous over HP/Compaq merger

With Compaq shareholders rubber-stamping the Hewlett-Packard merger last week, all eyes are focused on the tallying of HP shareholders' votes. Meanwhile, Australian distributors have a nail-biting wait before their fate is decided.

Over 600 staff from HP and Compaq are dedicated to plan and handle the post-merger integration as a combined HP/Compaq looks to strip $US2.5 billion in costs from its balance sheet.

The stakes are high. According to a post-merger integration planning document, the combined company will work towards a consolidated go-to-market strategy that places channel partners into one of three areas: value, volume and retail.

Both Tech Pacific and Ingram Micro have a footing in both camps while Dicker Data, Express Data, Daisytek, eXeed and Digiland have alliances with one vendor or the other.

It's a situation that is drawing strong comments from most of the major players involved. Steve Rust, managing director of Ingram Micro, sees more threats than opportunities from the merger.

"The single biggest influence on what this means for the channel is how well they manage the integration.

"If they don't get it right, customers will start to feel the impact and they will look elsewhere."

Ingram Micro is selling more Compaq than HP at the moment, according to Rust, and when combined the two of them make up one-third of his business.

"We currently have two sets of staff servicing the two brands and sometimes we could do with more on one or the other. So the upside for us is that we will be able to consolidate the resources we are applying to them.

"The big question is will the sum of one and one equal two? I suspect it will not."

Rust is confident there will

have to be some rationalisation of the number of distributors selling product from the combined

entity.

"There has to be a cull. If they leave all the distributors that are currently selling one or the other, competition will be too fierce and no-one will make any money.

"The whole object of the merger is to create efficiencies and that will have to reflect in the number of distributors they utilise."

Ross Cochrane, managing director of Express Data, is less convinced. He predicts that should the merger proceed, HP/Compaq will have to undergo considerable internal restructuring before any external or channel consolidation takes place.

He also cautions that a quick decision is in no way assured. Should a close vote result from HP shareholders, the merger runs the possibility of being contested in the courts.

Michael Bosnar, managing director of HP aggregator eXeed, said he believes the distribution line-up for the combined HP/Compaq has more chance of being broken down into technology streams.

"There are some products for which you need to control the number of distributors you appoint, others you can have as broad-based as you like," Bosnar said.

Ultimately, the new-look channel strategy for HP/Compaq will be made with considerable input from local management, according to Adrian Weiss, marketing communications manager at HP.

Weiss told ARN that teams of people from both HP and Compaq are looking at a new channel model from a local, regional (Singapore) and US level.

Confirmation of whether the merger is approved is expected in the next two to three weeks


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