As a merged company, HP and Compaq will dominate the hardware space in Australia, overtaking former number one IBM in the sector, says market research company Gartner.
"In Australia last year, the two companies shipped 485,000 PCs equalling $US595 million in revenue - 1.5 times more PCs than IBM, and three times more than Dell," the analyst announced. "Gartner believes the challenge is to retain this market share against established competitors that may take advantage of customer uncertainties and product discontinuities."
However, if the merged company expects to seriously rival Big Blue, it must first make another acquisition - that of a large consulting and system integration firm.
"Without that, they would not be able to drive services-led sales as IBM does today," says Gartner. "The merger makes them number two in the Australian services business, but they're still a long way behind IBM Global Services."
Services could make or break the new entity, according to analyst reports in the US.
"We think the operation will be successful as long as the patient doesn't die on the operating table," said John Gantz, senior IDC analyst. "There is a lot of risk associated in making this move, mostly around execution, integraton and services."
Todd Kort, a principal analyst at Gartner in the US, said that identical product catalogues from HP and Compaq make a merger difficult to understand. Consequently, he believes the two companies may very well find reason to throw in the towel before a merger is complete.