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The merger of hewlett packard and compaq

But 10 years later, partners reflect on the historic deal and how it changed HP -- for the better. Big technology mergers weren't thought of very fondly by the channel, and many HP and Compaq partners were fearful the proposed merger would put both IT vendors in jeopardy and also cause a major disruption to VARs' businesses.

  1. It was a risky bet for Lilien Systems , an HP Elite partner that did most of its sales with the vendor.
  2. Tap here to turn on desktop notifications to get the news sent straight to you.
  3. Nothing illustrates the success of the merger better than the chart below. Bigger is not necessarily more beautiful.

But fast-forward a decade, and solution providers say the historic merger was a surprising success and ultimately helped their businesses. And the bold move ultimately produced what the two companies promised — a worldwide technology powerhouse with top revenue positions in servers, PC and printers go here for the official HP-Compaq merger press release. I think they turned the combined company into a strong channel company, which is what we were all concerned about as partners.

The Merger That Worked: Compaq and Hewlett-Packard

Wald's company Riata Technologies which merged with White Glove Technologies in 2010 was a loyal Compaq partner, and Wald didn't want to see his top vendor become part of HP. He was greatly concerned about the potential disruption in the channel, too. Some of those fears were realized; Wald said the taxing Compaq integration negatively impacted Riata's business as HP struggled to find the right channel strategy for the combined company.

Worst tech mergers and acquisitions: HP and Compaq

To their credit, the folks at HP continued to invest in the channel and in the relationships with partners. Fiorina and Michael Capellas, the head of Compaq at the time of the merger, could not be reached for comment. He admits that when he heard the announcement that day, he was in "a state of panic" and feared the merger would be a disaster.

A Compaq partner prior to the merger, Richie said the memories of another big IT merger were fresh in his mind.

Hewlett-Packard and Compaq agree to merge, creating $87 billion global technology leader

But his fears began to erode slowly as HP began to integrate Compaq. In particular, Richie said he was impressed with how the two companies assimilated their respective partner programs into a combined effort that worked for both sets of partners.

The HP-Compaq Merger: Partners Reflect 10 Years Later

It was a risky bet for Lilien Systemsan HP Elite partner that did most of its sales with the vendor. Like many solution providers, Lilien's company saw revenue fall during the 2002 recession, and if the merger didn't succeed, it could have had devastating consequences. HP would definitely not be where it is today without Compaq. While StorageWorks was a Compaq product line, it was HP that made storage a priority during the integration and promoted the technology to channel partners like Sequel Data Systems.

Lilien agrees, saying the Compaq merger fundamentally changed how HP went to market. A hidden benefit of the merger, according to partners, was that the merger enabled partners that preferred to stay vendor-exclusive to grow their line cards without having to sign up with additional vendors. While HP got many different assets of out of the Compaq purchase, one of the biggest assets was Compaq's enormous PC business.

Compaq was the worldwide PC leader for several years before 2001 — when Dell's surging business began to take market share away from Compaq as well as HP and other major PC players. If HP does indeed leave the PC business behind, either by sale or spin-off, will it lead to second guessing about whether buying Compaq was the right move?

Lilien believes that regardless of what HP does with its PC business today, the Compaq merger was still a great move that dramatically changed HP.

  1. And the bigger the merger, the better.
  2. Moreover, at the time of writing, HP and Compaq have not announced how they plan to structure the new company.
  3. You might say, then, that "Walter fiddles while HP earns.

HP got a lot out of the merger," Lilien said. Whatever the future holds for HP and its PC business, partners agree that the Compaq merger was a historic move that changed the IT industry.