Middle East channel ponders HP/Compaq merger

Compaq and HP's Middle East offices are silent today as they await further instructions from corporate HQ. The companies' channel partners, however, gave their reaction to ITP.net.

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By  Mark Sutton Published  September 4, 2001

News of Hewlett-Packard’s $25 billion buy up of Compaq is causing consternation among the channel in the Middle East. The all-paper deal, which was announced late last night, appears to have been one of the best kept secrets in the IT industry, catching all parts of the channel unawares. Now, with both Compaq and HP’s local operations unavailable for comment, the industry is wondering what exactly the merger of two of the biggest computer companies in the world will mean.

The Middle East region will be especially hit by the move, owing to the scale of the operations of both companies in the region. Both HP and Compaq have been very active in the area, pushing most of their core businesses, both PC, server, peripherals and consultancy services in the region.

Eliot Shephard, marketing director of Tech Data, agreed. As a distributor for both HP and Compaq, he described the move as a very attractive proposition for the channel, as a merged company will have strengths in everything from peripherals to services. “It will be a good six months to one year before we see any impact, but if they can pull together, then it is a very attractive proposition, with very strong brand equity. This really will stir up the business,” he said.

Another benefit that the merged company will be able to leverage is regional strengths, said Gerry Saumure, managing director of Almasa Distribution. “Compaq’s regional offices will be a nice addition to HP, and give them a toe in to other markets,” he said.

Almasa was appointed as a distributor for HP peripherals in Iran at the end of August. Saumure welcomed the move to combine the companies: “I think it is great-the consolidation of the two, with their two philosophies will be an interesting combination,” he commented. “HP really grew as a printer business, through the channel, Compaq as a PC company, so if they can blend the philosophies this will be an excellent move.

Any changes are unlikely to come until at least Q1 next year, as the deal must be approved by the relevant financial authorities in the US, although the boards of both companies have cleared the move.

Combining the two will also be a considerable proposition, with a combined workforce of 145,000 workers. While there are synergies between the two companies product lines, there are also expected to be considerable job losses from the move.

The combined companies will be organized around four operating units: an imaging and printing group led by Vyomesh Joshi, now president of imaging and printing systems for HP; an access business led by Duane Zitzner, now president of computing systems for HP; an information-technology infrastructure business led by Peter Blackmore, currently executive vice president of sales and services for Compaq; and a services business headed by Ann Livermore, now president of HP services.

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