IDC Reveals Implications of the New HP on Local Hardware Market

NORTH SYDNEY- MAY 9, 2002 – Excitement is back in the IT&T industry as the merger of two industry stalwarts has been concluded with the announcement of their new structure and local management.


With the announcement that the new HP will have four lines of business: Personal Systems Group (PSG), Imaging and Printing Group (IPG), Enterprise Systems Group (ESG), and HP Services (HPS), this enforces the message the company is committed to aligning its business and customers quickly and effectively.

Further, the company is coming out of the gate in a rather simple form rather than attempting to laud itself as a robust multifaceted global enterprise. It is IDC Australias opinion that the new HP is expecting customers to prefer a combination of end-to-end hardware and services provisioning with fewer hoops to pass through as a supplier and partner. This structure aims to offer the scale of an IBM model combined with a directness of a DELL.

While it was leaked several days ago the new team is very Compaq heavy with only the Imaging and Printing team leader coming from the local HP organisation.

Compaq former Managing Director, Paul Brandling, will head the local office of the new HP (HPQ) and will be responsible for motivating his staff and communicating to the market the strengths of the new entity. This strategy and mission was outlined by Carly Fiornia and Michael Capellas, stating the company would focus on customer, trustworthiness, the new team, and speed and agility in execution.

A particular stand out point was the seeming autonomy given to each group at the onset of the launch. For example, the PSG group has the autonomy to define its channel, partners and products on a local rather than global basis. Not only does this make for an easier internal transition period as products, resources, and people are realigned, but customer offerings and future migration becomes more straightforward, commented, Joel Martin, IDC Research Director, Infrastructure & Communications.

Having said this, the transition roadmap that has been outlined expects the product line convergence to take place by October 2002 for PCs and notebooks, while consumer brands and enterprise workstations will remain separate until well into 2003. The Compaq brand will only remain in full in business desktops and notebooks, while a joint brand will exist elsewhere or in some cases the form factor will remain but product brand will become 100% HP,as in the popular iPaq, added Mr Martin.

Another group, the Enterprise Systems Group is expected to make considerable waves in the market place as it is tasked with bringing together both companies high end systems and having to maintain both strategic partner and end-user customers. To aid in achieving this HP are announcing a three product roadmap tying refreshment cycles in with migration to meet customer invest cycles rather than force change upon them.

One note was that Tru64 will not be ported to Itanium, and will be integrated into the HP-UX line. The new HP is also promising a minimum length of service commitment for storage and servers of 5 years after date of last sale of the product. This is a strong commitment to customers, which conducted business with either Compaq or HP during the past two years.

Mr Martin said, IDC expects the new HP to have many challenges in the road ahead, but committing to the customer does not seem to be one. IDC will continue to assess the market and the vendor?s performance across vertical markets, through the channel, and with the end user. Based on IDC?s recent Market Sentiment Monitor survey of over 250 medium and large enterprises, the autonomy and support for brand across industries at a local level should be well received.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and eBusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts local and worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDCs customers comprise the world's leading IT suppliers, IT organisations, eBusiness companies and the financial community. Additional information can be found at