HP holds course after Compaq merger

Government customers will see a much heavier emphasis on services and an expanded sales presence from the new Hewlett-Packard Co., which revealed the first details of its plans for the information technology market last week just days after formally closing its merger with Compaq Computer Corp.

Agencies, though, will see few changes in the people they do business with, because the new company, anxious to maintain as much continuity as possible for its existing HP and Compaq customers, wants to emphasize a "business as usual" attitude.

"There will be more resources available to government agencies, but we want to keep that customer consistency," said Bruce Klein, vice president of federal sales for HP. "I am absolutely limiting assignment changes to as few as possible."

But federal customers will see a big difference in the kinds of services the new company will offer, boosting its ability to compete for large enterprise solutions business with the likes of IBM Corp., whose services expertise has been a big reason for its success in the federal market, company officials said.

"We've gained a tremendous amount of intellectual property and people resources through the merger," Klein said.

The company will be making numerous changes to its product lines to reduce overlap. However, the company plans to support existing products for quite a while — until 2011 for Compaq Alpha systems — so that customers can migrate to new products at their own pace, Klein said.

For the public sector overall, HP expects strong growth in future years as the market become more mature in its handling of IT and as trends such as the drive to offer round-the-clock access to government services catch hold, said Jim Weynand, vice president of the public sector group for HP Americas.

"Government customers will also require us to deliver new wireless and other solutions that will allow them to be connected to their own people wherever they are in the field," he said. "Our [research and development] investment alone will be over $4 billion a year to help us develop these kind of solutions."

Response to the HP announcements was fairly muted, but analysts are generally positive about the company's prospects.

Given the details revealed about the product plans, HP should be considered a viable enterprise-class vendor in the PC space, according to Gartner Inc. analysts Mark Margevicius and Leslie Fiering. The new, consolidated HP "has passed its first milestone by presenting a clear, timely road map for the HP and Compaq PCs and notebooks," they wrote in an online commentary.

As for the government market, the emphasis on services "clearly makes sense," said Jim Kane, president and chief executive officer of Federal Sources Inc. "That's certainly the direction that Compaq was trying to go in," so this is a logical continuation of that effort.

Robinson is a freelance journalist based in Portland, Ore. He can be reached at hullite@mindspring.com.