Sun seeks to cash in on HP-Compaq woes

Kavita Nair in Mumbai

The HP-Compaq merger has run into rough weather, with the founder group of HP opting to vote against it. Even as a new chapter of the much maligned merger unfolds, the biggest beneficiaries from the confusion are none other than HP and Compaq’s competitors. Arch rival Sun Microsystems for instance is positively jubilant claiming that HP customers are migrating into its fold.

Mr Lionel Lim, vice-president and managing director, Asia South, Sun Microsystems Pte Ltd says, “As of now the HP/Compaq issue is a board room fight with the family which is actually good. This is hurting customer confidence and the company’s reputation a lot. Personally, I hope this merger does go through. Because if it does, then in one stroke two competitors will be felled.”

Sun says it has gained customers in the server space as HP and Compaq grapple with the merger.

“There is a great deal of confusion among HP’s customers in the wake of the merger. They are unsure about which products will survive in the post-merger era. As a result, there is migration on the server end as well as in the workgroup station segment,” says Mr Lim.

“With the existing uncertainty, competitors will jump in to take a slice of the cake. Customers will look out for options that are more secure,” says Gartner India Research & Advisory Services research analyst Vinod Nair. Gartner had in fact indicated right after the merger announcement earlier this year that HP’s plan to buy Compaq would most likely benefit only competitors.

Compaq, as well as competitors like IBM, when contacted declined to comment on the issue. HP India president Arun K Thiagarajan said, “While we cannot provide specifics about the merger, in India, we are very excited about the power this combination represents and opportunities it presents to our customers.”

However, Mr Nair points out: “The immediate after-effect of the merger was confusion in the channels as far as volume products such as PCs are concerned. Similarly, there is confusion prevailing in the high-end offerings since both the companies have different server architecture and different operating systems. If the deal does go through there is an uncertainty about the offerings from HP/Compaq.”

Software vendors are also in the spotlight under the circumstances. A software vendor writing on the HP/Compaq platform, for instance, is faced with uncertainty on the issue of writing on these platforms. Vendors will not be able to wait for the merger to be settled in order to decide.

In the meantime, Sun is not wasting any time. The company has stepped up efforts to lure customers away from HP/Compaq. In India, for instance, the company has introduced ‘volume trade-in offers’ wherein a customer can trade in old/new workgroup servers and server appliances of HP or Compaq for Sun Machines.