[Janak Parekh]

BTW, all, this made the rounds a couple weeks ago. Basically, internally, HP says they're not getting out of the PC biz soon - this is a fear tactic more than anything.

You have to realize that HP has massive vertically-integrated customers, and they can't just abandon the PC biz overnight.

Altho long-term... it would be sad; their corporate PC's, especially the Vectras, are awesome.

--bdj

[Janak Parekh]

BTW, all, this made the rounds a couple weeks ago. Basically, internally, HP says they're not getting out of the PC biz soon - this is a fear tactic more than anything.

You have to realize that HP has massive vertically-integrated customers, and they can't just abandon the PC biz overnight.

Altho long-term... it would be sad; their corporate PC's, especially the Vectras, are awesome.

--bdj

[Ed Hansberry]

Originally Posted by BigDaddyJ

BTW, all, this made the rounds a couple weeks ago.

Hence the "Ok, ok, this is a month old" statement right at the beginning of my post. ;-)

[JMountford]

I think we will see a lot of changes in the PC industry over the next year or two, especially with MS pushing for the changes they want.

[Kilmerr]

This is simply an idle CEO threat from a very odd public war. Either way HP is hit bad. If the PC Biz 'doesn't matter' why is HP trying so hard to snag big long-term corporate accounts? And why is Dell cleaning them dry? I don't buy the concept that the PC Biz is suddenly no longer a money maker. It has gone more commodity and less high margins yes, but good for the consumer and corporates. Sounds like HP is getting smacked and blaming the 'market'. If you can't compete, then leave...

It comes down to this: big mergers with overlapping product lines, both become less than what they were. The real ones cheering this merger on are IBM, Dell and Sun. When your competitors want a merger, you better think twice. I don't see much value in a merger, nor do the shareholders or the public (or the tech press) seemingly.

Either way, HP is less of a company for this. Compaq can come out golden in one direction. HP has no good side and will be a company divided no matter what.

But giving up PC Biz, has little to do with the Pocket PC market, imho...I don't see the Jornada fading.

Christopher Coulter
www.kilmerr.com

[Perry Reed]

I'm an ex-HP guy.

HP makes most of their profits on printing and imaging supplies (ink and toner cartridges, mostly). They make most of their revenue on printers and imaging devices. The problem here is that the printer business (called the "ink holder business" inside HP since the ink is where the real money is), is going the way of the PC business-- into a commodity market. The competition has caught up with HP, or nearly so, and so it matters very little whether you buy an HP, a Xerox, an Epson, or a printer from any number of other printer companies.

As for the PCs, HP still is the #1 home PC maker in the U.S. and are in the top 5 in most home and business markets worldwide. But, as I said, it's a commodity market with very little profits to be made.

Walter Hewlett's argument against the Compaq merger is that HP+Compaq would dilute the profitable print and imaging business while exposing the company further to the not-so-profitable PC business. In my opinion, he's half right. Yes, there would be further exposure on the PC side, but that printer business that he's trying to protect is going to be in the same position as the PC business very shortly.

The big win in the HP/Compaq merger would be the combination of the service organizations. When Compaq purchased Digital (and to a lesser extent Tandem), they bought some great service groups that, when combined with HP's will rival IBM in size and ability. This is the same reason that HP had tried to buy PriceWaterhouseCoopers not too long ago.

The biggest issue in the merger, again in my opinion, is how to combine the server lines. HP already has three of them: Windows/Intel-based NetServers, HP-UX- (and now Linux, too) based 9000 servers, and the old MPE-based 3000 servers (which are being slowly phased out, but still have a huge user base). Add to that the Compaq Intel-based servers, the rest of the Digital servers, including Alpha and Vax, and the Tandem servers, and you have a mess of hardware platforms, CPU platforms, and OS platforms. How HP handles that mess will go a long way to indicate how they'll handle the rest of the merger.

The PC side is actually simpler. You have multiple divisions between HP and Compaq targeting essentially the same markets, so you pick the winners in each market and consolidate or eliminate the redundancies.

One final note-- HP does indeed still make calculators. In fact, I believe that they're made by the same division in Singapore that makes the Jornadas.