Impact of HP-Compaq merger in Indian market

By Anand Parthasarathy

KOCHI, SEPT. 4. The $25 billion deal that saw one major U.S.- based computer company - Hewlett Packard - acquire a close competitor - Compaq - today, will inevitably impact the personal computer (PC) market in India where both are key players.

On their home turf, both information technology giants were evenly matched; HP, with its edge in printers, was the bigger operator with $47 billion in annual revenues compared to Compaq's $40 billion. Together they are now second only to IBM by a whisker.

But come to India - and the equation changes. Here Compaq with Rs. 1,945 crores estimated revenue in the last fiscal year was ranked the fourth among Indian IT companies ( after HCL, Tata and Wipro) in Dataquest's annual Indian Top Twenty IT rating just published. HP with Rs. 1,705 crores in 2000-01, is ranked number 7.

While HP's strength in India is its domination of the printer market - with a nearly 80 per cent share - both companies have head to head competition in both the server and the mass PC arena. Compaq's Presario multimedia PC has been taking on HP's Pavilion in the home PC segment where both slashed prices in recent weeks to bring systems below the Rs. 40,000 mark. In the office desktop space too, the two companies have been competing aggressively: Compaq's DeskPro versus HP's Brio. According to Dataquest (India) estimates, Compaq sold 151,568 PC units last year, to HP's 91,200.

With the two companies merged, it remains to be seen which brands survive and which are jettisoned. For Compaq's Indian operation, there is an element of poetic justice in today's takeover. In 1998, it was the dominant partner in the merger with Digital Equipment Corporation, another well known U.S. name in mini computers. Today the Digital operation in India is purely in the software arena - it self destructed the hardware business in Compaq's favour. Will a similar fate await Compaq's PC - and server business?

It remains to be seen. But the ultimate loser may be the consumer here whose choice of brands may be further curtailed. IBM and Dell are the only two major U.S. brands in the Indian PC and server arena remaining; while the budget brand, Gateway is also expected to test the waters in India shortly.

The acquisition has left HP's 47-year old Ms. Carly Fiorina as the CEO and Chairman of the new entity, while Compaq's Chairman, Mr. Michael Capellas, will be the new President. After the shakedown, one of the four new divisions - Imaging and Printing - will be headed by India-born Mr. Vyomesh Joshi.

Till this evening, HP's India operation did not comment on the Compaq acquisition or its possible local impact

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Section  : Business
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