Analysts in Asia chart new HP product lines

SINGAPORE--The decision to retain a particular product line will have a direct impact on Hewlett-Packard and Compaq's manufacturing facilities in Asia, especially Singapore, said analysts responding to HP's Tuesday announcement that it would acquire Compaq in a stock swap worth about US$25 billion.

HP printers and Jornada handhelds are made in Singapore. The company also has two manufacturing facilities here--inkjet printer design and thinfilm silicon wafer fab--apart from other plants in China and Japan.

In Asia Pacific, Compaq manufactures PCs and servers in Singapore, India, Australia and Japan. The selection of product lines will also determine the number of positions to cut, analysts said.

In addition, the combined companies will be organized around four operating units--imaging and printing, access devices business, IT infrastructure business and services business.

Industry analysts across the region polled by Singapore.CNET.com today revealed that HP is likely to retain the desktop, server, workstation, networking and printing businesses, while Compaq will hold the notebook, handheld, device and storage divisions (see table below).

The poll covered HP's three new business units--the US$29 billion access devices business which comprises PCs, handhelds and new Internet-access gadgets; the US$23 billion IT infrastructure business which consists of servers, storage and software, and the imaging and printing unit which is worth US$20 billion.

For the access devices division, analysts said that Compaq outranks HP based on Asia Pacific market share and revenues.

"I expect HP to retain the iPAQ product range. Compaq's iPAQ stands out over HP's Jornada especially from market adoption and brand perception in Asia," said Ian Bertram, Gartner Dataquest Asia Pacific regional director (Hardware Platforms). "(iPAQ) is also a widely adopted product in the enterprise market."

Davina Yeo, IDC Asia Pacific research manager (Personal Systems), concurred with Bertram but said that the iPAQ brand name would probably be dropped.

On the server business, Bertram said that HP fares better in the enterprise server space compared with Compaq. "HP's Superdome (servers) will be the product of choice," he said.

Bertram also picked Compaq over HP for storage as the latter does not have a "strong storage solutions story."

On its imaging and printing business, both Gartner's Bertram and IDC's Yeo agreed that HP was the clear winner. "I think HP is going to keep the imaging and printing business because it's one of the most profitable units so that's a pretty safe bet," Bertram said.

HP said that once the deal is completed, the combined company will eliminate about 15,000 jobs, or 10 percent of its workforce.

A Compaq Asia Pacific spokesperson said that the impact on the region has yet to be determined. "Compaq is still in the process of working out the finer details of the merger. The number of job cuts is not something that can be determined at this stage." HP Asia Pacific declined to comment.

Compaq employs 3,000 workers in Asia Pacific (excluding Japan and Greater China) while HP has 14,000 employees (including Japan).

HP's buyout of Compaq will be fraught with difficulty, according to Ashok Kumar, an analyst at US Bancorp. The two companies are very much alike. Roughly one-third of HP's revenue comes from PCs, notebooks and servers. About half of Compaq's earnings come from the same sources. Their Unix server businesses are similar.

"There are so many overlapping units there is no complementary benefit," he said. "The problem with HP is that they have a lot to deal with and if they want to get Compaq, it is going to be really tough."

SINGAPORE--The decision to retain a particular product line will have a direct impact on Hewlett-Packard and Compaq's manufacturing facilities in Asia, especially Singapore, said analysts responding to HP's Tuesday announcement that it would acquire Compaq in a stock swap worth about US$25 billion.

HP printers and Jornada handhelds are made in Singapore. The company also has two manufacturing facilities here--inkjet printer design and thinfilm silicon wafer fab--apart from other plants in China and Japan.

In Asia Pacific, Compaq manufactures PCs and servers in Singapore, India, Australia and Japan. The selection of product lines will also determine the number of positions to cut, analysts said.

In addition, the combined companies will be organized around four operating units--imaging and printing, access devices business, IT infrastructure business and services business.

Industry analysts across the region polled by Singapore.CNET.com today revealed that HP is likely to retain the desktop, server, workstation, networking and printing businesses, while Compaq will hold the notebook, handheld, device and storage divisions (see table below).

The poll covered HP's three new business units--the US$29 billion access devices business which comprises PCs, handhelds and new Internet-access gadgets; the US$23 billion IT infrastructure business which consists of servers, storage and software, and the imaging and printing unit which is worth US$20 billion.

For the access devices division, analysts said that Compaq outranks HP based on Asia Pacific market share and revenues.

"I expect HP to retain the iPAQ product range. Compaq's iPAQ stands out over HP's Jornada especially from market adoption and brand perception in Asia," said Ian Bertram, Gartner Dataquest Asia Pacific regional director (Hardware Platforms). "(iPAQ) is also a widely adopted product in the enterprise market."

Davina Yeo, IDC Asia Pacific research manager (Personal Systems), concurred with Bertram but said that the iPAQ brand name would probably be dropped.

On the server business, Bertram said that HP fares better in the enterprise server space compared with Compaq. "HP's Superdome (servers) will be the product of choice," he said.

Bertram also picked Compaq over HP for storage as the latter does not have a "strong storage solutions story."

On its imaging and printing business, both Gartner's Bertram and IDC's Yeo agreed that HP was the clear winner. "I think HP is going to keep the imaging and printing business because it's one of the most profitable units so that's a pretty safe bet," Bertram said.

HP said that once the deal is completed, the combined company will eliminate about 15,000 jobs, or 10 percent of its workforce.

A Compaq Asia Pacific spokesperson said that the impact on the region has yet to be determined. "Compaq is still in the process of working out the finer details of the merger. The number of job cuts is not something that can be determined at this stage." HP Asia Pacific declined to comment.

Compaq employs 3,000 workers in Asia Pacific (excluding Japan and Greater China) while HP has 14,000 employees (including Japan).

HP's buyout of Compaq will be fraught with difficulty, according to Ashok Kumar, an analyst at US Bancorp. The two companies are very much alike. Roughly one-third of HP's revenue comes from PCs, notebooks and servers. About half of Compaq's earnings come from the same sources. Their Unix server businesses are similar.

"There are so many overlapping units there is no complementary benefit," he said. "The problem with HP is that they have a lot to deal with and if they want to get Compaq, it is going to be really tough."