On September 4th, 20001,Hewlett-Packard Company and Compaq Company jointly announced a firm merger agreement, and a high-tech enterprise with an annual turnover of 87 billion dollars was born. The new HP will provide the most complete IT products and services in the industry for commercial and consumer users, and promise to serve users with open systems and architectures. The combined company will have the largest turnover in the world in terms of servers, access facilities, images and printing, and become a global leader in IT services, storage and management software.
Compaq ate DEC eight years ago, and HP ate Compaq today. When the shepherds quarrel, the wolf wins.
Today, Compaq's acquisition of DEC is basically a failure. The acquisition of Compaq is also a big challenge for HP. Will HP repeat Compaq's acquisition of DEC, and will the merger succeed? The experience of purchasing DEC from Compaq has some implications for today's HP.
DEC, Hewlett-Packard, IBM, these are all old shops with a history of nearly a hundred years, while Compaq has only a history of more than ten years. It is a miracle that it can become such a scale today. Eight years ago, Compaq was ambitious. After the acquisition of DEC, Compaq and Hewlett-Packard have almost equal turnover, and both are eager to get ahead. Practice has proved that it is counterproductive. In the past three years, Compaq's business is far from the initial expected growth. When Compaq merged with DEC, its sales were $39 billion and HP was $39.5 billion. Up to now, Compaq's sales in the first four quarters were $40.4 billion, while HP's reached $47 billion.
The main lesson of Compaq's failure to acquire DEC is cultural conflict, at least the two sides are not well prepared; On the other hand, sales channels are full of conflicts. Compaq integrated sales is unsuccessful and has no certain discipline. The two sides are not well integrated in sales model, target sales channels and target positioning.
Smart integration means respecting each other's differences. Don't pinch each other in different ways. If you pinch one, there is a problem. You should communicate on a certain level and in some technical aspects, instead of disrupting the whole organization.
DEC is an enterprise with excellent technology, and its culture has adapted to the era of excellent technology, so the basic first concept is high-tech investment. Its R&D investment once accounted for 13 percentage point of its income, which was very high. Technically, DEC is still advanced today. To some extent, DEC's business philosophy is that good wine is not afraid of the deep alley, rarely talks about business, and always talks about technology, thinking that everything will be fine if the technology is good.
Compaq is famous for its business performance, and the most famous statement is that its capital can be doubled 14 times a year when it is the highest. However, Compaq's investment in science and technology and R&D is very low, probably less than 3 percentage points. Compaq used to be a PC, so Compaq expanded greatly at that time. When I became the PC boss, I thought of buying DEC, and I wanted to combine Compaq, the business master, with DEC, the technology master.
However, it is difficult to really combine, and the problem is very big. The cultures of the two companies are too different. DEC has a history of more than 40 years. Headquartered in Boston, DEC is a place where scientific and technological elites are born, which smacks of scientific and technological aristocrats. Compaq is headquartered in Horst, Texas. It is not a very prosperous place, and its history is only 10 years. It has no deep cultural foundation. After Compaq acquired DEC, because of cultural incompatibility, DEC people thought that technology would no longer be valued, so a large number of talents left, lost the talents who mastered technology, and a large number of people went to Microsoft, Intel and other technology companies.
After Compaq acquired DEC, it was not easy to integrate in the sales front. Compaq sells PCs, paying attention to channels, stratification, main channels, first-class agents and distributors. There are only 300 and 500 units in a transaction. It is estimated that there will be tens of thousands of units this month and tens of thousands that month. Their main pursuit is capital turnover, and their entire distribution channel does not have much technical level, but more is service maintenance. DEC's agents are all big customers in the industry and may sell three or five units a year. But this machine is of great value, each of which is several million yuan. They mainly do minicomputers or servers, not just move the machines to others. They also provide applications and solutions to others. DEC and Compaq's agency are two different models. DEC's agent despises Compaq's agent, Compaq's agent despises DEC's agent, and the agent is in confusion. Results Since Compaq acquired DEC for three years, the sales team and sales channels have been tossing, and the whole sales channel is difficult to digest and absorb.
Today, HP eats Compaq and Compaq eats DEC, which are not exactly the same. At that time, Compaq ate DEC, and felt quite good and rich, with the purpose of expansion. At that time, we did not consider whether the market environment that people are particularly concerned about now is good or not, and we should work together with Qixin to resist the storm. At that time, Compaq was one-way, that is, to acquire DEC, and DEC was acquired in a down-to-earth manner. Compaq was acquired by HP today, which is a big environmental problem. In addition to competing for market position, there are quite a few passive components, because if you don't buy Compaq, it may be a mess.
HP and Compaq are highly complementary in many places. At first glance, it is a high-end server, a PC server, and PCs on both sides. In fact, high-end servers, PC servers and PC workstations all have different grades. So generally speaking, the product lines of both sides have quite a few complementary parts. Therefore, after the merger, the new HP product line will be very neat, and of course there will be overlapping parts, but there are still differences in levels and grades. So HP and Compaq merge and complement each other more than they repeat.
HP's overall thinking is very clear. Since 20 years ago, it has all printers, personal computers and high-end servers. The system department is responsible for high-end products, the PC department is responsible for PCs, and the printer department is responsible for printers. At that time, many people said that HP's instruments and computers were very good and could complement each other. The east is not bright and the west is bright. Why should we separate them? In fact, HP knows very well that PCs and printers belong to low-end products, and HP has always maintained the independence of high-end product management. Last year, HP made some attempts and shared some available resources. Therefore, after the acquisition of Compaq, HP's product line will look very neat, with more complementary parts than repetitive parts, and HP has a lot of experience in operating different products together.
Hewlett-Packard Company has a history of 62 years this year. Is the first high-tech enterprise established in Silicon Valley, which is the birthplace of Silicon Valley and has a very rich technical background. HP culture is people-oriented. Up to now, HP is quite mature in technology, management and grasping the whole market. Therefore, after the merger of HP and Compaq, HP should be able to manage the new HP well. From the perspective of HP as a whole, it is possible to avoid Compaq's previous mistakes in many aspects. In addition, Ms. Carly, Chairman and CEO of the Board of Directors, has rich experience in acquisition and distribution. She is aggressive. She just wants to rush up, seize the market, occupy the position, and further improve HP's position.
HP's acquisition of Compaq may also gain the share and proportion of Compaq services. Ms Carly thinks that HP's weakness compared with IBM lies in its service. In the past 20 years, especially since Guo Shina took charge of IBM, it is very important to expand services. It turns out that DEC has its own powerful service consulting system. In terms of high-end technical consulting, Compaq still maintains that set of consulting technical services.