(Fwd [2]) Vendors in Turmoil: No End To Hosting Upheaval

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  The big losers in the merger could be enterprises    reliant on Compaq's legacy operating systems,    OpenVMS and Tru64 Unix. "The users of OpenVMS    and Tru64 Unix probably really ought to be    evaluating their options at this point, because it's not    at all clear that HP will want to maintain those    products. It will probably boil down to HP-UX, plus    Linux," Kusnetzky said.

   Tru64 Unix has about 6 percent market share for    Unix operating systems, compared with 15 percent    for HP-UX. Compaq sold only 25,000 OpenVMS    licenses in 2000, Kusnetzky said.

   While both Compaq and HP have large services    organizations,
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they specialize in their own

   company's products and don't offer expertise in    vertical industries and application integration like    IBM Global Services and EDS, which rank 1 and 2    in services market share.
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The merger would create

   the third largest provider of IT services, according    to Gartner Dataquest, with combined service    revenues of $14 billion in 2000, compared with    IBM's $33.1 billion and EDS's $19.2 billion.

   Even with that additional size, it faces an uphill    battle. About 65 percent of Compaq's and HP's    combined services revenue in 2000 came from    support contracts for their own hardware, compared    with just 20 percent for IBM, according to Gartner    Dataquest.

   "When I'm looking at bringing someone in, I don't    have the time or the money to educate them on the    whole health care spectrum. I'm looking for health    care technology experience," said Bill Boffi, vice    president of e-business at BlueCross & BlueShield    of Rhode Island and an IBM Global Services    customer.

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Analysts said neither HP nor Compaq

   offer that level of expertise today.

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   It's not easy for a platform vendor to separate its    consultants from the product side of its business.

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   IBM attempts to do this by tying consultants'    compensation to the size of the contracts they land,    not to the amount of IBM hardware that goes into    those deals, said analyst Tom Rodenhauser of    Consulting Information Services. He said this kind of    independence is critical if hardware companies are    to attract top-flight consultants, who balk at the idea    of selling products.

   It may take HP five years or more to attract the    talent it needs to compete in business services    consulting, Rodenhauser said.

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• Forwarded message follows -------

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HP-Compaq: A Lot To Prove: Customers ask, What's in it for us? http://update.internetweek.com/cgi-bin4/flo?y=eESc0BdpN70V30Rzw0A8

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Author: Eric D. Pierce
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