AAx Hewlett Packard Acquires Compaq

3-Sep-01 - Two of the largest PC manufacturers merge as the PC market continues to decline.


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Hewlett Packard and Compaq are both struggling in a declining PC market. The stronger of the two, Hewlett Packard, has acquired Compaq, which had itself acquired Digital Equipment (once the second largest computer maker) and Tandem computers.

The companies announced the $25 billion deal on 3 Sep 2001 and expect it to gain government approval and be finalized by early 2002. Headquarters will be in Palo Alto, California, but a large operation will remain in Houston.

Analysis

This is a desparation move, and there will be similar moves by other PC manufacturers. The PC market is crushed and it isn't coming back. There are more large PC manufacturers than the market will bear, or will ever bear again, and some just have to go.

Why would anybody want to buy new PCs today? Everyone already has enough of them, and the new ones will be just like the old ones, and since they come with newer, fatter, slower versions of the same software, they aren't even any faster. Why bother?

This industry was born of innovation, it flourished from innovation, but innovation has been crushed out of it by the leaden weight of Microsoft's monopoly, so it's dying. There hasn't been anything really new for a decade.

Microsoft totally controls the design and configuration of PCs - even Intel is no longer allowed a role. PCs are all the same, do exactly the same thing and run exactly the same software - Microsoft Windows and Microsoft Office. Windows is way beyond "end of life" technology and the PC design should have been scrapped well over a decade ago. It's unstable, inadequate, and totally obsolete, but it's what runs Windows.

The excitement is gone, the enthusiasm is gone, and now the money is gone. Game over. Home use is moving to game consoles expanded for Internet access. Business appliations are moving to thin clients and Web based applications.

Of course, with XBox, Microsoft intends to crush the life out of the game console market too, and with its .NET initiative, crush the life out of the Internet. By destroying innovation and entrepreneurship, it's crushing the life out of the American economy.

In the future, technology leadership will re-awaken in some other country.

- Andrew Grygus

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