I forgot to add—Apple might be able to pick up some hardware engineers since iPaqs and Jornadas both run PocketPC and I doubt that both product lines would survive the buyout. Compaq (ex-DEC) and HP also have UNIX folk who might want to Think Different. The sad thing is, even HP has given up technology leadership by adopting Itanium (which it co-designed with Intel) instead of PA-RISC, just like Compaq is phasing out Alpha. StrongARM (the heart of the Newton MP2000/2100) lives on at Intel, where it is evolving into xScale. If Apple decides to get back into handhelds (which I doubt), an Intel CPU (gasp!) may yet be chosen to run “Pocket” MacOS X. Hmmm…

tbone,

The EU can stop the merger of two US companies if they do business in Europe. They companies could still merge, but they would not be able to sell stuff in the EU. This is how the GE/Honneywell merge got killed. If I am wrong I am sure that someone will say so.

I don’t think that the merger will have much impact except that it might create a bigger price war.

_________________
The House will rise again…

<font size=-1>[ This Message was edited by: HOM on 2001-09-04 16:06 ]</font>

On 2001-09-04 15:46, tbone1 wrote:

Why does the EU’s approval or disapproval have anything to do with a merger between to US companies? ... does the EU really have the ability to be a showstopper? If so, why? How would the EU react if the US tried to stop, say, Daimler from buying Fiat?

http://www.time.com/time/business/article/0,8599,166732,00.html

The EU stopped GE’s buyout of Honeywell. Multinational corporations are not always successful in their attempts to have governments roll over and play dead—which is probably a good thing.

Everyone says this is bad for the consumer. I completely disagree. I believe there were too many computer companies to begin with—just like there were too many online companies. The market can only support so many players. I mean HP, Compaq, Dell, eMachines, Gateway, et cetera—what’s the real difference? It is this super-saturation of the industry and consequent stagnation that has caused this whole economic down turn to begin with. I imagine one or more major or semi-major players and a whole slew of minor ones will no longer exist before this recession ends. Furthermore, this is excellent news for Apple. At worst, they will gain no market share from this. However, I believe they will do a whole lot better than break even. Apple is the only player that will come out smelling like a rose from the whole affair. Further, I do not believe this acquisition will boost HP that much, especially over the course of several years. Who knows, it could even be detrimental. I believe the driving force behind this purchase is the commodification of PCs by Dell. Dell is selling the present against the future. But who’s future? Certainly many more people bought computers than would normally do so due to the price. This will cause a glut of buyers in the near to mid future. However, if Dell can focus the glut on other computer makers, without losing industry percentage it could very easily put HP, Gateway, eMachines and the like out of business. On the other hand it could easily turn on them and be their undoing. Either way, this would leave Sony and Apple in an excellent position to sell quality solutions at a premium.

Not until too many computer makers are put out of business will other companies or possibly new companies have the ability to rise and replace them with the next great thing. This may even be Apple. This is what will ultimately be beneficial to the consumer. In the mean time, the consumer can go hog wild with super-cheap PCs. The consumer wins, and if Apple plays their cards right, they will too. All hail recessions, the checks and balances of capitalism.

On 2001-09-04 15:48, Extell wrote:
I dont think that IBM would do this because they make Apple’s chips. (FYI). IBM is primarly a research company. Have you ever looked at the number of patents they have?!? Joining with any company would lower IBM. I dont think IBM will “merge” with anyone.

No, more likely IBM would buy other firms if it would add significantly to IBM’s patent portfolio. I’m the ex-DEC, ex-Compaq anonymous poster, and I should add, I also worked briefly for IBM. My preferred computers at home, however, have always been Macs.

I think overall this acquisition will affect Apple very little - at least in the consumer market. I think most of the assault fronted by the new HP will be on the server front and services unit. Consider the following: HP worked with Intel to develop the Itanium processor for servers, HP also worked with Intel to develop a new Operating System for the Itanium. Compaq (morons that they <were>) exchanged the Alpha design team and specs with Intel for priority usage of Itaniums, which will now be standard on Compaq servers, including the ultra-high end Himalayas… (I would have to vote Compaq the WORST managed computer company of the 90s… even moreso than Apple. They gave away their crown jewel, the Alpha, in exchange for a CPU which is underpowered at best.) I think that IBM will probably end up abandoning, or at the very least, nominalizing the consumer market to put full force behind their server products to compete with the new HP. Sun will probably catch more heat as IBM turns up the competition a notch. If Apple was planning on joining the UNIX server market beyond OSX Server, they will probably have to seek an alliance with a major player - probably IBM - to propagate their OS/systems… but at the moment, Apple’s focus on desktops/laptops will probably keep them relatively free of new challenges in the consumer market. Additionally, with the CEO of Compaq joining HP, I wouldn’t be surprised to see the new venture start to have problems. Compaq’s stock has halved since he joined, as has HP’s since its new CEO joined; Apple’s has effectively quadrupled… I see clear sailing

Tim Bajarin, and I think other analysts, predicted consolidation amongst PC manufacturers, and it’s happening. Quite frankly, there is very little of significance differentiating the products amongst the various PC manufacturers. That’s why they’re merging. They’re really in the same, contracting market selling basically the exact same product.

Bajarin also said Apple and Sony were the best suited to survive the contraction because (if I remember correctly.. otherwise, it’s my own opinion) they have made their products more relevant to today’s market. They are also unique, and well differentiated. This is where Neff was so wrong. Apple succeeds because it makes a good product with significant distinguishing characteristics. The Power PC with the Velocity Engine (AKA AltiVec) is unique, and provides a competitive advantage… despite the MHz issues, which I think will go away). Nobody makes a product as similar to Apple’s as Compaq’s is to HP’s PCs. Apple can make a credible claim that because of it’s unique characteristics its products provide a competitive advantage over typical Wintel clones. The PC manufacturers can’t.

Beyond that, Apple is really selling solutions, not computers. And I think that’s what people ultimately want. The others seem to just be seling boxes.

I don’t think Apple is in trouble because of this. As I said, I think they are among the safest in the current environment.

On 2001-09-04 16:14, Anonymous wrote:
The EU stopped GE’s buyout of Honeywell.

Ah, yes, I remembered hearing something about that. I still think it’s pretty bogus, though.

Multinational corporations are not always successful in their attempts to have governments roll over and play dead—which is probably a good thing.

On the other hand, government does not exactly have a spotless record, either. Personally, I’d trust almost any business before I’d trust congress or the IRS.

Most mergers fail to live up to its promises. Many mergers fail completely. Still, companies merge like there’s no tomorrow. Why?

I think it’s a combination of wanting to be the biggest and not wanting to work your way up there yourself.

The result is bad for the consumer. Fewer choices, usually higher prices etc. But it inevitably leads to a stagnation and then suddenly a new company with a new look at things can enter.

It’s interesting to see these things, but also a bit sad.

On 2001-09-04 18:15, tbone1 wrote:

On 2001-09-04 16:14, Anonymous wrote:
The EU stopped GE’s buyout of Honeywell.

Ah, yes, I remembered hearing something about that. I still think it’s pretty bogus, though.

Multinational corporations are not always successful in their attempts to have governments roll over and play dead—which is probably a good thing.

On the other hand, government does not exactly have a spotless record, either. Personally, I’d trust almost any business before I’d trust congress or the IRS.

Bogus? Heh. Try telling that to Jack Welch (chairman of GE), who is used to getting his way. HP’s Carly Fiorina intends to meet with the head of the EU soon, for obvious reasons.

As for businesses being trustworthy, you either have not worked for a large transnational corporation (I have worked for several), or you have a naive view of the merits of democratically-elected governments vs. global firms that presumably answer only to their shareholders, if even that.

The more I think about it the more I believe that this will drive the price of PCs down, down, down in the near future, destroy many companies, and lead to a rebirth of the industry. The new HP will try to go toe to toe against Dell on price and I just don’t see how Dell can lose. Dirt cheap PCs, moderately engineered, and expertly marketed are Dell’s strongest suits. However, in order for continued growth in profits (as opposed to market share) the uses of a personal computer must be segregated into areas of focus in order to set each apart from the rest. Dell’s empire is based off taking existing ideas and doing them cheaper—saving money on things like research, development, and market approval. This means Dell will always lag in terms of science and rock in terms of economy. Dell has chosen to do one thing and do one thing well, sell cheap, standardized PCs. This is why Dell will survive.

Apple Computer, too, has focused its market to easy to use and maintain, cutting edge, exceptionally implemented products. This is why Apple will survive.

Sony focuses on decently engineered, somewhat economical, and highly diverse products. This is why they will survive.

What do companies like HP or Compaq do better than anyone else? What is the focus of their business model? How can they survive?

Let’s face it, most of the companies selling personal computers don’t have a consistent business model and have been able to escape only due to extremely high sales growth year over year. Not until all but the most focused computer makers are liquidated will this industry once again open up to renewed, nonlinear growth. Basically the whole problem with the industry today is that everyone was racing toward the same goals, larger HD, more RAM, faster CPU etc. Now these things have far surpassed the software that uses them. The industry must get back to a solutions based model.

For example, computers are too expensive so Dell makes them cheap. Computers are too hard to use so Apple makes them easy. Computers need to perform many different functions so Sony makes them diverse.

HP buying Compaq is just the first. The industry will suffer recession until only the most dedicated computer makers are left. The coming months—or possibly years—will shape the industry for the next 20 years. Furthermore, Apple is fully poised to take complete advantage of this recession making the future look very bright.

Now, if the EU decides that they need to sell off assets in Europe (for some monopolistic/regulatory reason, or because they didn’t bribe the appropriate EU ministers, or whatever), that’s one thing. But does the EU really have the ability to be a showstopper? If so, why? How would the EU react if the US tried to stop, say, Daimler from buying Fiat?

 

And why would that happen? Compaq and HP hold large market shares in the EU, not a lot different from what they hold in the US, whereas Fiat has nothing in the US at all. So how would Daimler/fiat represent a tie-up with monopolistic pwers in the US market? It wouldn’t. If two EU companies merged and DID represent a threat to US consumer choice, the US would have EVERY RIGHT to do something about it. US doesn’t seem that bothered about monopolies these days unfortunately…

On 2001-09-04 18:25, dahlenu wrote:
Most mergers fail to live up to its promises. Many mergers fail completely. Still, companies merge like there’s no tomorrow. Why?

Because such mergers usually manage to liquidate vast sums of money that the outgoing directors can pocket. It’s nothing short of scandalous that such earnings are not heavily taxed.

On 2001-09-05 02:46, Anonymous wrote:
As for businesses being trustworthy, you either have not worked for a large transnational corporation (I have worked for several), or you have a naive view of the merits of democratically-elected governments vs. global firms that presumably answer only to their shareholders, if even that.

I’ve worked/contacted for several, thank you. I have also done government contracting and in fact I was contracting at NASA, in DC, in 95/96 during the government shutdown. Business is messy, ugly, and brutish, but I’ll take it over government any day of the week. When a businessman ruins the infrastructure, says idiotic things before a camera, harms the economy, pollutes the environment, etc, at least he makes a buck off of it. A politician does these things for kicks and holds a loaded IRS to our heads to force us to pay for his (MESS)-ups.