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Compaq/HP Hairball: Page 2 of 3

Then there’s HP’s $350 million acquisition of StorageApps to consider (see HP Acquires StorageApps).

This was a recent move by HP into the virtualization market, whereas Compaq has been building its own virtualization product for some time. (see Virtual Reality?). "This could be a chance for Compaq to dump its late-to-market, largely unworkable product,” says one analyst who requested anonymity.

“Does FSAM and ENSA become ENSPAZ?” asks Steve Duplessie, analyst at the Enterprise Storage Group Inc.. FSAM or Federated Storage Area Management is HP’s umbrella architecture for its storage products, while Compaq’s is ENSA or Enterprise Network Storage Architecture.

”Resolving existing product overlap, OEM arrangements, and channel issues will be quite an endeavor for this new company,” says Dan Tanner, analyst with the Aberdeen Group.

Aside from technology and product integration issues, the merged organization must combine 70,000 employees in more than 160 countries, which is likely to mean significant layoffs. And although the top brass appear to be in place -- five Compaq board members will join HP’s board; Carly Fiorina will be CEO of the combined company; Michael D. Capellas, Compaq's chief executive, will serve as president -- how the rest of the organization will shape up is far from clear.