HP: Compaq Takeover Was Good?

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HP also has more negotiating heft than it did before the merger. Back in 2001, HP and the former Compaq were at the mercy of their major suppliers, Microsoft and Intel, said Jonathan Eunice, an analyst with Illuminata. Microsoft and Intel knew they could play the two companies off of one another when it came to introducing new technology or hammering out contracts, he said. The combined organization now has the size to negotiate agreements with alternative suppliers, like Advanced Micro Devices, without seriously affecting HP's relationships with its primary suppliers, Eunice said. It was hard to get to that point, but "sometimes you need to do ugly things," he said. "They're using their economic power to good effect."