HP and Compaq: Disaster for PC resellers?

The HP/Compaq deal could mean disaster for PC resellers, and could even mean higher prices for end-users in the short-term.

Canalys, an analyst house that looks at the sales channels for IT equipment, said the deal was primarily about removing costs, and the reseller channel could expect to receive the full force of those changes.

Steve Brazier, analyst for Canlys said: "This could be a disaster - HP and Compaq will take a huge chunk of money out of the channel."

IT Hardware resellers are thought to serve 50,000 businesses throughout Europe, and employ at least 250,000 people.

Erik Witvrouwen, director of refurbished hardware reseller Logstat said the deal could mean an awful lot of people losing their jobs: "HP are evidently looking for efficiencies in this takeover which means they'll cut out a lot of operations which are doubled up now."

This news comes on top of increasing speculation the takeover could actually see prices of commodity items such as PCs and Intel servers rise. This is according to analysts who see the deal as reducing the cut-throat price competition that has characterised the PC market in the last few years.

However, Canalys's Brazier said the pricing issue is out of the new HP's hands: "The price is very much dependent on Dell now. Make no mistake, this deal marks a massive win for Dell, who may now feel they can relax the price war they've been waging."