By Duncan Martell

SAN FRANCISCO: HP is seeking to beef up its computer-services offerings, to better compete with rival International Business Machines (IBM) Corp. It will be launching a new media campaign in this effect.

It also comes as HP has lost one of the principal architects of that merger, former President Michael Capellas, who left HP earlier this week to take on an even bigger challenge to run bankrupt phone company WorldCom.

All three of the big computer-systems makers, IBM, Sun Microsystems Inc and HP are putting forth their visions of how computing and information technology will be used by corporations in a post-Internet bubble era.

Fiorina, in a speech on Thursday at Oracle Corp.'s OpenWorld conference in San Francisco, told an audience of thousands that customers are telling HP that they want to do more with less, when it comes to spending on information technology.

"We understand HP is planning to unveil a new ad campaign on Monday," wrote Merrill Lynch analyst Steven Milunovich in a note to clients on Friday, adding that he believed comparable campaigns have cost about $400 million. "If HP wants to be the IBM alternative, it will require big bucks to create a big brand."

HP spokeswoman Rebeca Robboy declined to comment.

With the Compaq acquisition, HP now ranks in the top five computer-services companies, along with IBM, Electronic Data Systems Corp. and Computer Sciences Corp., but analysts have said that about half of its computer-services revenue is derived from so-called "break and fix" contracts.

HP was also, for a brief time, the biggest maker of personal computers in the world, but rival Dell Computer Corp. recently reclaimed the top spot, buoyed by its low-cost manufacturing model and low prices.

Fiorina, echoing moves by IBM and others, is staking HP's future on the belief that the technology industry will consolidate further, offering one-stop-shopping to companies looking for a better return on the money they spend on IT.

Milunovich credited Fiorina, who is well regarded for her marketing strategy, for HP's branding strategy shortly after she came on board.

"Good marketing is focused and differentiated," Milunovich wrote. "One of Carly Fiorina's first moves at HP was to consolidate brands, which was smart."

The campaign will also herald a new slogan, Milunovich wrote.

"The slogan will be something like 'Customers + HP = Everything is Possible,"' Milunovich wrote. "'Invent' remains part of the corporate logo."

He added that if that is indeed the slogan, it is a poor choice because of its generality, because it doesn't differentiate HP and because "users know everything is not possible."

"Investors are already concerned that HP is trying to be everything to everybody, a trap IBM fell into though IBM has since narrowed its focus," Milunovich wrote.

© Reuters