History
Founding
Compaq was founded in February 1982 byIntroduction of Compaq Portable
In November 1982, Compaq announced their first product, the Compaq Portable, a portableCompaq Deskpro
On June 28, 1984, Compaq released the Compaq Deskpro, a 16-bit desktop computer using an Intel 8086 microprocessor running at . It was considerably faster than an IBM PC and was, like the original Compaq Portable, also capable of running IBM software. It was Compaq's first non-portable computer and began the Deskpro line of computers.Compaq DeskPro 386
Compaq introduced the first PC based onCompaq SystemPro
Compaq's technical leadership and the rivalry with IBM was emphasized when the SystemPro server was launched in late 1989 – this was a true server product with standard support for a second CPU and1990s
By 1989, ''The New York Times'' wrote that being the first to release a 80386-based personal computer made Compaq the leader of the industry and "hurt no company more - in prestige as well as dollars - than" IBM. The company was so influential that observers and its executives spoke of "Compaq compatible". ''InfoWorld'' reported that "In the SA marketCompaq is already IBM's equal in being seen as a safe bet", quoting a sell-side analyst describing it as "now ''the'' safe choice in personal computers". Even rivalOuster of co-founders
Michael S. Swavely, president of Compaq's North American division since May 1989, took a six-month sabbatical in January 1991 (which would eventually become retirement effective on July 12, 1991).Market ascension
Under Pfeiffer's tenure as chief executive, Compaq entered the retail computer market with theManagement shuffle
In 1996, despite record sales and profits at Compaq, Pfeiffer initiated a major management shakeup in the senior ranks. John T. Rose, who previously ran Compaq's desktop PC division, took over the corporate server business from SVP Gary Stimac who had resigned. Rose had joined Compaq in 1993 from Digital Equipment Corporation where he oversaw the personal computer division and worldwide engineering, while Stimac had been with Compaq since 1982 and was one of the longest-serving executives. Senior Vice-president for North America Ross Cooley announced his resignation effective at the end of 1996. CFO Daryl J. White, who joined the company in January, 1983 resigned in May, 1996 after 8 years as CFO. Michael Winkler, who joined Compaq in 1995 to run its portable computer division, was promoted to general manager of the new PC products group. Earl Mason, hired from Inland Steel effective in May 1996, immediately made an impact as the new CFO. Under Mason's guidance, Compaq utilized its assets more efficiently instead of focusing just on income and profits, which increased Compaq's cash from to nearly in one year. Additionally, Compaq's return on invested capital (after-tax operating profit divided by operating assets) doubled to 50 percent from 25 percent in that period. Compaq had been producing the PC chassis at its plant in Shenzhen, China to cut costs. In 1996, instead of expanding its own plant, Compaq asked a Taiwanese supplier to set up a new factory nearby to produce the mechanicals, with the Taiwanese supplier owning the inventory until it reached Compaq in Houston. Pfeiffer also introduced a new distribution strategy, to build PCs made-to-order which would eliminate the stockpile of computers in warehouses and cut the components inventory down to two weeks, with the supply chain from supplier to dealer linked by complex software. Vice-president for Corporate Development Kenneth E. Kurtzman assembled five teams to examine Compaq's businesses and assess each unit's strategy and that of key rivals. Kurtzman's teams recommended to Pfeiffer that each business unit had to be first or second in its market within three years—or else Compaq should exit that line. Also, the company should no longer use profits from high-margin businesses to carry marginally profitable ones, as instead each unit must show a return on investment. Pfeiffer's vision was to make Compaq a full-fledged computer company, moving beyond its main business of manufacturing retail PCs and into the more lucrative business services and solutions that IBM did well at, such as computer servers which would also require more "customer handholding" from either the dealers or Compaq staff themselves. Unlike IBM and HP, Compaq would not build up field technicians and programmers in-house as those could be costly assets, instead Compaq would leverage its partnerships (including those with Andersen Consulting and software maker SAP) to install and maintain corporate systems. This allowed Compaq to compete in the "big-iron market" without incurring the costs of running its own services or software businesses. In January 1998, Compaq was at its height. CEO Pfeiffer boldly predicted that theAcquisitions
Pfeiffer also made several major and some minor acquisitions. In 1997, Compaq boughtOuster of Pfeiffer
In early 1998, Compaq had the problem of bloated PC inventories. By summer 1998, Compaq was suffering from product-quality problems. Robert W. Stearns, SVP of Business Development, said "In feiffer'squest for bigness, he lost an understanding of the customer and built what I call empty market share--large but not profitable", while Jim Moore, a technology strategy consultant with GeoPartners Research in Cambridge, Mass., says Pfeiffer "raced to scale without having economies of scale." The "colossus" that Pfeiffer built up was not nimble enough to adapt to the fast-changing computer industry. That year Compaq forecast demand poorly and overshipped too many PCs, causing resellers to dump them at fire sale prices, and since Compaq protected resellers from heavy losses it cost them two quarters of operating profits. Pfeiffer also refused to develop a potential successor, rebuffing Rosen's suggestion to recruit a few executives to create the separate position of Compaq president. The board complained that Pfeiffer was too removed from management and the rank-and-file, as he surrounded himself with a "clique" of Chief Financial Officer Earl Mason, Senior Vice-President John T. Rose, and Senior Vice-President of Human Resources Hans Gutsch. Current and former Compaq employees complained that Gutsch was part of a group of senior executives, dubbed the "A team", who controlled access to Pfeiffer. Gutsch was said to be a "master of corporate politics, pitting senior vice presidents against each other and inserting himself into parts of the company that normally would not be under his purview". Gutsch, who oversaw security, had an extensive security system and guard station installed on the eight floor of CCA-11, where the company's senior vice presidents worked. There were accusations that Gutsch and others sought to divide top management, although this was regarded by others as sour grapes on the part of executives who were shut out of planning that involved the acquisitions of Tandem and Digital Equipment Corp. Pfeiffer reduced the size of the group working on the deal due to news leaks, saying "We cut the team down to the minimum number of people - those who would have to be directly involved, and not one person more". Robert W. Stearns, Compaq's senior vice president for business development, with responsibility for mergers and acquisitions, had opposed the acquisition of Digital as the cultural differences between both companies were too great, and complained that he was placed on the "B team" as a result. Compaq entered 1999 with strong expectations. Fourth-quarter 1998 earnings reported in January 1999 beat expectations by six cents a share with record 48 percent growth. The company launched ''Compaq.com'' as the key for its new direct sales strategy, and planned an IPO forLate 1990s–2000s
In 1998, Compaq signed new sales and equipment alliance with NaviSite. Under the pact, Compaq agreed to promote and sell NaviSite Web hosting services. In return, NaviSite took Compaq as a preferred provider for its storage andStruggles
Capellas was able to restore some of the luster lost in the latter part of the Pfeiffer era and he repaired the relationship withAcquisition by Hewlett-Packard
In 2002, Compaq signed a merger agreement with Hewlett-Packard for , including for goodwill, where each Compaq share would be exchanged for 0.6325 of a Hewlett-Packard share. There would be a termination fee of that either company would have to pay the other to break the merger. Compaq shareholders would own 36% of the combined company while HP's would have 64%. Hewlett-Packard had reported yearly revenues of , while Compaq's was , and the combined company would have been close to IBM's revenues. It was projected to have in annual cost savings by mid-2004. The expected layoffs at Compaq and HP, 8500 and 9000 jobs respectively, would leave the combined company with a workforce of 145,000. The companies would dole out a combined in bonuses to prevent key employees from leaving if shareholders approve the proposed merger, with for HP employees and for Compaq employees. Both companies had to seek approval from their shareholders through separate special meetings. While Compaq shareholders unanimously approved the deal, there was a public proxy battle within HP as the deal was strongly opposed by numerous large HP shareholders, including the sons of the company founders, Walter Hewlett and David W. Packard, as well as the California Public Employees’ Retirement System (Post-merger
Capellas, Compaq's last chairman and CEO, became president of the post-merger Hewlett-Packard, under chairman and CEOHeadquarters
The Compaq World Headquarters (now HP United States) campus consisted of of land which contained 15 office buildings, 7 manufacturing buildings, a product conference center, an employee cafeteria, mechanical laboratories, warehouses, and chemical handling facilities. Instead of headquartering the company in a downtown Houston skyscraper, then-CEO Rod Canion chose a West Coast-style campus surrounded by forests, where every employee had similar offices and no-one (not even the CEO) had a reserved parking spot. As it grew, Compaq became so important to Houston that it negotiated the expansion of Highway 249 in the late 1980s, and many other technology companies appeared in what became known as the "249 Corridor". After Canion's ouster, senior vice-president of human resources, Hans W. Gutsch, oversaw the company's facilities and security. Gutsch had an extensive security system and guard station installed on the eight floor of CCA-1, where the company's senior vice presidents had their offices. Eckhard Pfeiffer, president and CEO, introduced a whole series of executive perks to a company that had always had an egalitarian culture; for instance, he oversaw the construction of an executive parking garage, previously parking places had never been reserved. On August 31, 1998, the Compaq Commons was opened in the headquarters campus, which featured a conference center, an employee convenience store, a wellness center, and an employee cafeteria. In 2009, HP sold part of Compaq's former headquarters to theCompetitors
Compaq originally competed directly against IBM, manufacturingSponsorship
Before its merger with HP, Compaq sponsored the Williams Formula One team when it was still powered by BMW engines. HP inherited and continued the sponsorship deal for a few years. Compaq sponsoredSee also
*Notes
References
External links
*