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95-452: The Compaq Portable III (Model 2660) is a PC/AT-compatible computer released by Compaq Computer Corporation in 1987. It was advertised as being much smaller and lighter than the previous portable x86 -PCs; however it was still quite large by today's standards. Three models were announced at release. The Model 1 had a list price of $ 3999 USD and was equipped with a 12 MHz Intel 80286 , 640 KB of RAM , 1.2 MB 5.25" floppy drive , and

190-506: A 10" amber colored gas-plasma display . Other models included the Model 20 at $ 4999 USD which added a 20 MB hard disk , or $ 5799 for the Model 40 with the upgraded 40 MB hard disk. When Compaq launched its Portable III, the launch was timed to occur simultaneously in twelve countries around the world, in keeping with Compaq's showmanship style. The Portable III was designed to be the smallest, lightest and fastest 386 machine, since Compaq

285-472: A $ 50 billion company by the year 2000, or to beat I.B.M. – but they didn't have anything to do with customers. The new C.E.O. should look at everything Eckhard acquired and ask: did the customer benefit from that. If the answer isn't yes, they should get rid of it." On one hand, Compaq had previously dominated the PC market with its price war but was now struggling against Dell , which sold directly to buyers, avoiding

380-453: A $ 71 million loss for that quarter, their first loss as a company, while the stock had dropped by over two-thirds. An analyst stated that "Compaq has made a lot of tactical errors in the last year and a half. They were trend-setters, now they are lagging". Canion initially believed that the 1990s recession was responsible for Compaq's declining sales but insisted that they would recover once the economy improved, however Pfeiffer's observation of

475-470: A 96-pin port. This unit was a more flexible option than the completely detached expansion units made for other portables. Because it gets its power from the computer via this port, it could be securely attached it to the Portable III, and carried as if it were part of the machine. More than one expansion unit could be configured for different needs, allowing it considerable versatility for its time. Power

570-531: A BBA from Kent State, Capellas met his future wife, Marie Angelillo, a former nurse. The two married in 1979, and for the next 20 years they traveled around the world as Capellas climbed the ranks of each company he joined. Capellas began his career at Republic Steel . He went on to hold senior executive roles at Schlumberger , Benchmarking Partners, SAP , and Oracle Corporation . Capellas joined Compaq Computer Corporation as CIO in 1998. In 1999, when president and chief executive officer (CEO) Eckhard Pfeiffer

665-502: A foodservice distributor based in Chicago, and he informed Compaq's board that he accepted the offer. Rose, senior vice president and general manager of Compaq's Enterprise Computing group, resigned effective as of June 3 and was succeeded by Tandem veteran Enrico Pesatori. Rose was reportedly upset that he was not considered for the CEO vacancy, which became apparent once Michael Capellas

760-429: A low-priced PC could be made in half the time and at lower cost than Canion's initiative. It was also believed that Canion's consensus-style management slowed the company's ability to react in the market, whereas Pfeiffer's autocratic style would be suited to price and product competition. Rosen initiated a 14-hour board meeting, and the directors also interviewed Pfeiffer for several hours without informing Canion. At

855-513: A price war that they started." Subsequent earnings releases from Compaq's rivals, Dell, Gateway, IBM, and Hewlett-Packard suggested that the problems were not affecting the whole PC industry as Pfeiffer had suggested. Dell and Gateway sold direct, which helped them to avoid Compaq's inventory problems and compete on price without dealer markups, plus Gateway sold web access and a broad range of software tailored to small businesses. Hewlett-Packard's PC business had similar challenges like Compaq but this

950-472: A religious education program at the University of St. Thomas. Murto had helped to organize the company's marketing and authorized-dealer distribution strategy, and held the post of senior vice president of sales since June 1985. Murto was succeeded by Ross A. Cooley, director of corporate sales. Cooley would report to Michael S. Swavely, vice president for marketing, who was given increased responsibility and

1045-477: A senior advisor. On July 10, 2007, Capellas was identified as the new CEO of First Data Corporation . The position was to become effective upon the completion of the leveraged buyout (LBO) of First Data by private equity firm Kohlberg Kravis Roberts . In 2010 it was announced he would be chairman and CEO of VCE , a joint venture of Cisco Systems and EMC Corporation with investment from Intel and VMware that specializes in cloud computing . In July 2012

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1140-493: A significant markup for more profits or discount for more sales, dealers had a major incentive to advertise Compaq. During its first year of sales (second year of operation), the company sold 53,000 PCs for sales of $ 111 million , the first start-up to hit the $ 100 million mark that fast. Compaq went public in 1983 on the NYSE and raised $ 67 million . In 1986, it enjoyed record sales of $ 329 million from 150,000 PCs, and became

1235-483: A table to write a letter to the president, someone has to write the letter. Compaq is sitting down at the typewriter". 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). Eckhard Pfeiffer , then president of Compaq International, was named to succeed him. Pfeiffer also received

1330-433: A then-industry record of $ 9.6 billion. The merger made Compaq, at the time, the world's second largest computer maker in the world in terms of revenue behind IBM. Digital Equipment, which had nearly twice as many employees as Compaq while generating half the revenue, had been a leading computer company during the 1970s and early 1980s. However, Digital had struggled during the 1990s, with high operating costs. For nine years,

1425-458: Is supplied using a mains electricity outlet, it was not designed to run on batteries. Compaq Computer Corporation Compaq Computer Corporation was an American information technology company founded in 1982 that developed, sold, and supported computers and related products and services. Compaq produced some of the first IBM PC compatible computers, being the second company after Columbia Data Products to legally reverse engineer

1520-438: Is the best way to merchandise those products. You remove the freedom from the dealers to really merchandise when you bundle in software. It is perceived by a lot of people as a marketing gimmick. You know, when you advertise a $ 3,000 computer with $ 3,000 worth of free software, it obviously can't be true. The software should stand on its merits and be supported and so should the hardware. Why should you be constrained to use

1615-613: The BIOS of the IBM Personal Computer . It rose to become the largest supplier of PC systems during the 1990s. The company was initially based in Harris County, Texas . The company was formed by Rod Canion , Jim Harris , and Bill Murto , all of whom were former Texas Instruments senior managers. All three had left by 1991 under a shakeup, which saw Eckhard Pfeiffer appointed president and CEO, serving through

1710-576: The Deskpro , a 16-bit desktop computer using an Intel 8086 microprocessor running at 7.14  MHz . 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. In 1986, Compaq introduced the Deskpro 386 , the first PC based on Intel 's new 80386 microprocessor. Bill Gates of Microsoft later said

1805-677: The UnixWare NonStop Clusters product in 1998. Minor acquisitions centered around building a networking arm and included NetWorth (1998) based in Irving, Texas and Thomas-Conrad (1998) based in Austin, Texas. In 1997, Microcom was also acquired, based in Norwood, MA, which brought a line of modems, Remote Access Servers (RAS) and the popular Carbon Copy software. In 1998, Compaq acquired Digital Equipment Corporation for

1900-700: The " Gang of Nine ", to develop EISA. Development of a truly mobile successor to the Portable line began in 1986, the company releasing two stopgap products in the meantime, the SLT (Compaq's first laptop ) and the Compaq Portable III (a lighter-weight, lunchbox-sized entry in the Portable line). In 1989, they introduced the LTE , their first notebook-sized laptop which competed with NEC 's UltraLite and Zenith Data Systems 's MinisPort . However, whereas

1995-514: 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

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2090-404: The 1990s. Ben Rosen provided the venture capital financing for the fledgling company and served as chairman of the board for 17 years from 1983 until September 28, 2000, when he retired and was succeeded by Michael Capellas , who served as its last chairman and CEO until its merger. Compaq was overtaken by Dell as the top global PC maker in 1999, which took Compaq several months to take

2185-567: The Compaq Plus with a 10  MB hard drive, PC Magazine wrote of "the reputation for compatibility it built with its highly regarded floppy disk portable". Compaq computers remained the most compatible PC clones into 1984, and maintained its reputation for compatibility for years, even as clone BIOSes became available from Phoenix Technologies and other companies that also reverse engineered IBM's design, then sold their version to clone manufacturers. On June 28, 1984, Compaq released

2280-537: The European market noted that it was competition as rivals could match Compaq at a fraction of the cost. Under pressure from Compaq's board to control costs as staff was ballooning at their Houston headquarters despite falling U.S. sales, while the number of non-U.S. employees had stayed constant, Compaq made its first-ever layoffs (1400 employees which was 12% of its workforce) while Pfeiffer was promoted to EVP and COO. Rosen and Canion had disagreed about how to counter

2375-535: The IBM PC, to other computer manufacturers. The only part which had to be duplicated was the BIOS , which Compaq did legally by using clean room design at a cost of $ 1 million . Unlike other companies, Compaq did not bundle application software with its computers. Vice President of Sales and Service H. L. Sparks said in early 1984: We've considered it, and every time we consider it we reject it. I don't believe and our dealer network doesn't believe that bundling

2470-458: The Internet had overtaken Compaq's management team, saying "As a company engaged in transforming its industry for the Internet era, we must have the organizational flexibility necessary to move at Internet speed." In a statement, Pfeiffer said "Compaq has come a long way since I joined the company in 1983" and "under Ben's guidance, I know this company will realize its potential." Rosen's priority

2565-589: The LTE was the first commercially successful notebook computer, helping launch the burgeoning industry. It was a direct influence on both Apple and IBM for the development of their own notebook computers, the PowerBook and ThinkPad , respectively. 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

2660-607: 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

2755-412: The U. S. such that European dealers were more qualified to handle its increasingly complex products. During the 1980s, under Canion's direction Compaq had focused on engineering, research, and quality control, producing high-end, high-performance machines with high profit margins that allowed Compaq to continue investing in engineering and next-generation technology. This strategy was successful as Compaq

2850-584: The UltraLite and MinisPort failed to gain much uptake due to their novel but nonstandard data storage technologies, the LTE succeeded on account of its use of the conventional floppy drive and spinning hard drive, allowing users to transfer data to and from their desktop computers without any hassle. As well, Compaq began offering docking stations with the release of the LTE/386s in 1990, providing performance comparable to then-current desktop machines. Thus,

2945-451: 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 for AltaVista toward

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3040-475: The cheaper Asian PC imports, as Canion wanted Compaq to build lower cost PCs with components developed in-house in order to preserve Compaq's reputation for engineering and quality, while Rosen believed that Compaq needed to buy standard components from suppliers and reach the market faster. While Canion developed an 18-month plan to create a line of low-priced computers, Rosen sent his own Compaq engineering team to Comdex without Canion's knowledge and discovered that

3135-514: The combined companies should do, or indeed how the three dramatically different cultures could work as a single entity, and Compaq struggled from strategy indecisiveness and lost focus, as a result being caught in between the low end and high end of the market. Mark Anderson, president of Strategic News Service, a research firm based in Friday Harbor, Wash. was quoted as saying, "The kind of goals he had sounded good to shareholders – like being

3230-521: The combined company would have to lay off 2,000 employees from Compaq and 15,000 from Digital which would potentially hurt morale. Furthermore, Compaq fell behind schedule in integrating Digital's operations, which also distracted the company from its strength in low-end PCs where it used to lead the market in rolling out next-generation systems which let rival Dell grab market share. Reportedly Compaq had three consulting firms working to integrate Digital alone. However, Pfeiffer had little vision for what

3325-665: The company had lost money or barely broke even, and had recently refocused itself as a "network solutions company". In 1995, Compaq had considered a bid for Digital but only became seriously interested in 1997 after Digital's major divestments and refocusing on the Internet. At the time of the acquisition, services accounted for 45 percent of Digital's revenues (about $ 6 billion) and their gross margins on services averaged 34 percent, considerably higher than Compaq's 25% margins on PC sales and also satisfying customers who had demanded more services from Compaq for years. Compaq had originally wanted to purchase only Digital's services business but that

3420-463: 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

3515-459: The company's annual meeting for selling stock before reporting the sales slowdown. Rose was succeeded by SVP Enrico Pesatori, who had previously worked as a senior executive at Olivetti , Zenith Data Systems , Digital Equipment Corporation , and Tandem Computers . Capellas was appointed COO after pressure mounted on Rosen to find a permanent CEO, however it was reported that potential candidates did not want to work under Rosen as chairman. Around

3610-587: The company's field sales organization after starting up the Western U.S. Area of Operations. These executives, along with other key contributors, including Kevin Ellington, Douglas Johns, Steven Flannigan, and Gary Stimac, helped the company compete against the IBM Corporation in all personal computer sales categories, after many predicted that none could compete with the behemoth. The soft-spoken Canion

3705-588: The company's meteoric growth in the late 1980s and early 1990s were Ross A. Cooley, another former IBM associate, who served for many years as SVP of GM North America; Michael Swavely, who was the company's chief marketing officer in the early years, and eventually ran the North America organization, later passing along that responsibility to Cooley when Swavely retired. In the United States, Brendan A. "Mac" McLoughlin (another long time IBM executive) led

3800-457: 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,

3895-508: The conclusion, the board was unanimous in picking Pfeiffer over Canion. As Canion was popular with company workers, 150 employees staged an impromptu protest with signs stating "We love you, Rod." and taking out a newspaper ad saying "Rod, you are the wind beneath our wings. We love you." Canion declined an offer to remain on Compaq's board and was bitter about his ouster as he did not speak to Rosen for years, although their relationship became cordial again. In 1999, Canion admitted that his ouster

Compaq Portable III - Misplaced Pages Continue

3990-655: The dealer channel and its markup, and built each machine to order to keep inventories and costs at a minimum. At the same time, Compaq, through its acquisitions of the Digital Equipment Corporation in 1998 and Tandem Computers in 1997, had tried to become a major systems company, like IBM and Hewlett-Packard. While IBM and HP were able generate repeat business from corporate customers to drive sales of their different divisions, Compaq had not yet managed to make its newly acquired sales and services organizations work as seamlessly. In early 1998, Compaq had

4085-587: 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. Most of Compaq's server sales were for systems that would be running Microsoft's Windows NT operating system, and indeed Compaq

4180-536: The end of 1999 in order to capitalize on the dotcom bubble. However, by February 1999, analysts were sceptical of Compaq's plan to sell both direct and to resellers. Compaq was hit with two class-action lawsuits, as a result of CFO Earl Mason, SVP John Rose, and other executives selling US$ 50 million of stock before a conference call with analysts, where they noted that demand for PCs was slowing down. On April 17, 1999, just nine days after Compaq reported first-quarter profit being at half of what analysts had expected,

4275-470: The fastest-growing part of the computer hardware market. Compaq also built up a network engineering and marketing staff. 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

4370-406: The first CPU change to the PC platform that was not initiated by IBM. Compaq had concluded, according to PC , that it could do so because "IBM's DOS standard is now bigger than IBM"; IBM could not make changes to the PC architecture it had created to hurt Compaq, without also obsoleting millions of real IBM PCs. An IBM-made 386 machine reached the market almost a year later, but by that time Compaq

4465-409: The first day of trading after the first-quarter announcement and closed the following Friday at $ 23.62 . During three out of the last six quarters of Pfeiffer's tenure, the company's revenues or earnings had missed expectations. While rival Dell had 55% growth in U.S. PC sales in the first quarter of 1999, Compaq could only manage 10%. Rosen suggested that the accelerating change brought about by

4560-790: The fledgling company secure $ 1.5 million to produce their initial computer. Overall, the founders managed to raise $ 25 million from venture capitalists, as this gave stability to the new company as well as providing assurances to the dealers or middlemen. Unlike many startups, Compaq differentiated its offerings from the many other IBM PC clones by not focusing mainly on price, but instead concentrating on new features, such as portability and better graphics displays as well as performance—and all at prices comparable to those of IBM's PCs. In contrast to Dell and Gateway 2000 , Compaq hired veteran engineers with an average of 15 years experience, which lent credibility to Compaq's reputation of reliability among customers. Due to its partnership with Intel , Compaq

4655-422: The folks at IBM didn't trust the 386. They didn't think it would get done. So we encouraged Compaq to go ahead and just do a 386 machine. That was the first time people started to get a sense that it wasn't just IBM setting the standards, that this industry had a life of its own, and that companies like Compaq and Intel were in there doing new things that people should pay attention to. The Compaq 386 computer marked

4750-436: The latest in a string of earnings disappointments, Pfeiffer was forced to resign as CEO in a coup led by board chairman Ben Rosen . Reportedly, at the special board meeting held on April 15, 1999, the directors were unanimous in dismissing Pfeiffer. The company's stock had fallen 50 percent since its all-time high in January 1999. Compaq shares, which traded as high as $ 51.25 early in 1999, dropped 23 percent on April 12, 1999,

4845-418: The monitors that they offered to customers of their Deskpro and Presario lines as standalone units to third-party resellers, including their popular 171FS monitor. On June 26, 1995, Compaq reached an agreement with Cisco Systems, Inc. , in order to get into networking, including digital modems, routers, and switches favored by small businesses and corporate departments, which was now a $ 4 billion business and

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4940-508: The original AT bus—which it renamed ISA —instead of licensing IBM's MCA. Prior to developing EISA Compaq had invested significant resources into reverse engineering MCA, but its executives correctly calculated that the $ 80 billion already spent by corporations on IBM-compatible technology would make it difficult for even IBM to force manufacturers to adopt the new MCA design. Instead of cloning MCA, Compaq led an alliance with Hewlett Packard and seven other major manufacturers, known collectively as

5035-492: 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,

5130-562: 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 [Pfeiffer's] quest 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

5225-625: The release of Windows 3.0 in 1990.) 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 and RAID , but also the first product to feature the EISA bus, designed in reaction to IBM's MCA ( Micro Channel Architecture ) which was incompatible with the original AT bus. Although Compaq had become successful by being 100 percent IBM-compatible, it decided to continue with

5320-464: The release of its Windows 2000 operating system. In 2001, Capellas led Compaq into an acquisition by Hewlett-Packard , but the deal was delayed for eight months because of a proxy and boardroom battle within HP. Finally, on May 3, 2002, Hewlett-Packard announced approval of the acquisition and Capellas became president of the post-merger Hewlett-Packard, under CEO Carly Fiorina , to ease the integration of

5415-571: The retail computer market with the Compaq Presario as one of the first manufacturers in the mid-1990s to market a sub-$ 1000 PC. In order to maintain the prices it wanted, Compaq became the first first-tier computer manufacturer to utilize CPUs from AMD and Cyrix . The two price wars resulting from Compaq's actions ultimately drove numerous competitors from the market, such as Packard Bell and AST Research . From third place in 1993, Compaq had overtaken Apple Computer and even surpassed IBM as

5510-639: The same time Pesatori was placed in charge of the newly created Enterprise Solutions and Services Group, making him Compaq's second most powerful executive in operational responsibility after Capellas. Michael Capellas Capellas claims that he inherited a gritty determination from his father, a Greek citizen who fought with the Greek Army against the Germans in Italy in World War II . After

5605-414: 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

5700-452: The software that comes with a piece of hardware? I think it can tend to inhibit sales over the long run. Compaq instead emphasized PC compatibility, of which Future Computing in May 1983 ranked Compaq as among the "Best" examples. "Many industry observers think [Compaq] is poised for meteoric growth", The New York Times reported in March of that year. By October, when the company announced

5795-405: The space of the first Compaq Portable. The most remarkable feature was its gas plasma display which lifted up and swiveled so that it could be placed in a good position for reading. It also has a proprietary graphics mode that allows it to run at true 640 x 400 mode. Windows 2.11 had a Compaq Portable display driver for 640 x 400 mode. The optional 80287 coprocessor ran at 8 MHz regardless of

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5890-399: The speed of the 80286, and the 640 KB of RAM were made up of 100-ns 256K-bit chips. The Portable III lacked the internal expansion ports of previous Portables and desktop PCs of the time, but Compaq offered an optional external expansion unit (model 2662A), that provided two full length, 16-bit ISA add-in cards for $ 199. The external expansion unit was electrically connected to the computer by

5985-616: The temporary name Gateway Technology. The name "COMPAQ" was said to be derived from "Compatibility and Quality" but this explanation was an afterthought. The name was chosen from many suggested by Ogilvy & Mather , it being the name least rejected. The first Compaq PC was sketched out on a placemat by Ted Papajohn while dining with the founders in a pie shop, (named House of Pies in Houston). Their first venture capital came from Benjamin M. Rosen and Sevin Rosen Funds , who helped

6080-416: The time of Rando's departure, Compaq Services ranked third behind those of IBM and EDS, while slightly ahead of Hewlett-Packard 's and Andersen Consulting , however customers switched from Digital technology-based workstations to those of HP, IBM, and Sun Microsystems. Mason, senior vice president and chief financial officer, had previously been offered the job of chief executive of Alliant Foodservice, Inc.,

6175-474: The title of chief operating officer, with responsibility for the company's operations on a worldwide basis, so that Canion could devote more time to strategy. Swavely's abrupt departure in January led to rumors of turmoil in Compaq's executive suite, including friction between Canion and Swavely, likely as Swavely's rival Pfeiffer had received the number two leadership position. Swavely's U.S. marketing organization

6270-546: The title of vice president for sales and marketing. In November 1982, Compaq announced their first product, the Compaq Portable , a portable IBM PC compatible personal computer . It was released in March 1983 at $ 2,995 . The Compaq Portable was one of the progenitors of today's laptop ; some called it a "suitcase computer" for its size and the look of its case. It was the second IBM PC compatible, being capable of running all software that would run on an IBM PC . It

6365-455: The top PC manufacturer in 1994, as both IBM and Apple were struggling considerably during that time. Compaq's inventory and gross margins were better than that of its rivals which enabled it to wage the price wars. Compaq had decided to make a foray into printers in 1989, and the first models were released to positive reviews in 1992. However, Pfeiffer saw that the prospects of taking on market leader Hewlett-Packard (who had 60% market share)

6460-529: The top spot again in 2000 before eventually being overtaken by Dell again in 2001. Struggling to keep up in the price wars against Dell, as well as with a risky acquisition of DEC , Compaq was acquired by Hewlett-Packard (HP) for US$ 25 billion in 2002. The Compaq brand remained in use by HP for lower-end systems until 2013 when it was discontinued. As of 2024 , the brand is currently licensed to third parties for use on electronics in Brazil and India. Compaq

6555-419: The turnaround president and CEO of WorldCom (later MCI ). He led a successful restructuring of the organization, one of the largest in corporate history, and stepped down as CEO after MCI's merger with Verizon in 2006. In December 2006, Capellas was appointed acting CEO of Serena Software , selected by Silver Lake Partners , the company that took Serena private in March 2006 and where Capellas served as

6650-402: The two companies. However, Capellas was reported not to be happy with his role, being said not to be utilized and being unlikely to become CEO as the board supported Fiorina. Capellas stepped down on November 12, 2002, just six months on the job. His former role of president was not filled as the executives who reported to him then reported directly to the CEO. In December 2002, Capellas became

6745-584: The war, the elder Capellas met and married his wife, Juliet, in Italy. The family then emigrated to Ohio where Capellas' father worked his way up from laborer to superintendent at the Republic Steel Corp . My dad had an unbelievable work ethic. He was intensely loyal to the company. He worked there for 30 years, says Capellas. As an undergraduate at Kent State University , Capellas developed an interest in computers. Shortly after he graduated with

6840-507: The youngest-ever firm to make the Fortune 500 . In 1985, sales reached $ 504 million. In 1987, Compaq hit the $ 1 billion revenue mark, taking the least amount of time to reach that milestone. By 1991, Compaq held the fifth place spot in the PC market with $ 3 billion in sales that year. Two key marketing executives in Compaq's early years, Jim D'Arezzo and Sparky Sparks, had come from IBM's PC Group . Other key executives responsible for

6935-426: Was a commercial success, selling 53,000 units in its first year and generating $ 111 million in sales revenue. The Compaq Portable was the first in the range of the Compaq Portable series . Compaq was able to market a legal IBM clone because IBM mostly used "off the shelf" parts for their PC . Furthermore, Microsoft had kept the right to license MS-DOS , the most popular and de facto standard operating system for

7030-441: Was a key player during the merger discussions and the most senior executive from Digital to remain with Compaq after the acquisition closed and had been touted by some as the heir-apparent to Pfeiffer. Rando's division had performed strongly as it had sales of $ 1.6 billion for the first quarter compared to $ 113 million in 1998, which met expectations and was anticipated to post accelerated and profitable growth going forward. At

7125-436: Was able to maintain a technological lead in the market place as it was the first one to come out with computers containing the next generation of each Intel processor . Under Canion's direction, Compaq sold computers only through dealers to avoid potential competition that a direct sales channel would foster, which helped foster loyalty among resellers. By giving dealers considerable leeway in pricing Compaq's offerings, either

7220-502: Was at its height. CEO Pfeiffer boldly predicted that the Microsoft/Intel "Wintel" duopoly would be replaced by "Wintelpaq". Pfeiffer also made several major and some minor acquisitions. In 1997, Compaq bought Tandem Computers , known for their NonStop server line. This acquisition instantly gave Compaq a presence in the higher end business computing market. The alliance between Compaq and SCO took advantage of this to put out

7315-517: Was considered a trusted brand, while many other IBM clones were untrusted due to being plagued by poor reliability. However, by the end of the eighties many manufacturers had improved their quality and were able to produce inexpensive PCs with off-the-shelf components, incurring none of the R&;D costs which allowed them to undercut Compaq's expensive computers. Faced with lower-cost rivals such as Dell , AST Research , and Gateway 2000 , Compaq suffered

7410-473: Was forced to resign after a boardroom coup led by chairman Benjamin M. Rosen , Rosen took on the capacity of interim CEO while Capellas was elevated to COO. Several months later, Capellas became permanent CEO and Chairman of Compaq. As chairman and CEO of Compaq between 1999 and 2001, Capellas helped repair the relationship between Microsoft and Compaq, which had eroded over the years. His efforts resulted in Compaq becoming Microsoft's key strategic partner for

7505-509: Was founded in February 1982 by Rod Canion , Jim Harris , and Bill Murto, three senior managers from semiconductor manufacturer Texas Instruments . The three of them had left due to lack of faith and loss of confidence in TI's management, and initially considered but ultimately decided against starting a chain of Mexican restaurants. Each invested $ 1,000 to form the company, which was founded with

7600-476: Was given US$ 20,000 to start up Compaq Europe He started up Compaq's first overseas office in Munich in 1984. By 1990, Compaq Europe was a $ 2 billion business and number two behind IBM in that region, and foreign sales contributed 54 percent of Compaq's revenues. Pfeiffer, while transplanting Compaq's U.S. strategy of dealer-only distribution to Europe, was more selective in signing up dealers than Compaq had been in

7695-493: Was justified, saying "I was burned out. I needed to leave. He [Rosen] felt I didn't have a strong sense of urgency". Two weeks after Canion's ouster, five other senior executives resigned, including remaining company founder James Harris as SVP of Engineering. These departures were motivated by an enhanced severance or early retirement, as well as an imminent demotion as their functions were to be shifted to vice presidents. Under Pfeiffer's tenure as chief executive, Compaq entered

7790-592: Was losing ground with only 4% growth for Compaq versus 7% in the market, likely due to short supplies of the LTE 386s from component shortages, rivals that undercut Compaq's prices by as much as 35%, and large customers who did not like Compaq's dealer-only policy. Pfeiffer became president and CEO of Compaq later that year, as a result of a boardroom coup led by board chairman Ben Rosen that forced co-founder Rod Canion to resign as president and CEO. Pfeiffer had joined Compaq from Texas Instruments , and established operations from scratch in both Europe and Asia. Pfeiffer

7885-488: Was named COO. While Enterprise Computing, responsible for engineering and marketing of network servers, workstations and data-storage products, reportedly accounted for one third of Compaq's revenues and likely the largest part of its profits, it was responsible for the earnings shortfall in Q1 of 1999. In addition, Rose was part of the "old guard" close to former CEO Pfeiffer, and he and other Compaq executives had been criticized at

7980-417: Was not nimble enough to adapt to the fast-changing computer industry. That year Compaq forecast demand poorly and shipped 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

8075-586: Was offset by HP's extremely lucrative printer business, while IBM sold PCs at a loss but used them to lock in multi-year services contracts with customers. After Pfeiffer's resignation, the board established an office of the CEO with a triumvirate of directors; Rosen as interim CEO and vice chairmen Frank P. Doyle and Robert Ted Enloe III. They began "cleaning house", as shortly afterward many of Pfeiffer's top executives resigned or were pushed out, including John J. Rando, Earl L. Mason, and John T. Rose. Rando, senior vice president and general manager of Compaq Services,

8170-543: Was popular with employees and the culture that he built helped Compaq to attract the best talent. Instead of headquartering the company in a downtown Houston skyscraper, 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. At semi-annual meetings, turnout was high as any employee could ask questions to senior managers. In 1987, company co-founder Bill Murto resigned to study at

8265-557: 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 $ 700 million to nearly $ 5 billion 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

8360-523: Was regarded by others as sour grapes on the part of executives who were shut out of planning that involved the acquisitions of Tandem Computers 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

8455-477: Was so influential that observers and its executives spoke of "Compaq compatible". InfoWorld reported that "In the [ISA market] Compaq 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 rival Tandy Corporation acknowledged Compaq's leadership, stating that within the Gang of Nine "when you have 10 people sit down before

8550-471: Was the 386 supplier of choice and IBM had lost some of its prestige. For the first three months after announcement, the Deskpro 386 shipped with Windows/386. This was a version of Windows 2.1 adapted for the 80386 processor. Support for the virtual 8086 mode was added by Compaq engineers. (Windows, running on top of the MS-DOS operating system, would not become a popular "operating environment" until at least

8645-680: Was the largest hardware supplier for Windows NT. However, some 20 percent of Compaq servers went for systems that would be running the Unix operating system . This was exemplified by a strategic alliance formed in 1997 between Compaq and the Santa Cruz Operation (SCO), which was known for its server Unix operating system products on Intel-architecture-based hardware. Compaq was also the largest hardware supplier for SCO's Unix products, and some 10 percent of Compaq's ProLiant servers ran SCO's UnixWare . In January 1998, Compaq

8740-477: Was to have Compaq catchup as an E-commerce competitor, and he also moved to streamline operations and reduce the indecision that plagued the company. Roger Kay, an analyst at International Data Corporation, observed that Compaq's behavior at times seemed like a personal vendetta, noting that "Eckhard has been so obsessed with staying ahead of Dell that they focused too hard on market share and stopped paying attention to profitability and liquidity. They got whacked in

8835-505: Was tough, as that would force Compaq to devote more funds and people to that project than originally budgeted. Compaq ended up selling the printer business to Xerox and took a charge of $ 50 million. In 1994, Compaq formed a joint venture with ADI Corporation , a Taiwanese manufacturer who produced the bulk of Compaq's monitors, to raise multiple factories in Mexico, Brazil, and Europe to assemble and store ADI's monitors. Compaq sold many of

8930-465: Was turned down. When the announcement was made, it was initially viewed as a master stroke as it immediately gave Compaq a 22,000 person global service operation to help corporations handle major technological purchases (by 2001 services made up over 20% of Compaq's revenues, largely due to the Digital employees inherited from the merger), in order to compete with IBM. However it was also risky merger, as

9025-416: Was under the pressure from Toshiba with its T1100 and T3100 and Zenith Data Systems with its Z-181. Compaq only had 286 motherboards ready for mass production, so the 386 version, the Compaq Portable 386 , would follow about one year later. The design of the Portable III had been deeply modified over the earlier Compaq portable series of machines. It was half the size and its footprint occupied half

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