Compaq plans massive restructuring

Compaq is priming itself to restructure around the packaging of services and computers aimed at specific industries, rather than its current hardware focus, according to a report Monday in The Wall Street Journal.

The company plans to take an approach that puts Compaq in competition with the likes of IBM, according to internal memos from Compaq Chairman and CEO Michael Capellas, cited by the The Wall Street Journal.

According to The Wall Street Journal report, Compaq plans to offer services to specific industries such as financial, telecommunications, health care and manufacturing by the end of the year.

"Our goal is to increase services from about one-fifth of Compaq's revenue today to one-third," within 4 years, the report quoted Capellas' memo as stating.

It is a direction that Capellas touched upon when he spoke to journalists in London in January. Then, Capellas said that looking 5 years out, he sees a 70% to 30% split in the company's revenue stream, with the majority of Compaq's revenue coming from "other solutions and portfolios (apart from PCs). We will continue to grow our services and servers at a very fast rate."

Capellas said at the time, "We sell software inside of our products, though we sell it as a solution so the software is not as evident; our software is a little more bundled. But I do think we have to add software content over time." He added that system management software is the direction Compaq would take, with middleware being embedded in the database products by vendors like Oracle and manageability being built "on top of it."

Compaq representatives declined to comment on the report.

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