Compaq eyes services to bolster flagging hardware revenues

An internal memo to employees has spilled the beans about Compaq's plans to bolster flagging hardware revenues by refocusing on services.

Compaq is looking to take a leaf out of the IBM Global Services book by beefing up its services offering, and creating a complete solutions package including software and hardware. It is anticipated, according to chairman and CEO of Compaq, Michael Capellas, that the move will "better serve customers and increase market share".

The document, which was sent by Capellas to the company's 68,000 staff worldwide, outlined how the company will consolidate its three services businesses - customer services, professional services and Compaq financial services. It also noted that Compaq plans to plough up to $US500 million into the acquisition of a US-based services company.

Compaq Australia was unwilling to comment on how it will impact its operations here in Australia, however the memo hinted that the company is planning to employ a similar strategy globally, and will be looking to acquire enterprise services companies outside the US.

Compaq is not alone in its quest to broaden its revenue stream. On the back of slowing computer hardware sales, the likes of IBM, Fujitsu, Hewlett-Packard and Unisys have all extended beyond their hardware-centric origins over the last decade. Capellas highlighted this trend in the memo, saying that customers now want to spend less of their own time putting together all the pieces of their IT strategies and instead want to buy packages to serve their needs. According to Capellas, this change has led other companies to make similar moves.

Compaq has already delved into the services arena; one of the main reasons for the buyout of Digital Equipment in 1998 was a bid to snare its IT services departments. However, the new move will see a more vigorous pursuit of the services strategy. w

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