ITXPO: Capellas outlines Compaq roadmap

Compaq Computer chief executive officer Michael Capellas here yesterday reiterated that his company's strategy has shifted towards electronic business and pointed to some expected product announcements in the next few months.

During an interview with analysts at Gartner Group's European Symposium/ITxpo '99 here yesterday, Capellas also discussed the way in which the PC business is transforming itself and how his company --the world's largest PC supplier -- will serve large corporate customers in the future.

Rather than setting a financial goal for his company in the next three years, Capellas summed up his mission as this: "When people think 'I need to enable my business for e-commerce and the Internet,' they will think: ask Compaq first." Compaq's job, Capellas said, is to redefine what a personal computer is, as the form changes radically in the next year and a half.

Compaq's strategic advantage in the PC business will come from predicting the changing form of PCs, Capellas said.

"The world of personal computing is going through a huge transformation in the next year to year and a half. We want to remake the world," Capellas said. For example, Compaq in the next three to nine months will launch new, simpler desktop clients, he said. These machines will retain some intelligence on them, but more of the applications will run on the server.

In terms of its large corporate customers, Capellas reiterated Compaq's support for three of its systems -- the Alpha and Himalaya server lines as well as the company's Open VMS systems. Fault-tolerant systems will be increasingly important as companies need back-end support for e-business applications that can not go down -- ever, Capellas said. "We see Himalaya making a huge resurgence," he added.

In the near future, Compaq will also announce some deals for ASP (application server provider) services, although it will be in partnership with application companies and telecommunication carriers. "The powerful ASPs of the future will be the application companies," said Capellas, dismissing Compaq as a potential ASP on its own. "We have no desire to be an ASP. That is not in our core competency."

Compaq's fortunes overall may have begun a turn-around with the most recent third quarter earnings, reported last month, Capellas said. Following a series of cost-cutting measures and reorganisation of its distribution channels in the US, Compaq beat Wall Street expectations, posting net income of $US140 million, or 8 cents per share, for its third quarter ended September 30.

At the same time, however, Compaq's PC business is facing increasing competition from its arch-rival Dell Computer. Compaq was dislodged from its number one position in the US computer market by Dell in the third quarter according to two reports issued last month by International Data Corp. (IDC) and Gartner's Dataquest.

Dell increased its share of US shipments to 17.1 percent, beating Compaq, which had 15.3 percent, according to Dataquest. Compaq, however, retained its position as unit sales leader worldwide.

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