Digital Merger Was Difficult but Necessary: Compaq

SINGAPORE (08/18/2000) - Having recently returned its commercial PC business to profitability, Compaq Computer Corp. is not looking back from its infamous plagued acquisition of Digital Equipment Corp. almost three years ago.

"(The Digital integration) was a difficult one for Compaq," acknowledged Michael Winkler, senior vice president and group general manager, Commercial PC Group, Compaq. Known for their solid foothold in most of the high-end server categories they competed in, Digital and Tandem presented the kind of enterprise customers that Compaq was keen on acquiring.

However, the integration of Digital had absorbed much of Compaq's time and energy, where the parent company was ridden with the complexity of merging Digital's high-end computers and services.

"But we are absolutely certain it was the right decision for us," Winkler said, noting that the merger offered Compaq the opportunity to play in markets they were unable to compete in before the integration.

He singled out Digital's experience in markets such as high-end computing and professional services which for instance, "allowed us to become a key certified partner of Windows migration."

Winkler also revealed that Compaq has now "effectively" migrated the Digital product line.

And the company seems to be on the right path, having recently returned its commercial PC business to profitability after several consecutive quarterly losses.

Compaq shipped an estimated 5 million PC units worldwide in the last quarter, securing 13 percent of this market, and a 7.5 percent market share in Asia-Pacific (excluding Japan and China), Winkler said. The company "re-engineered" itself, rolling out "the most complete lineup of innovative products we've ever had", he said, highlighting Compaq's success with the iPaq PC.

Analysts had predicted that Compaq's new iPaq PC, released in January, could rake in US$1 billion worth of business for the company by the end of the year.

Compaq also wants to attack the so-called ‘white box' market space in Asia-Pacific, which has grown in size over time, noted Paul Blinkhorn, vice president of Commercial Personal Computing group, Compaq Asia-Pacific.

PCs that are assembled locally and carry no brand name, are collectively termed as ‘white boxes'. Compaq also saw tremendous growth in its portables, which grew 70 percent in Asia-Pacific in the last quarter over the quarter before, Blinkhorn said.

The company sees growing potential "in the mobility of devices" which include handhelds, and wireless communications such as Bluetooth and GSM (global system for mobile communications), Winkler said.

Compaq's current game plan is firmly aligned with its vision - "Everything to the Internet" - where products such as "Internet appliances are going to play an increasingly important role in our strategy", said Blinkhorn.

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