The 12 months was 1982 and computer systems had lastly made the leap from machines that took up a full room to one thing that might match on a desk. However they have been nonetheless removed from moveable, so three entrepreneurs determined to alter that.
Began with $3,000, Rod Canion, Jim Harris, and Invoice Murto founded a bit firm referred to as “Compaq,” a portmanteau of the phrases “compatibility” and “high quality.”
The identify represented the corporate’s imaginative and prescient, which was to tackle the behemoth often called Worldwide Enterprise Machines (IBM) and to make an IBM-compatible PC that was as highly effective their top-of-the-line desktop unit however in a smaller, extra moveable kind issue.
The corporate’s first entry into the market was the Compaq Moveable in 1983.
A Moveable, IBM-compatible PC
The Compaq Moveable was concerning the measurement of the everyday PC towers that we now have as we speak, however the all-in-one contained all the pieces one would want for computing on the go, together with a 9-inch monochrome monitor and a snap-out keyboard. The unit may match within the carry-on baggage compartment on an airplane, which was Compaq’s intent.
Powered by an Intel 4.77MHz 8088 processor, the Compaq Moveable had 128k of RAM and two configuration choices for storage – both two double-sided double-density (360KB) 5.25-inch floppy drives, or one floppy drive and a 10MB onerous drive. It ran MS-DOS with a proprietary BIOS referred to as Compaq DOS 1.13.
Computing has turn out to be ubiquitous to the purpose that even those that keep in mind the early days look again in amazement at how far we now have are available in solely 40 or 50 years.
The Compaq Moveable debuted with a hefty price ticket of about $3,600 (a tad over $11,000 in 2024 {dollars}). The system was means out of the vary for a mean person, nevertheless it was a steal for enterprise professionals who have been at all times on the go.
Compaq bought greater than 53,000 models in its first 12 months, producing a record-breaking $111 million in income. Document gross sales continued with the moveable PC promoting $329 million, and $504 million in 1983 and 1984.
Speedy Progress and Business Influence
The momentum of these first few years made Compaq a frontrunner within the PC trade. In 1986, the corporate broke another record by changing into the youngest firm listed within the Fortune 500, proper after the Compaq Moveable II’s launch. By 1987, the computing startup had reached over $1 billion in income. At the moment, one of many founders, Invoice Murto, left his place as senior VP of gross sales. Regardless of his departure, the corporate continued to soar.
A big a part of Compaq’s success got here because of Rod Canion’s management. Canion cultivated a relaxed firm tradition that attracted a number of the trade’s prime expertise. By 1991, Compaq had reached over $3 billion in gross sales and was in fifth place in market share.
Nonetheless, 1991 turned out to be a tumultuous 12 months for the corporate. Variations in imaginative and prescient between CEO Canion and the board of administrators resulted within the resignation of each Canion and his co-founder and SVP of engineering, Jim Harris.
The battle arose partially as a result of opponents corresponding to Dell, AST Analysis, and Gateway had entered the market, providing cheaper alternate options to Compaq computer systems. The corporate’s progress dipped to 4 % versus an trade common of seven %.
The board wished to alter issues up, however Canion insisted on persevering with to do what had made the corporate well-known – promoting high-end enterprise machines to enterprise sellers at a large revenue margin. After Compaq suffered its first quarterly loss to the tune of $71 million and firm inventory had dipped by over 66 %, Canion was ousted. Harris and 4 different very long time executives adopted him 5 weeks later.
The Compaq Presario: Pivoting to Shopper Markets
COO Eckhard Pfeiffer turned the brand new CEO and led the corporate in a brand new course. Up up to now, Compaq had targeted on advertising and marketing and producing methods just like the Compaq DeskPro and SystemPro supposed for the enterprise market.
The Compaq Presario was one of many first shopper PCs that bought for underneath $1,000, it was successful.
Pfeiffer’s imaginative and prescient was to introduce reasonably priced PCs to the typical shopper. The primary of those was the Compaq Presario. It was one of many first PCs launched to the patron marketplace for underneath $1,000, and it was successful.
To achieve these new low costs, Compaq was the primary of the large PC corporations to begin utilizing chips from AMD and Cyrix, a follow that finally turned an trade normal.
This new technique triggered a value conflict that put another opponents, together with Packard Bell and AST Analysis, out of enterprise. It additionally propelled Compaq from its third-place spot behind Apple in 1993 into the second-biggest PC producer. IBM nonetheless held the highest spot, however not for lengthy.
By 1994 Compaq had surpassed the king of the enterprise machines. Once more, a lot of this success needed to do with bringing down the prices of entry. Nonetheless, Compaq’s reign was to be short-lived after a string of dangerous choices and acquisitions.
A Document of Dangerous Acquisitions
The corporate began manufacturing printers in 1989 and people have been nicely acquired, however Pfeiffer didn’t really feel that Compaq had the assets to compete with printer king Hewlett Packard, which owned 60 % of the market on the time. Compaq bought off its printer division to Xerox for a mere $50 million in 1994.
Compaq Presario CDS 524 (above) and Compaq Presario 2240 (below): a showcase of a typical dwelling laptop from the Nineteen Nineties.
Compaq then tried to get into the $4 billion-a-year networking enterprise by partnering with Cisco in 1995. Pfeiffer spent a lot effort and assets, build up a community engineering division.
Beginning in 1997, Compaq went on what gave the impression to be a shopping for spree. First, it snapped up Tandem Computer systems for $3 billion. That was shortly adopted by selecting up Microcom later that 12 months, and NetWorth in 1998 to bolster its networking division.
Earlier than the top of 1998, the corporate would purchase up the legendary Digital Gear Company (DEC) for a record-shattering $9.6 billion. The DEC buyout was the most important merger within the historical past of the pc trade, however it could transform an abysmal resolution.
On paper, Digital would offer Compaq the leverage to achieve notoriety within the high-end company and enterprise market, however that by no means panned out.
On paper, Digital would offer Compaq the leverage to achieve notoriety within the high-end company and enterprise market, however that by no means panned out. The brand new subsidiary had a chip making division, nonetheless Compaq had little interest in making silicon or competing in opposition to Intel, and DEC chips weren’t suitable with its computer systems.
DEC additionally made minicomputers, one thing that Compaq additionally was not considering doing. Enterprise consulting was one other of Digital’s worthwhile divisions, however merely not one thing Compaq wished. So it was an all-around incompatible acquisition.
Compaq silicon photograph. Picture:
The Decline of Compaq
The DEC acquisition was arguably the start of the top for Compaq. Because it goes, when one firm takes over one other, workspace cultures collide. Numerous layoffs occurred, and firm morale tanked. The shakeup led to missed deadlines and unmoved merchandise.
Compaq was delivery too many models to retailers, who in the end needed to dump the excess at ridiculously low costs. The corporate had lengthy supported its sellers by absorbing such markdowns, so the error price the corporate thousands and thousands. It additionally created conflicts with companions corresponding to Microsoft.
In 1999, Compaq’s board of administrators felt that Pfeiffer had turn out to be out of contact with rank-and-file workers. New management was as a way to mend fences with companions and enhance the corporate’s morale. So board chair Ben Rosen moved to interchange Pfeiffer, a choice the board unanimously permitted.
Michael Capellas replaced Pfeiffer. Earlier than his promotion, Capellas briefly (seven weeks) served as COO and as chief info officer earlier than that. Nonetheless, shifting administration proved to be a case of too little, too late.
Shares in Compaq had already dropped practically 50 %, resulting in merger negotiations with rival Hewlett Packard. These talks led to additional battle throughout the firm. The board was equally divided concerning the attainable merger, and when it got here to a vote, the choice simply barely handed.
The HP Merger
In 2002, HP absorbed Compaq for $42.2 billion. Compaq shareholders retained 36 % of the merged firm whereas HP held the remaining 64 %. Regardless of doling out greater than $634.5 million in bonuses to retain key personnel, there have been nonetheless greater than 15,000 layoffs after the 2 corporations finalized the deal.
Furthering pressure noticed the Compaq model losing much more market share to its opponents.
Progress within the Compaq division dwindled, and Dell subsequently surpassed it in gross sales.
So HP determined to drag Compaq into its personal laptop line as a low-end “finances” model. After all, this was akin to a snake consuming its tail because the Compaq line suffered high quality points attributable to the intra-company competitors.
Compaq nonetheless retained its identify by means of the mid-2000s, however slowly HP started rebranding its merchandise underneath its Elitebook and Probook strains, and by 2013 HP discontinued the Compaq line.
The model has not utterly gone away, nonetheless. In 2015, Argentinian firm Grupo Newsan licensed the identify to fabricate Compaq laptops in Argentina. It produced two new strains of Presario notebooks in 2016. By 2019. Newsan had deserted the Compaq model. Different such licensing offers have been struck in the previous couple of years, the place third events have used the model to launch (normally low-end) electronics. This consists of Sensible TVs in India and Latin America, together with laptops in Brazil and generic Android tablets in varied Latin American nations.
The story of key {hardware} and electronics corporations that at one level have been leaders and pioneers within the tech trade, however at the moment are defunct. We cowl probably the most distinguished a part of their historical past, improvements, successes and controversies.
Masthead credit score: Compaq Presario 4540 powered by AMD K6 233 MHz by Trygve Finkelsen
