The New Compaq

In 1983, I couldn't figure out why Datamation Magazine regularly disparaged my CP/M-based PC as a "toy" compared with "real" systems from Digital Equipment and IBM. In February 1998, after 50 years of publication, Datamation printed its last issue, and Compaq, a "toy-computer" company bought Digital, a "real-computer" company.

Both of these events confirm that PCs are now the dominant computing platform. Compaq is now the world's third-largest hardware power behind IBM and HP. To gain perspective on these changes, let's look at what brought Compaq to this point and the implications of Compaq's new status.

A major factor in Compaq's decision to buy Digital was Digital's service and support capabilities. In the service area, Digital employs the industry's largest group of trained systems engineers (SEs) who can implement enterprisewide Windows NT installations (e.g., Digital's NT SEs have implemented 2 million seats of Exchange, including a 120,000-seat Exchange migration project at Lockheed Martin). Demand for NT SEs exceeds supply. In fact, some industry experts surmise that Compaq bought Digital just to acquire its 1600 SEs.

On the support side, like Microsoft, Compaq has been outsourcing NT support to Digital. So, if you call Compaq or Microsoft for support, you will probably talk to a Digital employee. Compaq has paid Digital a lot for this support. Buying Digital allowed Compaq not only to stop spending money on service and support but to earn money by inheriting Microsoft's support business.

Another reason for Compaq's purchase of Digital is that, with Compaq's earlier acquisition of Tandem, Compaq now has systems that range from the smallest desktop computers to the largest mainframes. And, Compaq has the most clustering solutions available from any vendor: Microsoft Cluster Server (MSCS), Digital Clusters for NT, VAX Cluster, and Tandem's Himalaya. In addition, software-based NT clustering solutions such as Octopus, NSI, and Vinca run on Compaq. Few clustering solutions won't be available from Compaq. With this diversity, Compaq can position its computer lines in any way that the company deems beneficial.

For insight into Compaq's product strategy and how Compaq benefits, consider Compaq's positioning of Tandem's line. Last September, Windows NT Magazine's Lab asked Tandem for a CS150 dual 2-way cluster-in-a-box system. In December, Tandem said that Compaq held all PC-based systems and Tandem couldn't ship a CS150. Now it is clear that Compaq will manufacture all PC-based systems and Tandem will sell only its high-end Himalayas.

Considering Tandem's scenario makes you wonder how Digital will look in a year. I speculate that Compaq will assimilate Digital business that overlaps with Compaq's business. All Intel-based Digital systems will become Compaq. All storage subsystems and all service will become Compaq's. Remaining under the Digital name will be VAX/VMS, 64-bit UNIX, and the Alpha and StrongArm chips.

How does this positioning benefit Compaq? The company is poised for growth. If Compaq adds the Alpha-based workstation to Compaq's distribution channels, the Alpha can be a bestseller in the right markets. It can continue to be the top of the line for both high-powered workstations and servers. Next, the StrongArm chip is positioned to capture the Windows CE, network computer, and Windows-based terminal (WBT) market. Expect Compaq to introduce WBTs to run with Microsoft's Windows-based Terminal Server. Compaq's WBTs can replace 12 million to 25 million green-screen terminals by the year 2001.

Compaq's buying spree means increased competition for your business: With Compaq as the largest supplier of NT systems and support, IBM and HP will compete heavily for your business.

P.S. Look for a few April Fool's Day gags in this issue for your entertainment.

TAGS: Windows 8
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