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Inspiration Technology

What is “Inspiration Technology


from Compaq”?
We are no longer in the information age. We are in the inspiration age.

Information technology limits you. It only takes you so far. Information is input.
Inspiration is output. Compaq believes technology should enable individuals to reach
their full potential. Compaq believes technology should enable but in a less intrusive
way.

Compaq understands that the technology isn’t what matters; it’s what you want to do that
is important. Technology should liberate you — help you get more of the things you
want. “Inspiration Technology from Compaq” liberates you and allows you to focus all
your time and energy on what inspires you — learning, communicating, selling,
servicing, creating— whatever.

“Inspiration Technology from Compaq” delivers to the user exactly what they want in as
seamless, invisible and effortless a way as possible. It allows you to do the things you
want most on your terms.

Compaq goes beyond the limits of information technology to the boundless, liberating
possibilities with “Inspiration Technology from Compaq.”

Imaginations, we’re moving the limitation the


limitations of information Technology to a new
technology Welcome to the new I.T. Inspiration
Technology from Compaq.
Company Background
Compaq Computer Corporation is the world's largest supplier of personal computers
and, as a result of its acquisition of Digital Equipment Corporation in June 1998, is the
second largest computer firm in the world (trailing only IBM). Digital Equipment
Corporation was a pioneering American computer company, a leading vendor in the
minicomputer market throughout the 1960s and 1970s, and for a long time one of the
most admired within the hacker community.

The company was formed by Rod Canion, Jim Harris and Bill Murto — former Texas
Instruments senior managers. The name "COMPAQ" was derived from "Compatibility
and Quality" as at its formation Compaq produced some of the first IBM PC compatible
computers.

Compaq was founded in February 1982 by Rod Canion, Jim Harris and Bill Murto,
three senior managers from semiconductor manufacturer Texas Instruments. Each
invested $1,000 to form the company. Their first venture capital came from Ben Rosen
and Sevin Rosen Funds. The original Compaq PC was first sketched out on a placemat
by the founders while dining in a local Houston restaurant, House of Pies.

Two key marketing executives in Compaq's early years, Jim D'Arezzo and Sparky
Sparks, had come from IBM's PC Group. Other key executives responsible for the
company's meteoric growth in the late 80s and early 90s were Ross A. Cooley, another
former IBMer, who served for many years as SVP of GM North America; Michael
Swavely, who was the company's chief marketing officer in the early years, and
eventually ran the North America organization, later passing along that responsibility to
Mr. Cooley, when Swavely retired. In the United States, Brendan A. "Mac" McLoughlin
(another long time IBM executive) led the company's field sales organization after
starting up the Western U.S. Area of Operations. These gifted executives, along with
other key contributors, including Kevin Ellington, Douglas Johns, Steven Flannigan, and
Gary Stimac, helped the company with the IBM Corporation in all personal computer
sales categories, after many predicted that none could compete with the behemoth.
HP-Compaq Merger
Compaq existed as an independent corporation until 2002, when it was acquired for $25
billion by Hewlett-Packard. The HP has annual sales of approximately $90 billion which
is comparable to IBM and the operating income of almost $4billion. The merger was led
by Carly Fiorina, the chairwomen and CEO of HP.

Reason of Merger
A very simple question that arises here is that, if HP was progressing at such a
tremendous pace, what was the reason that the company had to merge with Compaq?
Carly Fiorina, who became the CEO of HP in the year 1999, had a key role to play in the
merger that took place in 2001. She was the first woman to have taken over as CEO of
such a big company and the first outsider too. She worked very efficiently as she
travelled more than 250,000 miles in the first year as a CEO. Her basic aim was to
modernize the culture of operation of HP. She laid great emphasis on the profitable sides
of the business. This shows that she was very extravagant in her approach as a CEO. In
spite of the growth in the market value of HP's share from 54.43 to 74.48 dollars, the
company was still inefficient. This was because it could not meet the targets due to a
failure of both company and industry. HP was forced to cut down on jobs and also be
eluded from the privilege of having Price Water House Cooper's to take care of its audit.
So, even the job of Fiorina was under threat. This meant that improvement in the internal
strategies of the company was not going to be sufficient for the company's success.
Ultimately, the company had to certainly plan out something different. So, it was decided
that the company would be acquiring Compaq in a stock transaction whose net worth was
25 billion dollars. Initially, this merger was not planned. It started with a telephonic
conversation between CEO HP, Fiorina and Chairman and CEO Compaq, Capellas. The
idea behind the conversation was to discuss on a licensing agreement but it continued as a
discussion on competitive strategy and finally a merger. It took two months for further
studies and by September, 2001, the boards of the two companies approved of the
merger. In spite of the decision coming from the CEO of HP, the merger was strongly
opposed in the company. The two CEOs believed that the only way to fight the growing
competition in terms of prices was to have a merger. But the investors and the other
stakeholders thought that the company would never be able to have the loyalty of the
Compaq customers, if products are sold with an HP logo on it. Other than this, there were
questions on the synchronization of the organization's members with each other. This was
because of the change in the organization culture as well. Even though these were
supposed to serious problems with respect to the merger, the CEO of HP, Fiorina justified
the same with the fact that the merger would remove one serious competitor in the over-
supplied PC market of those days. She said that the market share of the company is
bound to increase with the merger and also the working unit would double. (Hoopes,
2001)
Advantages of Merger
Even though it seemed to be advantageous to very few people in the beginning, it was the
strong determination of Fiorina that she was able to stand by her decision. Wall Street
and all her investors had gone against the company lampooning her ideas with the saying
that she has made 1+1=1.5 by her extravagant ways of expansion. Fiorina had put it this
way that after the company's merger, not only would it have a larger share in the market
but also the units of production would double. This would mean that the company would
grow tremendously in volume. Her dream of competing with the giants in the field, IBM
would also come true. She was of the view that much of the redundancy in the two
companies would decrease as the internal costs on promotion, marketing and shipping
would come down with the merger. This would produce the slightest harm to the
collection of revenue. She used the ideas of competitive positioning to justify her plans of
the merger. She said that the merger is based on the ideologies of consolidation and not
on diversification. She could also defend allegations against the change in the HP was.
She was of the view that the HP has always encouraged changes as it is about innovating
and taking bold steps. She said that the company requires being consistent with creativity,
improvement and modification. This merger had the capability of providing exactly the
same. (Mergers and Acquisitions, 2010)

Compaq Value Proposition


"There are still a lot of people who hold traditional views of Compaq. They are not aware
that the 'new Compaq' is a solutions-oriented company with a strong and clear
commitment to the business intelligence marketplace," says Nicholson. Having acquired
Tandem in 1997 and Digital in 1998, Compaq is now the second largest computer
company in the world and the leading developer of enterprise computing solutions.

Nicholson joined Compaq as part of the Digital acquisition. Most of Nicholson's eleven
years with Digital were spent in the United Kingdom, but in 1995 Nicholson moved to
the United States to lead Digital's worldwide channel business development. "As soon as
the acquisition was finalized, I took over the Database and Business Intelligence Business
Unit which is an engineering and marketing-focused business unit," explains Nicholson.
"I think one of the nice surprises for everybody when Compaq acquired Tandem and then
subsequently acquired Digital was the lack of overlap in where our technology was being
used by customers the three companies were all operating in different segments of the
business. Our biggest challenge, which is also our biggest opportunity, is getting out into
the marketplace and making sure people know the breadth and depth of Compaq's
solutions capability."

The blending of the three companies’ human resources as well as technical resources
has enabled the "new Compaq" to differentiate itself from its competitors. "The sheer
scale of the offerings that we have is just one differentiator," explains Nicholson. "Our
customers range from individual consumers to international organizations requiring the
largest systems that can be put together with our clustering, and our solutions range from
the provision of the simplest technology to the delivery of complex systems integration.
But if you look at us compared to the competition, it's the capacity and capability of the
people in the organization that make the difference. You can have a hundred
conversations a week with people in different parts of Compaq, and while they're all
addressing different pieces of the marketplace and all have different areas of expertise,
they have one thing in common: a focus on solutions. It's marvelous. At the end of the
day, that's what it comes down to the delivery of solutions."

"We touch so many prospective customers that have differing needs and levels of
technological understanding. Some customers know exactly what they want and want to
buy it in a certain way. At the other end of the spectrum are customers who can articulate
their business problems or their business visions but have no idea how technology can be
applied to help them meet those ends. We can address the complete range," states
Nicholson. "Compaq's mission in business intelligence is to be the leader in providing
industry-standard solutions. We want to be an agent of change. That's pretty much what
differentiates us from the competition," he adds.

Nicholson's unit focuses on delivering database and business intelligence (BI) solutions,
and Nicholson describes the goal of the unit saying, "The value proposition that we take
is that we want to deliver solutions that ensure our customers a fast route to success, with
less risk and lowest total cost." He adds, "I've never met a customer yet that didn't want
those things. My experience with customers is that they want to buy solutions to
identified problems or business needs. They do not want to buy something that adds
complexity. And I think the technology industry in general has too often been guilty of
that. The price that people have to pay day in and day out to operate solutions based on
technology is, in our view, too high. We have to reduce that burden."

Compaq Service Channels’


Compaq customers gain additional benefit from services provided by the company.
Nicholson explains one aspect of Compaq's service offerings saying, "Our International
Competency Center in database and business intelligence has three state-of-the-art labs so
that customers or partners can pre-test an environment. In the last 12 months, there have
been hundreds of customer and partner visitors, and we project that visits to the site will
double this year. That facility, which is now being replicated in competency centers in
Europe and Japan, is a key to our commitment to our customers to reduce the risk
associated with installing large, complex systems."

"The Advanced Data Mining Center (ADMC) is a Compaq resource designed to help
customers experience the value of data mining and data mining tools by operating on
their own data in a controlled and secure environment. The ADMC experts show
customers how to manage their own data mining capabilities through transfer of
knowledge and technologies, offering as little or as much support as required," Nicholson
says.
"Our Web-based solution called ActiveAnswers is a unique, on-line knowledge repository
and virtual solution community for channel partners, solution providers and what we call
self-integrators customers who want to do it themselves. Two examples of the types of
things that we post are everything anybody would ever need to know about Microsoft
SQL Server and implementing Oracle's NT Data Mart Suite. It's all on our site even
down to configurators and sizers. Our Alpha Warehouse family, our International
Competency Center, our Advanced Data Mining Center and ActiveAnswers are specific
examples of how we have taken very different and effective approaches to providing
quality solutions for our customers," Nicholson comments.

Compaq Partners’
Compaq's partnering strategy. "We have this fundamental belief that partnering is the
right way to go and that you do benefit by sharing what you have not keeping it to
yourself. We have strong partner relationships with market leaders such as Microsoft,
Oracle and SAS Institute resulting in leading solutions for business intelligence," says
Nicholson. "We're pretty clear about our engagement and leverage with partners. We do
not want to be in a position where we compete with our partners. We want to leverage
their strengths. We believe one of the most powerful things that we can do is to share the
knowledge that we have with our partners to help customers get better solutions. In
contrast to the solutions providers who do everything end-to-end and pull the knowledge
close to themselves, we believe the ultimate power is empowering our channel and
business partners."

With the cooperation of their partners, Nicholson's unit has concentrated on simplifying
the provision of business intelligence solutions while reducing risk and speeding
deployment. For example, Compaq offers pre-packaged AlphaServer systems in business
intelligence to provide a hardware/software platform that is pre-tested and ready to run.
Nicholson explains, "Alpha Warehouse One is pre-packaged and pre-tested with Oracle8
up to a one terabyte data warehouse. If the customer wishes, we'll pre-load Oracle on the
system. We like to give the customer the choice. We also provide a choice of entry points
for building data warehouses and data marts. Users can choose a full one- terabyte
solution or start with entry-level "Builder" configurations and upgrade to Alpha
Warehouse One. On the data mining side, we have Alpha Warehouse Miner with SAS
Institute. It's exactly the same principle pre-tested and pre-configured so our customers
can be assured of an integrated installation. The Alpha Warehouse family can also be
configured as custom solutions to meet any business need."

Competitors
HP primarily competes against computer manufacturers including Dell, Acer, Lenovo
and Toshiba. Originally the company competed against IBM, making affordable IBM
PC compatibles often cheaper and faster than the IBM alternative. Lenovo, which
purchased IBM's personal computer business in 2005, is a new competitor, especially in
China where it was founded.

Recognizing that requirement for effective and innovative business intelligence solutions
exists worldwide, Nicholson states, "I think it's incumbent on any company that wants to
operate globally to realize that one size does not fit all. The challenge for me,
individually and corporately, is to make sure that the building blocks of value that we
provide are able to be reassembled into something that looks right, feels right and
provides competitive advantage for a customer in the British market, the French market,
the German market, in Singapore and in Australia as well as in North America."

Nicholson can attest that accomplishing the task of climbing every Munro in Scotland is
an endeavor that requires planning and a substantial commitment of time and energy.
Similarly, Compaq's climb to the summit of the "New World of Computing" has been
accomplished through innovative business intelligence solutions that address the full
range of customer needs.

Compaq Business
Our products and services are available worldwide. We believe this geographic diversity
allows us to meet demand on a worldwide basis for both consumer and enterprise
customers, draws on business and technical expertise from a worldwide workforce,
provides stability to our operations, allows us to drive economies of scale, provides
revenue streams to offset geographic economic trends and offers us an opportunity to
access new markets for maturing products. In addition, we believe that future growth is
dependent in part on our ability to develop products and sales models that target
developing countries. In this regard, we believe that our broad geographic presence gives
us a solid base upon which to build such future growth. A summary of our domestic and
international net revenue and net property, plant and equipment is set forth in Note 19 to
the Consolidated Financial Statements in Item 8, which is incorporated herein by
reference. Approximately 64% of our overall net revenue in fiscal 2009 came from
outside the United States. The substantial majority of our net revenue originating outside
the United States was from customers other than foreign governments. For a discussion
of risks attendant to HP’s foreign operations, see ‘‘Risk Factors—Due to the international
nature of our business, political or economic changes or other factors could harm our
future revenue, costs and expenses and financial condition,’’ in Item 1A, ‘‘Quantitative
and Qualitative Disclosure about Market Risk’’ in Item 7A and Note 10 to the
Consolidated Financial Statements in Item 8, which are incorporated herein by reference.

Compaq entered India


This is an impressive DQ Top 20 story. Of a PC vendor that entered India relatively late,
in the mid-1990s. It acquired an established systems and solutions company in 1998-99,
while entering the DQ Top 20 at No 5 in 1998-99. It soon set the PC marketing
benchmarks for established players like HP and IBM. And it’s now made it to the Top 5
InfoTech groups of India—growing the fastest among the systems vendors.

Compaq entered India in 1994, setting up a subsidiary in 1997 with a Rs 45 lakh


investment—later stepped up to Rs 2.25 crore. In July 1999, the share capital went up to
Rs 88.5 crore (88 million shares), mostly held by Compaq Computer, USA. This year,
almost the entire equity has been transferred to Compaq Mauritius.

Compaq India spent its first four years building up operations, channels, a first few retail
outlets, and other core and support infrastructure. These included, in 1998-99, an
assembly plant at the then recently-acquired Digital India’s facility off Bangalore, call
centers in Mumbai, Delhi and Calcutta, and service networks (and packages) to tackle an
unimpressive service reputation in India.

For a company in global and local turmoil, Compaq grew rather well. In 1998 came the
acquisition of Digital India, unique in India because the latter retained its Digital identity
as a services subsidiary. Systems and servers went to Compaq, which closed down most
Digital product lines barring the Alpha-based UNIX servers. Digital India chief Som
Mittal replaced Abhishek Mukherji as head of Compaq in India in 1998. A year down,
Mittal went back to heading Digital India, as Balu Doraisamy took over at Compaq.
Compaq took a global hit in its PC leadership and its earnings, went through a $1-billion
restructuring and 8,000 layoffs, and sacked CEO Eckhard Pfeiffer, as a very low-profile
Michael Capellas took over. The systems problems continued Compaq losing global No 1
position to Dell – first in PCs globally, then in servers for North America in Q1 2001.

The turmoil is behind Compaq India, though. It saw rapid growth in India last year, far
beyond its Asia growth of 16%, grossing $0.6 billion for Q1, 2001 in Asia excluding
Japan and Greater China (PRC, Taiwan and Hong Kong). Global revenues for the same
period were $9.2 billion, of which Japan, at 31%, has the biggest share outside the US.

In the year gone by, Compaq India displaced HCL Insys from the top PCs slot. Now,
Compaq’s focus and challenge remains that of going beyond PCs to the more profitable
S-segments: servers, storage, services. It’s done well in parts: its storage business grew
40% in India, and contributed 10% of Compaq Asia-Pacific’s storage revenues.

In high-end UNIX servers, Compaq is a distant number four in the global RISC UNIX
servers segment. The gap in the Alpha’s life-cycle, during the Digital acquisition by
Compaq, was not good for the Alpha; now, it’s nearing the end of the road for the Alpha.
Compaq is switching to Intel’s Itanium for its high-end servers, and will "transfer its
Alpha chip expertise" (people and technology) to Intel, leaving the RISC genre to Sun
and IBM. And in Intel-based servers, whatever the global challenges from Dell, Compaq
was a clear number one in India.

Compaq has now merged its consumer and commercial desktop PC operations under one
roof. In India, this "Access Business Group", under director Ravi Swaminathan, will sell
a range of devices that will access the Net: portables, hand-helds, MP3 players, and
related services.

Compaq’s DQ Top 5 Group entry was helped by its services subsidiary’s performance.
Digital India, which focuses only on software and services exports, has just reported its
first full year of operations ending March 2001. Its revenues at Rs 184 crore represent
more than a doubling of its previous year’s (annualized) revenues. Its hardware and
networking services businesses were transferred to parent Compaq, while it stayed
focused on software and services. With its unique position (only in India does the Digital
logo still exist), Digital India describes itself simply as a "software and services
multinational headquartered in India".

What’s next for Compaq? The global focus is on a systems recovery, from red ink to
black. For India, Compaq will keep the pressure up on PCs to maintain the #1 slot, try to
ramp up PC server sales to make up for any decline in its UNIX servers, and try for major
projects to keep both systems and higher-margin services revenues up. Compaq Global
Services plans to spend over $10 million on acquiring "a couple of companies in India"
this year. This should help Compaq in closer to IBM Global’s services revenues in India,
and keep up its growth and margins—a tough task in this financial year.

HP-Compaq Strategy in India


HP in India
Hewlett Packard was founded in 1938 by William Hewlett and David Packard and went
public in 1957. HP has come a long way since then from being an electronic instruments
company to a major player in the computer industry.

HP established its presence in India in 1988. Today, the Indian site is one of the largest
sites outside the U.S. HP has more than 30 thousand employees in 42 locations. HP has a
presence in over 350 cities in India. The HP and Compaq merger in 2002 resulted in the
creation of the largest PC Company in India with revenues of Rs. 35 billion and a
combined 17 per cent market share (more than a third of the organized market) in India.
The merged entity's market share was more than double of the nearest competitor New
Delhi-based HCL Info systems (eight percent).

HP has developed a three-pronged strategy to attract, capture and retain Indian customers.
Salient features of HP’s Strategy are:

• Consumer focus: Indian youth and women


• Product Focus: Technology loaded and stylish products with connectivity and
mobility not ignoring price sensitivity of Indian market.
• Market Focus: Targeting Tier 2 and Tier 3 cities in India
• Segment focus: Large product portfolio catering to SOHO, SMB, government and
enterprise segments.
• Dual-Brand Marketing Strategy: Mass market brand like Compaq Presario and at
the same time ultimate digital experience brand HP pavilion.
• Significant investment in R&D
• Globalization: Adopting a global framework and adapting locally
• Following the principle that PC’s are very personal

HP's 'Trade in Trade Out' program


In September 2009, HP India launched the second edition of its 'Trade in Trade Out'
program aimed at all corporate and customers in India. Season one of the 'Trade in Trade
Out' program received a tremendous response from HP customers. Under the program,
any corporate or customer can exchange/upgrade their existing high-end large format
printers in order to help their business obtain more value from IT investments. The
products taken back are recycled to reduce the environmental impact of technology
products.

In March 2009, HP launched the 'HP Software University' (HPSU) in partnership with
Indian Institute of Hardware Technology (IIHT). The university was launched to address
the growing demand for software testing professionals in India.

Compaq Market Research


HP launches new Compaq laptop series in India
HP, in a bid to reinforce its market share in the laptop space has launched a brand new
series of nine trendy and stylish Compaq laptops embedded with several valuable
software and features. The new series carries modern features like backlit keyboard,
finger print reader and HDMI 1.3 add to its chic look apart from a built in TV tuner card,
blue ray drive and an infra ready remote control. The new Compaq notebook range is
priced between Rs 26,990 to Rs Rs 38,990.

Briefing the media, Rajiv Grover, Director - Consumer Products, personal systems group
of HP said that the new range was a result of HP's extensive research, focusing on user
preferences amongst the youth.

The unique blend of looks and durability makes the new range both attractive and sturdy.
Strengthening its market with an aggressive 'go-to-market' strategy, HP India plans to
expand its retail footprint across 600 cities and expand the retail dealer network to over
6000 by the end of this year. The notebook market which was at just 85,000 in 2003, has
grown to 1.7 million last year, touching 2.4 million during the current fiscal. IDC has
projected the notebook sales to touch 7.8 million by the year 2012.