58 Facts About Compaq

Compaq Computer Corporation was an American information technology company founded in 1982 that developed, sold, and supported computers and related products and services.

Compaq produced some of the first IBM PC compatible computers, being the second company after Columbia Data Products to legally reverse engineer the IBM Personal Computer.

The Compaq brand remained in use by HP for lower-end systems until 2013 when it was discontinued.

Compaq was founded in February 1982 by Rod Canion, Jim Harris, and Bill Murto, three senior managers from semiconductor manufacturer Texas Instruments.

The first Compaq PC was sketched out on a placemat by Ted Papajohn while dining with the founders in a pie shop,.

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Unlike many startups, Compaq differentiated its offerings from the many other IBM PC clones by not focusing mainly on price, but instead concentrating on new features, such as portability and better graphics displays as well as performance—and all at prices comparable to those of IBM's PCs.

In contrast to Dell and Gateway 2000, Compaq hired veteran engineers with an average of 15 years experience, which lent credibility to Compaq's reputation of reliability among customers.

Under Canion's direction, Compaq sold computers only through dealers to avoid potential competition that a direct sales channel would foster, which helped foster loyalty among resellers.

In 1987, Compaq hit the revenue mark, taking the least amount of time to reach that milestone.

In November 1982, Compaq announced their first product, the Compaq Portable, a portable IBM PC compatible personal computer.

The Compaq Portable was one of the progenitors of today's laptop; some called it a "suitcase computer" for its size and the look of its case.

The Compaq Portable was the first in the range of the Compaq Portable series.

Compaq was able to market a legal IBM clone because IBM mostly used "off the shelf" parts for their PC.

Unlike other companies, Compaq did not bundle application software with its computers.

Compaq instead emphasized PC compatibility, of which Future Computing in May 1983 ranked Compaq as among the "Best" examples.

Compaq computers remained the most compatible PC clones into 1984, and maintained its reputation for compatibility for years, even as clone BIOSes became available from Phoenix Technologies and other companies that reverse engineered IBM's design, then sold their version to clone manufacturers.

On June 28,1984, Compaq released the Compaq Deskpro, a 16-bit desktop computer using an Intel 8086 microprocessor running at 7.

Compaq introduced the first PC based on Intel's new 80386 microprocessor, the Compaq Deskpro 386, in 1986.

An IBM-made 386 machine reached the market almost a year later, but by that time Compaq was the 386 supplier of choice and IBM had lost some of its prestige.

Compaq's technical leadership and the rivalry with IBM was emphasized when the SystemPro server was launched in late 1989 – this was a true server product with standard support for a second CPU and RAID, but the first product to feature the EISA bus, designed in reaction to IBM's MCA which was incompatible with the original AT bus.

Compaq was so influential that observers and its executives spoke of "Compaq compatible".

InfoWorld reported that "In the [ISA market] Compaq is already IBM's equal in being seen as a safe bet", quoting a sell-side analyst describing it as "now the safe choice in personal computers".

Canion initially believed that the 1990s recession was responsible for Compaq's declining sales but insisted that they would recover once the economy improved, however Pfeiffer's observation of the European market noted that it was competition as rivals could match Compaq at a fraction of the cost.

Under Pfeiffer's tenure as chief executive, Compaq entered the retail computer market with the Compaq Presario as one of the first manufacturers in the mid-1990s to market a sub-$1000 PC.

From third place in 1993, Compaq had overtaken Apple Computer and even surpassed IBM as the top PC manufacturer in 1994, as both IBM and Apple were struggling considerably during that time.

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Compaq had decided to make a foray into printers in 1989, and the first models were released to positive reviews in 1992.

However, Pfeiffer saw that the prospects of taking on market leader Hewlett Packard was tough, as that would force Compaq to devote more funds and people to that project than originally budgeted.

Compaq ended up selling the printer business to Xerox and took a charge of $50 million.

On June 26,1995, Compaq reached an agreement with Cisco Systems Inc in order to get into networking, including digital modems, routers, and switches favored by small businesses and corporate departments, which was now a $4 billion business and the fastest-growing part of the computer hardware market.

In 1996, despite record sales and profits at Compaq, Pfeiffer initiated a major management shakeup in the senior ranks.

Under Mason's guidance, Compaq utilized its assets more efficiently instead of focusing just on income and profits, which increased Compaq's cash from to nearly in one year.

Compaq had been producing the PC chassis at its plant in Shenzhen, China to cut costs.

In 1996, instead of expanding its own plant, Compaq asked a Taiwanese supplier to set up a new factory nearby to produce the mechanicals, with the Taiwanese supplier owning the inventory until it reached Compaq in Houston.

In 1997, Compaq bought Tandem Computers, known for their NonStop server line.

In 1998, Compaq acquired Digital Equipment Corporation for a then-industry record of US$9 billion.

Digital Equipment, which had nearly twice as many employees as Compaq while generating half the revenue, had been a leading computer company during the 1970s and early 1980s.

In 1995, Compaq had considered a bid for Digital but only became seriously interested in 1997 after Digital's major divestments and refocusing on the Internet.

Compaq had originally wanted to purchase only Digital's services business but that was turned down.

Furthermore, Compaq fell behind schedule in integrating Digital's operations, which distracted the company from its strength in low-end PCs where it used to lead the market in rolling out next-generation systems which let rival Dell grab market share.

Reportedly Compaq had three consulting firms working to integrate Digital alone.

However, Pfeiffer had little vision for what the combined companies should do, or indeed how the three dramatically different cultures could work as a single entity, and Compaq struggled from strategy indecisiveness and lost focus, as a result being caught in between the low end and high end of the market.

Current and former Compaq employees complained that Gutsch was part of a group of senior executives, dubbed the "A team", who controlled access to Pfeiffer.

Compaq was hit with two class-action lawsuits, as a result of CFO Earl Mason, SVP John Rose, and other executives selling of stock before a conference call with analysts, where they noted that demand for PCs was slowing down.

Rando, senior vice president and general manager of Compaq Services, was a key player during the merger discussions and the most senior executive from Digital to remain with Compaq after the acquisition closed and had been touted by some as the heir-apparent to Pfeiffer.

At the time of Rando's departure, Compaq Services ranked third behind those of IBM and EDS, while slightly ahead of Hewlett-Packard's and Andersen Consulting, however customers switched from Digital and Tandem technology-based workstations to those of HP, IBM, and Sun Microsystems.

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However Compaq still struggled against lower-cost competitors with direct sales channels such as Dell who took over the top spot of PC manufacturer from Compaq in 2001.

Compaq relied significantly on reseller channels, so their criticism caused Compaq to retreat from its proposed direct sales plan, although Capellas maintained that he would use the middlemen to provide value-added services.

In 1998, Compaq signed new sales and equipment alliance with NaviSite.

Under the pact, Compaq agreed to promote and sell NaviSite Web hosting services.

Compaq struggled as a result of the collapse of the dot-com bubble, which hurt sales of their high-end systems in 2001 and 2002, and they managed only a small profit in a few quarters during these years.

The stock price of Compaq, which was around $25 when Capellas became CEO, was trading at half that by 2002.

In 2002, Compaq signed a merger agreement with Hewlett-Packard for, including for goodwill, where each Compaq share would be exchanged for 0.

Hewlett-Packard had reported yearly revenues of, while Compaq's was, and the combined company would have been close to IBM's revenues.

Detractors of the deal noted that buying Compaq was a "distraction" that would not directly help HP take on IBM's breadth or Dell Computer's direct sales model.

Plus there were significant cultural differences between HP and Compaq; which made decisions by consensus and rapid autocratic styles, respectively.

Several senior executives from the Compaq side including Jeff Clarke and Peter Blackmore would resign or be ousted from the post-merger HP.

Compaq originally competed directly against IBM, manufacturing computer systems equivalent with the IBM PC, as well as Apple Computer.

However, the combined HP-Compaq struggled and fell to second place behind Dell from 2003 to 2006.