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Compaq Shifts Focus
Matt Watson writes: "MSNBC is running this story on Compaq's shifting mainly to software and services. The article states that the sluggish PC market is partly to blame." More specifically, Compaq is talking about "industry-specific" packages. Niche marketing, basically, but with a very lage company that can concentrate on certain areas.
they die.
Contrary to the popular belief, there indeed is no God.
It's a shame to see a company like Compaq willing to take such drastic measures for the sake of short term results. They're divesting themselves of the Alpha and basically making themselves slaves to Intel in order to make their quarterly report look good. This is probably great for bonuses at the top, but it's pretty short sighted. And it's really sad to see the company that so revolutionized personal computing in its early years (first portable PC(tm), first 100% compatible IBM PC BIOS clone, first 386 PC, etc) so completely at the mercy of stock market volatility.
Of course, I think Compaq has some overpriced hardware, and their decisions to lock people into proprietary upgrades makes me not recommend them to anybody, but the service folks were A-OK. :)
Poor DEC. They will never live again. Most of us knew that when Compaq acquired them after Tandem (remember, they bought Tandem and then phased out all Tandem stuff in favor of Compaq hardware) that it was probably not a good thing for DEC. Now it appears that it has happened. Granted, it took 3 years, but still--DEC is the stuff of Legends. I still have a DEC VT plugged in to my Linux servers via serial cables. It's like using a piece of history for daily needs.
I never got to use an Alpha chip. I always wanted one, but I just never got around to it. Now it appears to be too late (what are the real odds of Intel not doing what Compaq did with Tandem?).
"Doubt your doubts and believe your beliefs." -- Switchfoot, Ode to Chin
So they didn't phase out the tandems, they just appended the name compaq to them. They still run mips and they still run tandems os. When they bought tandem, they did screw it up, but the architecture of the tandems wasn't changes. See Here for more info on the s-series, runnign mips 12000 processors.
Gerhardt S. did in fact say he wanted to move the himalaya to the alpha, but lacked the proper focus inside the company to accomplish that. The tandem os is very very cleverly designed, as is the hardware, but not trivial to port to new architectures. The tandem processor to mips conversion took years of development, and the conservative nature of tandems customer base meant that only in the late 90's did most customers upgrade.
I could go on forever about the acquisition of tandem and compaq, how compaq under Schroeder screwed up the culture, engineering and drove gobs of key engineers into the waiting arms of the .coms, but I won't. So, yes, the tandem acquisition was screwed up, btu no, the hardware wasn't molested.
Chris DiBona
--
Grant Chair, Linux Int.
Co-Editor, Open Sources
Co-Editor, Open Sources
Open Source Program Manager, Google, Inc.
...because there seems to be something about human nature that works that way. Particularly in the business world. Two cases in point:
* IBM made a lot of money shifting focus from hardware to services. Therefore we (for large values of "we") must shift focus to services, and we will also make lots of money. Logical flaws in this line of reasoning too numerous to point out!
* Some companies out there (Cisco, fooConsulting) are making insane gross margins. Therefore, all of our product lines must make insane gross margins. Therefore, we must "exit" (i.e. sell or trash) any business which doesn't make insane margins this quarter. Prime example: HP begets Agilent, because instruments "aren't growing fast enough". Agilent sells medical instruments, because they "aren't profitable enough". In 2 or 3 quarters I wonder if HP will wish they had those medical instruments back, given that people will still be using hospitals when all the dotcoms are dead?
Why can't business "leaders" see that _everyone_ can't do the same thing, or everyone will end up with a zero profit margin? And I ask that as an evil MBA, too!
sPh
"Compaq created the first PC BIOS"
Um, I think that would be "the first legal 100% compatible clone of the IBM PC BIOS".
Point being:
* There were PC BIOS' before the IBM PC
* The Compaq Portable and Compaq Deskpro were clones (PCM or "plug-compatibles" in the jargon of the day) of the original IBM PC.
sPh
"Pretty standard in the business. Look on any oil rig, medical shop, mineral company, steel mill, etc, and you'll see standard technology selling at super premiums"
While niche markets are the place to be to make money, the gross margin for the whole business isn't what you would think from the mark-up on the components. R&D, conformance to industry specs, support, and quality/reliability expectations eat up a lot of that money.
Industrial customers don't accept the "blue screens happen" philosophy - they expect your products to work, and for you to stand behind them. I once saw the follow-up from the customer when a mission-critical product failed in a steel mill. 15 member team roaming the halls and shop floor grilling randomly selected employees on procedures, specifications, etc.; parts pulled off shelves at random and tested for specs., etc. Can you imagine the typical commercial software supplier surviving that kind of inspection?
sPh
Niche markets are sweet in that companies can get away with charging absolutely ridiculous prices for otherwise generic hardware. As a case in point I've seen medical equipment where the hardware company charges $15,000 for an interfacing PC, and said PC is nothing more than a $700 clone PC. Pretty standard in the business. Look on any oil rig, medical shop, mineral company, steel mill, etc, and you'll see standard technology selling at super premiums.
At the same time though is this really nothing more than a "please don't pay attention to our results for the next couple of quarters because we're pursuing this great new business" type initiative that is so common in public companies? Given the size of compaq I find it very hard to believe they will do anything to threaten their hardware market.
The web selling engine still won't let you specify Linux for a professional workstation. I presume that it would work, but why should I do business with a company that makes it difficult. Any business.
Caution: Now approaching the (technological) singularity.
I think we've pushed this "anyone can grow up to be president" thing too far.
For everyone here who's slagging Compaq, why don't you guys go get a REAL Compaq (like a Deskpro) and then tell me what you think.. if all you've had to deal with is a Presario, your opinion is flawed, because you've never seen what they can really do..
Well, you actually hit the nail on the head in another way, probably without intending to. Anybody on this board who uses a Presario shouldn't be using one, anyway. Talk to the real Presario target market - first time computer users, moms, dads, grandparents - and you'll get a different opinion. While I'd never buy a Presario for myself, and they're never something I'd recommend for a second computer, they're a great starter box. They give you everything you need with an awesome out-of-box experience, very friendly and easy to use.
The biggest problem with Presarios is that advanced users (like Slashdot readers) see them at Best Buy for very reasonable prices, and don't understand what's in the box before they pick one up. Read the displays, and Compaq is very specific about what OS runs on each machine. If you want to get Windows 2000 on a baseline Presario, for example, you just can't do it. It's not that the machine isn't fast enough, or that they're trying to build value, but they just don't have drivers for the hardware, and they don't intend to start. That's fine for what they're sold for - my grandma's never going to upgrade her Presario to Windows 2000, not when she can get an all-new Presario in two years that has more stuff and comes with Windows 2000 built in.
What's your damage, Heather?
I see a lot of "I hate Compaq" posts..
For everyone here who's slagging Compaq, why don't you guys go get a REAL Compaq (like a Deskpro) and then tell me what you think.. if all you've had to deal with is a Presario, your opinion is flawed, because you've never seen what they can really do..
I LOVE my Deskpro's - they're completely SILENT - as in NO noise.. they're easy to upgrade.. I can open it up, and install a new CD ROM, or HD, or any expansion card in 5 seconds, without the need for a screwdriver. It's like working with a Formula 1..
Presarios are consumer-level crap - pretty much disposable.. if that's all you've ever seen, you'll surely be disapponted.. but open your mind and see that there is more to Compaq than the Presario..
If I never have to work on another Compaq pos case again, I'll be a happy, happy man.
Who was the brilliant genius in their case design department that said "Hey, we've got all these non-standard screws lying about, let's use them in our computers! And after that, let's make it impossible to access the CMOS unless you stick a non-functioning hard drive onto the primary IDE channel!" No joke there, that was what a Compaq technician told me to do to get into the CMOS. And you know what? It still didn't work.
Now if Compaq shifted focus completely to the iPaq and dropped the price by about $200...*grin*
---- El diablo esta en mis pantalones! Mire, mire!
Lack of change makes a stagnant company. A company which can't change to deal with changes will ultimately fail.
If compaq can't make money on a division, and has no visions in the forseeable future of making a profit on that division, it has an obligation to its shareholders to get rid of it.
Yes, that may mean that many people lose their jobs in the short term, but if it weren't for that happening, the company may go under, and everyone loses their job. [well, probably not with bankruptcy protection and the like, but you get the idea] If an entire company the size of Compaq goes under, this would have a dramatic effect on other sectors, too.
They may be taking a risk in this untested market, but if they don't get into it quickly, they might be too far behind to make it. They may fail in their endevor, but they definately would not have succeeded if they hadn't tried.
[goddamn it...I sound like a damned optimist or something today.... what the hell is up with this? Luckily, knowing their tech support, they're going to have to make some major changes to succeed in a service based model...]
Build it, and they will come^Hplain.
I wonder how long this will last. A company like Compaq has made its money, and built its business, on the PC and Server market. I dont think that this will pan out to be much more than 5 or 10% of compaq's business model. They rely to heavily on the markets they have to ever be able to shift gears like this.
"If ignorance is bliss, why aren't there more happy people in the world?"
If I were Compaq, I'd get the hell outta the PC business, too.
Bill Gurley has an interesting editorial on the subject in his Above the Crowd column at News.com.
Of course, unlike Dell and HP, Compaq isn't just now entering services, they are expanding on what they bought when they got DEC, combined with their own services organization that they've been developing for years.
See here for more information.
Disclaimer: I happen to work for Compaq Services.
In case you hadn't noticed, Llama Keeper was talking about servers while you were talking about desktop PCs. I'd say it's safe to say those are two different markets, and a company excelling at one and sucking at another is not unthinkable. I have had a somewhat positive experience with Compaq's server line, while I have had an overwhelmingly negative experience with their desktops. I think you're both right.
Here's my DeCSS mirror, where's yours?
In my hometown of Huntsville, AL the local-boys-made-good company of Intergraph (noted for their innovative CAD/CAM terminals 10 years ago) tried to get out of hardware and focus on software to cut losses but it didn't help. They've lost over a quarter billion dollars in the last five years and haven't had a profitable year since 1992. They're still saying they'll be profitable someday... Good luck Compaq - it was nice knowing you....
What DID happen to alpha? What would have happened if Compaq hadn't bought Digital, and there was still a company around that cared if Alpha lived or died. And what happens to Alpha now? I see no mention of it in this article.
If Compaq didn't buy DEC, then DEC would have most likely gone the way of SGI, and faded into gradual irrelevance. With the acquisition, the best DEC technology (VMS, Tru64) will be able to survive, and now is a lot more sustainable than it would have been under DEC.
BTW, I hear Disney has a new documentary out about Atlantis. You may want to check it out.
Read the EFF's Fair Use FAQ
Dell is supposedly moving into the services business. H-P has (so far unsuccessfully) been attempting the same thing.
IBM has (successfully) moved into the services business, but only because they were already diversified enough to make the move.
The trend isn't new. As long ago as 1999, the writing was on the wall. The problem is, most of these hardware OEMs are going to have a difficult time making the transition. They're used to competing on price, not on service. The OEM business is brutally competitive in the price arena, but let's be honest, most PC clone makers are not really innovating. All they're doing is trying to squeeze inefficiency out of manufacturing and distribution, making money on very thin margins.
Entering services will be difficult for Compaq, just as it has been for Dell, H-P, and all the other OEMs that are jumping on the bandwagon. Compete on price alone at your own peril.
Read the EFF's Fair Use FAQ
Anti-flame disclaimer: I am not an expert of Compaq hardware, nor do I know how the current Compaq PCs are shipped. If I am incorrect, it is because this is my impression of Compaq hardware from the past, and that carried on to my current impression of them. If this info does not currently hold true, that is becase Compaq did nothing to change this rather common impression of them and their hardware.
Compaq desktops suck because they are so darn proprietary. They leave very little headroom for upgrades and the upgrades that are available are very expensive. The average user may not notice this but there is a reason that Compaq is getting out of the PC market and the reason is because people are reluctant to buy it due to negative word-of-mouth! Compaq could have easily avoided this common impression by pumping more money into marketing but they didn't. That is one big reason why they are crapping out today. If they would have used more standard equipment and offered better upgrade packages for the older models, they would have been better off in the long run. I understand that the goal was to get people to buy a new PC every time the old one got too old, but that closed mindset came back to bite them really really hard in the Compass.
Of course, that is just my opinion.
I liked the old arm-stretchers (sewing machines, luggables, whatever) BITD. After that, everything they touched turned to shit.
cat
In this case, I think you took the old saying, "when your only tool is a hammer, every job starts to look like a nail" to literal extremes. :)
Still, kudos to you for your quick&dirty hardware hack.
Information wants to be anthropomorphized.
As a guy who has had to work on Compaqs in the past I can sum up my feelings in one word. 'Good'.
So good-bye, so long, and I hope to see you disappear from NASDAQ soon.
Compaq is not abandoning its hardware. Rather its focusnig on just adding value to its high end servers through software solutions! Think clustering, server management, fail over, operating system support. I take as my source an internal letter sent by CEO to employees. The MSNBC piece seems like general uninformed FUD in light of recent news of Alpha's demise.
Regarding that, the Alpha platform might have been technically superior. However in the next two or three generations it could not compete with the massive amounts of cash that Intel can throw at its fab process. Economy of scale wins out. Look at SGI, and I predict also sun in couple generations.
still, its sad. now everybody will be at the mercy of intels shipping cycles and blunders.