Compaq Computer Corporation Industry PDA and Computer Hardware Founded February 1982 Headquarters Unincorporated Harris County, Texas, United States Area served United States Key people Rod Canion,
Last Chief Executive officer
Products desktops, notebooks, Servers, Telecommunications equipment, Software Parent Hewlett-Packard Subsidiaries Tandem Computers, Digital Equipment Corporation Website compaq.com
Compaq Computer Corporation is a personal computer company founded in 1982. Once the largest supplier of personal computing systems in the world, Compaq existed as an independent corporation until 2002, when it was acquired for US$25 billion by Hewlett-Packard.
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 Benjamin M. Rosen and Sevin Rosen Funds. The original Compaq PC was first sketched out on a placemat by Ted Papajohn while dining with the founders in a local Houston restaurant, House of Pies. The company was founded with the temporary name Gateway Technology. The name "COMPAQ" was said to be derived from "Compatibility and Quality" but this explanation was an afterthought. The name was chosen from many suggested by Ogilvy amd Mather (Houston office); it being the name least rejected.
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 IBM associate, 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.
In November 1982 Compaq announced their first product, the Compaq Portable, a portable IBM PC compatible personal computer. It was released in March 1983 at $2995, considerably more affordable than the Canadian Hyperion. 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. It was the second IBM PC compatible, being capable of running all software that would run on an IBM PC. It was a commercial success, selling 53,000 units in its first year and generating $111 million in sales revenue. 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. Furthermore, Microsoft had kept the right to license the operating system to other computer manufacturers. The only part which had to be duplicated was the BIOS, which Compaq did legally by using clean room reverse engineering at a cost of $1 million. Phoenix Technologies would shortly follow their lead, but soon "clone BIOSes" were available from many other companies who reverse engineered IBM's design, then sold their version to the PC clone manufacturers.
On June 28, 1984 Compaq released the Compaq Deskpro, a 16-bit desktop computer using an Intel 8086 microprocessor running at 7.14 MHz. It was considerably faster than an IBM PC and was, like the Compaq Portable, also capable of running IBM software. It was Compaq's first non-portable computer and began the Compaq Deskpro line of computers.
When Compaq introduced the first PC based on Intel's new 80386 microprocessor, the Compaq Deskpro 386, in 1986, it marked the first CPU change to the PC platform that was not initiated by IBM. An IBM-made 386 machine eventually reached the market seven months later, but by that time Compaq was the 386 supplier of choice and IBM had lost its image of technical leadership.
For the first three months after announcement the Deskpro 386 shipped with Windows/386. This was a version of Windows 2.1 adapted for the 80386 processor. Support for the virtual 8086 mode was added by Compaq engineers.
This 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 also the first product to feature the EISA bus, designed in reaction to IBM's MCA (MicroChannel Architecture). Prior to developing EISA, Compaq invested significant resources into reverse engineering MCA. Compaq shelved the idea of cloning MCA and formed an alliance with HP and seven others to develop EISA.
At the same time as they began to dominate the server market, in the early 1990s Compaq entered the retail computer market with the Presario, and was one of the first manufacturers in the mid-1990s to market a sub-$1000 PC. In order to maintain the prices it wanted, Compaq became the first top-tier computer manufacturer to utilize CPUs from AMD and Cyrix. The price war resulting from Compaq's actions ultimately drove numerous competitors, most notably IBM and Packard Bell, from this market.
In 1997, Compaq bought Tandem Computers, known for their NonStop server line. This acquisition instantly gave Compaq a presence in the higher end business computing market. In 1998, Compaq acquired Digital Equipment Corporation, the leading company in the previous generation of minicomputers during the 1970s and early 1980s. This acquisition made Compaq, at the time, the second largest computer maker in the world in terms of revenue. Unfortunately for the company, CEO Eckhard Pfeiffer, who engineered both mergers, 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 as a result. Pfeiffer was forced out as CEO in 1999 in a coup led by board chairman Ben Rosen and was succeeded by Michael Capellas, who had been serving as Compaq's CIO. Capellas was able to restore some of the luster lost in the latter part of the Pfeiffer era, but the company still struggled against lower-cost competitors such as Dell.
In 1998, Compaq also signed new sales and equipment alliance with NaviSite. Under the pact, Compaq agreed to promote and sell NaviSite Web hosting services. In return, NaviSite took Compaq as a preferred provider for its storage and Intel-based servers.
Compaq's headquarters complex consisted of 80 acres (320,000 m2) of land in unincorporated northwest Harris County, Texas. The land had 15 office buildings, seven manufacturing buildings, a product conference center, an employee cafeteria, mechanical laboratories, warehouses, and chemical handling facilities.
Merger with HP
In 2002, Compaq engaged in a merger with Hewlett-Packard. Numerous large HP shareholders, including Walter Hewlett, publicly opposed the deal, which resulted in an impassioned public proxy battle between those for and against the deal.
The merger was approved only after the narrowest of margins, and allegations of vote buying (primarily involving an alleged last-second back-room deal with Deutsche Bank) haunted the new company.
It was subsequently disclosed that HP had retained Deutsche Bank's investment banking division in January 2002 to assist in the merger. HP had agreed to pay Deutsche Bank $1 million guaranteed, and another $1 million contingent upon approval of the merger. On August 19, 2003, the United States Securities and Exchange Commission charged Deutsche Bank with failing to disclose a material conflict of interest in its voting of client proxies for the merger and imposed a civil penalty of $750,000. Deutsche Bank consented without admitting or denying the findings.
Before the merger, Compaq's ticker symbol was CPQ. This was melded with Hewlett-Packard's previous symbol (HWP) to create the current symbol of HPQ.
Capellas left the company after serving less than a year as President of HP to become CEO of MCI Worldcom, leading to its purchase by Verizon. Carly Fiorina, the Chairman and CEO of HP, added Capellas's responsibilities to her own.
Fiorina helmed HP for nearly three years after Capellas left. HP laid off thousands of former Compaq, DEC, HP, and Tandem employees, its stock price generally declined and profits did not perk up. Though the merger initially made it the number one PC maker, it soon lost the lead and further market share to Dell. In addition, the merging of the stagnant Compaq computer manufacturer with HP's lucrative printing and imaging division was criticized as that overshadowed the latter's profitability. In February 2005, the Board of Directors ousted Fiorina. Former Compaq CEO Capellas was mentioned by some as a potential successor, but several months afterwards, Mark Hurd was hired as CEO.
In late 2005, Dell seemed to be faltering and HPQ took back the #1 sales position. Hurd separated the PC division from the imaging and printing division. HP's PC segment has since been reinvigorated and now generates more revenue than the traditionally more profitable printers.
Most Compaq products have been re-branded with the HP nameplate, such as the company's market leading ProLiant server line, while the Compaq brand remains on only some consumer-oriented and budget products, notably Compaq Presario PCs. HP's business computers line was discontinued in favour of the Compaq Evo line, which was rebranded HP Compaq. HP's Jornada PDAs were replaced by Compaq iPAQ PDAs, which were renamed HP iPAQ. All Compaq computers now ship with HP software.
In May 2007, HP announced in a press release a new logo for their Compaq Division to be placed on the new model Compaq Presarios.
In 2008, HP reshuffled its business line notebooks. The "Compaq" name from its "HP Compaq" series was originally used for all of HP's business and budget notebooks. However, the HP EliteBook line became the top of the business notebook lineup while the HP Compaq B series became its middle business line. As of early 2009, the "HP ProBook" filled out HP's low end business lineup.
Compaq sponsored Queens Park Rangers Football Club from 1994 to 1996, during their previous two seasons as a Premier League club. Compaq sponsored Bradford Bulls Rugby League club. Before its merger with HP, it also sponsored the Williams Formula One team when it was still powered by BMW engines.
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