Compaq

Compaq Computer Corporation was an American personal computer company founded in 1982 by Rod Canion, Jim Harris and Bill Murto. Compaq was once the largest supplier of computing systems in the world. During the 1980s Compaq produced some of the first IBM PC compatible computers at a low-cost. The term "COMPAQ" is an acronym for "Compatibility and Quality". It existed as an independent corporation until 2002, when it was purchased by Hewlett-Packard.

History

1980s

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 partners. It is often told that the architecture of the original Compaq PC was first sketched out on a placemat by the founders while dining in the Houston restaurant, House of Pies.

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 competitors at the time. The Compaq Portable was one of the progenitors of today's laptop. 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. 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 for $1 million. Numerous other companies soon followed their lead.

In 1985 Compaq released the Compaq Deskpro 286, a 16-bit desktop computer using an Intel 80286 microprocessor running at 6 MHz and capable of 7-MB RAM, it was considerably faster than an IBM PC and was, like the Compaq Portable, also capable of running IBM software. It cost $2000 for the 40-MB hard disk model. It was the first of the Compaq Deskpro line of computers.

After making half a billion dollars turnover, in 1986 Compaq released the Compaq Portable II. The Portable II was significantly lighter and smaller than its predecessor, featuring a revised design with an 8 MHz processor and 10 MB hard disk. It was cheaper than the IBM PC/AT at $3199, or $4799 with a hard disk.

When in 1987, Compaq introduced the first PC based on Intel's new 80386 microprocessor, with the Compaq Portable 386 and Compaq Portable III they began a period of increasing performance leadership over IBM, who were not yet using this processor. This leadership, and the rivalry with IBM was emphasised 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 which was designed in reaction to IBM's MCA (MicroChannel Architecture).

1990s

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 first-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 computing during the 1970s and early 1980s. This acquisition made Compaq, at the time, the world's second largest computer maker in the world in terms of revenue. Unfortunately for the company, CEO Eckhart 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 eventually replaced by Michael Capellas, formerly CIO of the company. 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.

2000s

In 2001, Compaq engaged in a merger with Hewlett-Packard. Numerous large HP shareholders, including Walter Hewlett, publicly opposed the deal, which resulted in a nasty 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 Bank of America) haunted the new company. Capellas left the company after serving less than a year as President of HP. Carly Fiorina, the CEO of HP, added Capellas' responsibilities to her own. Fiorina helmed Compaq for nearly three years after Capellas left. During that time, HP laid off thousands of former Compaq employees, its stock price generally declined, profits did not perk up, and it continued to lose market share to Dell. Facing dismissal from a hostile Board of Directors, Fiorina opted to leave in February 2005 before the board could fire her. Mark Hurd took her place as CEO of HP. Some Compaq products were re-branded with the HP nameplate, while the Compaq brand remained on other products, notably PC, PDA, and server lines.

PC Products

Wireless LAN Products

Compaq WL400 access point

Culture

Two sports stadiums were named after the company:

The Compaq Center, of Houston, Texas, formerly The Summit, lost its sports teams to the Toyota Center. The building became the new home of Lakewood Church, one of the largest Protestant congregations in the United States.
The San Jose Compaq Center, of San Jose, California, was renamed the HP Pavilion.

Competitors

HP Compaq competes against other computer manufacturers including Dell, Lenovo, Gateway, Sony and Toshiba among others. 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 is headquartered.

External links

1982 establishments | 2002 disestablishments | Electronics companies | Computer hardware companies | Defunct computer companies of the United States

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