Acknowledging that nothing he could say at this year's international press briefing could match last year's announcement that his company was acquiring Digital Equipment, Eckhard Pfeiffer, Compaq's president and CEO, nonetheless tried to impress by promising that Compaq will dominate the Internet Age.
"Compaq has transformed itself from a PC company to a worldwide technology leader. Now we want Internet leadership. That's where Compaq is going next," said Pfeiffer, speaking to hundreds of journalists and analysts.
Pfeiffer defined Internet leadership as selling the hardware and services that run the Internet and supplying Internet-enabled products to enterprises and consumers. He pointed out that Compaq servers run four of the top five Web sites and are critical for major e-commerce sites such as Amazon.com. Compaq runs the entire network of Microsoft and much of the e-mail system for America Online, he said.
Pfeiffer also spoke about how Compaq has grown in the intervening year since the Digital acquisition. Compaq's fourth quarter 1998 results, in which the Houston-based company turned in almost $11 billion in revenue and $758 million in profits, demonstrated that the Digital deal had lived up to expectations. Analysts estimate that Compaq will report $43.5 billion in revenue for 1999, Pfeiffer said.
Pfeiffer also outlined Compaq's gains in market share, taking special note of the Wall Street speculation that competitor Dell's earnings report will not meet analyst expectations. "Dell losing market share will be confirmed," Pfeiffer said. Relying on figures from International Data Corp., Pfeiffer said that Compaq controls 15.4% of the PC market worldwide, outpacing other PC vendors such as IBM, Dell and Hewlett-Packard.
Compaq is spinning off its Alta Vista search engine site and will float the company on a stock exchange to raise the capital it needs to become the dominant portal on the Web, Pfeiffer said. Although the AltaVista page will be an important tool for leading consumers to Compaq's corporate Web site, the business model for the AltaVista page doesn't really fit into the model for the rest of Compaq.
Pfeiffer also outlined Compaq's plans to grow its direct-sales business, bypassing retail outlets and the enterprise channel. Pfeiffer called the new model "customer choice," saying that he was not prepared to tell customers that they could not buy directly from Compaq if they wanted to do so. Direct sales from the Compaq site and via the telephone won't hurt distributors because of an overall growth in market share for Compaq, said Andreas Barth, Compaq senior vice president and general manager for Europe, Middle East and Africa. Direct sales will increase and so will revenue through the channel.
Pfeiffer also sought to reassure Digital and Tandem customers that Compaq is not planning to desert them. "Let me put the concerns to rest. Compaq is fully supporting Digital Alpha, Tandem's Himalaya servers and Open VMS."
Addressing the hot issue of home networking and the brewing standards battle, Pfeiffer said that Compaq is pursuing several alternatives for the networked home and will closely follow what others are doing in that area. Compaq is already shipping a Presario PC with plug-and-play home networking capability, he said.
RELATED LINKS
IDG News Service, 1/26/99.
Market woes force Compaq net retreat
Network World, 1/11/99.
Goodbye to Digital, howdy Compaq East
Network World, 7/13/98.
