Defying laws of gravity the Houston based Compaq Computer Corporation is climbing ever higher altitude with each passing days. In line with growing world-wide acceptance of the Compaq brand, the two Bangladeshi dealers of Compaq – Desktop Computer Connection Ltd. and Flora Ltd. achieved a commendable success in widely establishing Compaq’s quality products from handheld PCs to office-size server systems in Bangladesh.
Founded in 1982, Compaq Computer Corporation’s products are sold and supported in more than 100 countries through a network of more than 31,000 Compaq marketing partners.
This year so far Compaq aside edged both IBM and Apple to become the world’s biggest PC maker, with a 9.5% share of the world market by volume, according to Dataquest. Compaq, which unlashed a price war in PC industry two years ago celebrated its reaching the top by again
cutting the price of its computer by upto 29% to maintain their much boasted cost-leadership mode.”
Pfeiffer, a low-key German, set his goal to overtake IBM as the world’s No. 1 PC supplier by 1996. Compaq achieved Pfeiffer’s goal a year early with hot products as the Presario home PC, Prolinea and Elite notebook PC.
Compaq has designed into each product the potential for a 25% price reduction during its life cycle and expects to keep cutting both costs and prices by 15-20% a year.
Because of continued strong sales of its systems, Compaq’s second quarter earnings jumped to a spectacular 95%. In the highly competitive computer industry Compaq’s second quarter gross margins also continued to grow to 26.5%. (Gross margins is the yardstick of a company’s overall profitability). In corresponding period of 1993 the gross margins were 24.8%.
Eckhard Pfeiffer, President and CEO of Compaq Computer Corporation, who piloted Compaq’s unceasing success world-wide said – “In our drive for market share leadership, Compaq slipped a record number of computers during the second quarter as our products continued to represent the best value for customers world-wide.”
“Compaq anticipates growing demand in the second half of the year. We will continue our expansion activities to satisfy this demand,” said Pfeiffer. “Our challenge will be to manage effectively manufacturing and distribution processes, inventory and product transitions to meet market opportunities.”
At the end of June Compaq introduced the high-performance Rack-Mountable ProLiant family of servers, vertically packaged in highly serviceable modular rack cabinets, that address MIS managers’ needs for consolidation and manageability previously only available with mission-critical minicomputer and mainframe systems.
The network-ready, flagship Deskpro XL, introduced in April to replace the Deskpro/M family, is Compaq’s most flexible powerful Desktop PC. This family features incomparable upgradability, performance and compatibility.
Compaq also began shipments of the LTE Elite high-performance notebook in June. This five model family features the industry’s first built in AC adapter in a full-function notebook, four display technologies and the lightest total carrying weight. Contura Aero, led the subnotebook category in sales and market share in the first half of the year.
Compaq and Multimedia
Compaq’s consumer PCs now contain a CD-ROM player to recognize emerging market of multimedia. Compaq wants consumers to develop a “record-player mentality” about PCs, buying CD-ROM and Multimedia software as routinely as they buy CDs today. That means making multimedia PCs easier to use. To achieve its goal Compaq will continue to invest in more multimedia software firms. It may also possibly buy Cisco Systems that make “routers” forbigmultimedianetworks.
Compaq and PictureTel announced a five-year strategic alliance for the design and manufacture of standards-based personal conferencing products, expected to result in products available world-wide in 1995. Microsoft and Compaq announced the two companies are developing video servers that will enable individuals to receive cost-effective, interactive multimedia video, audio and data on private and public networks.
Most significant is the Compaq-Oracle formation of the Compaq Business Unit at Oracle and the Compaq-Oracle Alliance in July. The unit and alli-
ance were established in order to deliver more reliable, higher performance and easier to manage integrated database server platforms.
Ever ambitious Eckhard Pfeiffer now switched tactics to break Compaq’s image as “Just a PC maker”, by lunching a new range of machines on June 27, aimed directly at IBM’s aging mainframes and minicomputer.
Taking the worst risk of overextending itself, the Huston Company boldly introduced a 454 kg and 183 cm tall computer named Armada to wean off major corporations their mainframes. Armada shall allow companies to consolidate all their servers in one place. This new server, a fully loaded system shall cost over US $ 100,000.
By persuading corporate clients that they can handle the support customers are sure to demand, Compaq will need more than an Armada to conquer this new frontier. To be able to do that, Compaq is investing some $ 40 million this year to develop a range of sales support services and to retrain dealers to handle complex corporate jobs. Goodluck Armada! Bravo Compaq!
COMPAQ’S CONQUERING CARDINALS
DIVIDE & CONQUER
Separate product and geographic regions have their own business models. Top management meets monthly to monitor the units and allocate resources.
Shipments have soared, but not hiring. Result: outstanding productivity – sales of $713,00 per employee!
A just-in-tirne supply chain cuts inventory and manufacturing costs. More PCs are being built lo order— not for the warehouse.
DESIGN IN SAVINGS
Engineers work with manufacturing and purchasing to make sure parts arc shared across product lines.
CUT YOUR LOSSES
When a product or marketing approach isn’t paying off, kill It fast. For example, last year laser printers got the ax.
TIMING IS EVERYTHING
Having the right products at the right price is better than being first. That’s how Compaq went from nowhere to No. 1 in note books. Extensive market research helps. So does common sense.
(ReJ.: The Business Week, July 11.1994)