It's a Done Deal

With Compaq Computer Corp.'s acquisition of Digital Equipment Corp. complete, Compaq CEO Eckhard Pfeiffer laid months of speculation to rest concerning the future of the combined organization. Pfeiffer outlined a plan for the gradual subsumption of the Digital brand name under that of Compaq, as well as a strategy to address Windows NT, Digital's Alpha microprocessor and Digital operating systems such as Digital UNIX and Open VMS.

"We're laying the cornerstone for a new world of computing. One that builds on the combined strengths of Digital, Compaq, Tandem and our partners," Pfeiffer announced at a press conference held upon completion of the deal. Pfeiffer touted the new Compaq's strengths in the burgeoning Windows NT marketplace, pointing to the clustering and high-availability expertise of both Digital and Compaq subsidiary Tandem as proof positive that the new Compaq has the resources to usher Windows NT to the top tiers of the enterprise.

In the midst of talking-up the combined Compaq's strength in the Windows NT market, however, Pfeiffer also gave assurances that core Digital technologies such as the 64-bit Alpha microprocessor and the Digital UNIX and Open VMS operating systems would be embraced and extended under Compaq's hegemony.

"I've been impressed with the strength of [Digital's] support of Alpha, and I've made a commitment to them that Compaq will continue to support Alpha," Pfeiffer said. "Compaq will expand its leadership in 64-bit computing by using Alpha and Digital UNIX as its 64-bit platform and by establishing [Alpha and Digital UNIX] as industry standards."

Among analysts, Rob Enderle, a senior analyst with consultancy Giga Information Group (Santa Clara, Calif.), thinks that with the delay of Intel Corp.'s next generation 64-bit Merced microprocessor, Compaq's Alpha initiative makes a lot of sense. "Merced's not here yet and probably won't be here in terms of mainstream deployments at least for a couple of years, which means that Compaq has a solution that is supported by Microsoft that nobody else does," observes Enderle.

John Rose, senior vice president and general manager of Compaq's enterprise computing group, later qualified Compaq's seemingly unabashed support of Alpha by acknowledging that the company would fully support Merced when it came to market. "With the appearance of Merced, Alpha goes away," Enderle concurs. "Most all the RISC processors have a clearly defined end of life now."

UNIX and Windows NT interoperability is a hot topic, and Compaq officials did their best to position the combined company's strengths in this regard as well. Rose added, "Compaq is actively working in this area with Microsoft to ensure that we deliver the highest levels of integration between the Windows platform and [UNIX]."

Compaq has a three point strategy for NT-UNIX interoperability that involves leveraging Digital's and Tandem's expertise in areas such as clustering and transaction processing; investing in and developing middleware solutions for interoperability between UNIX and Windows NT; and leveraging the combined company's expertise in the area of enterprise services and support.

On the other hand, the casualties will include 15,000 employees on the Digital side and 2,000 on the Compaq side, along with Digital's line of PC products. One exception is Digital's HiNote brand of laptops, which will be retained by Compaq.

There still remains work to be done, however, says Dan Kusnetzky, director of operating environments and serverware research with International Data Corp. (IDC, Framingham, Mass.). According to Kusnetzky, Compaq still faces a number of the same problems that Digital faced in attempting to consolidate a breadth of product offerings from both Digital and Tandem into a compelling solution set.