As Compaq's takeover of Digital Equipment plods its way through the regulatory process, Digital CEO Bob Palmer embarked on a tour of northern Europe to brief customers on the changes ahead.
So you're here to visit customers today. What's your message to them?
This trip to Europe - which was set up before the merger's announcement - was primarily to visit customers and discuss the future of their investments in Digital and our commitment to them.
When it was announced, I felt it was important to continue with this roadshow and reassure customers that the investments in OpenVMS, Unix and Alpha will continue - to be able to explain the logic of those investments and Compaq's commitment to them.
How have customers in other countries you visited reacted?
You know, Compaq is paying a $3 billion premium over the market price for Digital. Obviously, Compaq CEO Eckhard Pheiffer is determined to support those customers and grow the business in those accounts. We have an open process right now.
The company executives have met in Maynard and Houston to talk about what our vision is. The way we are approaching this is not like an acquisition, although financially it is an acquisition.
But it really is an integration, a merger of three companies - Tandem, Compaq and Digital. When you look at the total technology and the range of platforms that those three are bringing together for customers, it's really impressive.
What Eckhard has been clear about is that we don't want three companies loosely confederated - we want an integrated new company that is focused on systems and able to provide and support these systems to customers on a global basis.
We have set up more than 20 teams now with executive sponsorship from each company and people closer to the problems and issues - working together, sharing ideas. They will come to the executive board and present their recommendations for this integration.
What is your message to the Digital employees you are seeing today?
Realistically, you don't need three headquarters in Europe for Tandem, Compaq and Digital. It's not something our customers can afford. As you know, customers are our only source of funds, and they have to pay for everything. There will have to be some consolidation in overhead and HQ functions.
Whenever you bring two large organisations together, there will be some efficiency issues.
How do you evaluate your efforts in reinventing Digital?
It's always difficult to see objectively all of the things you've done.
I've made some mistakes and expect to make mistakes. If you're not making any mistakes, you're probably not doing anything.
In the last few years, I have had some good outcomes, with the decision to bring litigation against Intel, a successful resolution of that intellectual property dispute which is reportedly the largest ever in the US, and which has been settled promptly. That was probably the hardest decision I had to make.
Then the decision to merge with Compaq. Not such a hard decision because it makes such good sense to our shareholders.
Overall, I feel good about what Digital has been able to do with 64-bit Alpha technology, with our Gigaswitch, with AltaVista search and indexing, and with Storageworks. We were able to come out with great leadership products, despite the organisational difficulties.
A lot of companies are working on separate Unix implementations for the Merced. Will there be Unix wars?
I hope not. We have the opportunity to make Digital Unix our standard for the Intel architecture.
In the 32-bit environment, the Unix community never delivered to its customers. We have invested over $100 million in the development of 64-bit Unix and have spent five years on it. If you have the choice between developing it yourself or taking a licence from Digital, what would you do?
How do you see the evolution of the NT and Unix operating systems? Do you agree that NT is picking up slower than expected?
NT was a bit slower starting. In retrospect, we were probably early in adopting 64-bit computing. We were probably a little early on our expectations for Windows NT. I've been criticised for sticking to three operating systems, but that's what our customers want.
Compaq wants to move into the network arena. Wouldn't it have been better to wait rather than sell the networking business to Cabletron?
If we had known this merger would take place, we might have thought about that. The reason I thought about selling it was because we needed more critical mass. We did not have sufficient scale to provide all of the networking products.
We had about a $500,000 business and I know Compaq had a healthy business.
But critical mass in the networking business is at least a couple of billion dollars.
How would you like to be remembered?
I'd like to be remembered as someone who inherited a difficult situation and led the company in a competent way. I know I'm not flawless. You know what is most important to me is what the employees think.
As a CEO, you have a responsibility to shareholders, customers and employees.
What I feel fondest about, in my personal commitment, are Digital employees.
We did some pretty important strategic things. We were focused and got to the point where we were very attractive to another company. In fact, we increased the shareholder value.
Do you see a place for yourself in
the merged company?
Well, it's not clear. When mergers don't work, it's mostly when the ego of the CEO gets in the way of doing the right thing for customers, shareholders and the employees.
I am pleased that in this case, we didn't let this be an issue. I think it's inappropriate for the CEO to be negotiating his position when so many people are at stake.
Eckhard will be CEO of the new company. If I will still hold a position is uncertain. If not, I'm still relatively young and fit and have learned a lot about turnaround - I know a lot about technology, so I'm probably employable. I'd like to stay on if there were a meaningful role.
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