Compaq battles to shake off PC image

Gartner cites vendor problems, reports Cath Everett in San Diego.

Compaq will not succeed in kickstarting sales in Digital's declining computer lines in its desire to be a $50 billion business by 2000 despite acquiring Tandem and Digital to help improve growth.

Speaking at the Gartner Group Symposium in San Diego last week, Scott Winkler, analyst at the research company, said one of the problems the vendor faced was that, despite purchasing high-end server companies, it is still viewed as a PC vendor. There was also the perception that enterprise buyers do not take the company seriously.

He said: 'Part of the question is whether Compaq will take the best of the PC model and apply it to enterprise computing to create a company held back by the past, or whether it will be too aggressive and uncertain and try to apply the PC model to enterprises, which would be uncomfortable for them.'

He added: 'Another answer that is incomplete is the progress Compaq has made on the Digital acquisition. It has cut administration and engineering costs significantly, but I think a lot of Digital engineers are hanging on with a wait and see attitude. Compaq is still working hard on the acquisition - but it won't admit it - and although it's willing to invest in Digital, it will be very difficult given the hand it has been dealt.'

Winkler estimated that it will take two years before the two firms are properly integrated, but he believes Compaq will eventually become one of the biggest vendors in the market, and growth here will compensate for dwindling sales in Digital's system sales.

He said: 'I think Compaq is still in acquisitive mode and it will be a couple more years before we see a single worldwide Compaq view. As for its heritage, it will again take a few more years of turmoil to sort that out. Compaq still has a lot of work to do and it's still a bumpy road ahead.'

However, Digital is one of the few global providers of lucrative NT services and is likely to maintain this position until at least the end of 2000.

But Compaq has no experience in managing a services organisation and risks losing staff if they do not feel appreciated.