Experts pan Compaq for Tandem purchase

Compaq?s $3 billion acquisition of Tandem may prove an expensive mistake because of Tandem?s financial troubles and a lack of product or channel synergy.

This is the view of a damning report on the merger by Forrester Research, which recommends that Tandem customers monitor Compaq?s commitment to Tandem?s non-Wintel technologies ?very carefully?.

It adds: ?Compaq will be tempted to drop investment in Tandem?s products, and phase out Mips in favour of Intel.?

Authors Jon Oltsik and Tom Rhinelander argue that almost any alternative to Tandem would have been more effective.

?Compaq could have picked up a value-add Intel/NT-based shop like Data General, a services body shop such as Unisys or a high-end enterprise player like Digital, and got far more bang for the buck,? the analysts said.

Compaq, whose negotiations to buy Digital broke down twice, has taken on a niche player that lost money last year when it tried to move against Sun and IBM in the mainstream server market, the report argues.

Worse, Tandem?s salesforce is now charged with selling Compaq?s full range, which Compaq sees as a method of offering a corporate sales and support body without going direct itself and antagonising resellers. But Oltsik argues that the 4,000 Tandem staff are only used to selling high-end systems to premier accounts, and that most large corporates already have solid deals with PC distributors.

The final burden for Compaq is supporting Tandem?s proprietary installed base while marrying that technology into a strategy based firmly on Wintel standards.

The report advises the manufacturer to resist the temptation to offer corporates bundled deals of high-end servers and Compaq PCs, and to keep the two ranges, their sales strengths and their saleforces quite separate.