PC-Expo Keynote Address
June 16, 1998
Thank you, and good morning.
It is always an honor and a pleasure to speak here at PC Expo.
An honor because this is the premier PC show in the industry ...
And a pleasure because it gives me an opportunity to thank all of the Compaq customers in this audience for your business.
We at Compaq know that our success comes from one source - our customers. We also know that in this highly competitive business, we must continuously earn your trust and confidence.
To that end, we are committed to provide you with innovative products like the ones you will see on display at our booth here at the Javits Center to deliver the most rewarding buying experience and to constantly improve our ability to meet your computing needs.
It is this last point that is really at the heart of what I want to talk about today - how Compaq is evolving to meet your rapidly changing needs.
I want to discuss our vision of a new world of computing our decision to acquire Digital and what the combined company will be able to do for you.
Success in our industry is a constant process of invention and re-invention.
How could it be any other way in a world that is changing so rapidly - where the market rules that seemed clear one day appear to be out of date the next?
Where product lifecycles continue to shrink from years to months and even to weeks?
Where computing has moved from the small scale of local area networks to the planetary scale of the Internet?
In this interconnected world, customer expectations have never been higher.
You expect to be able to access the information you need quickly and easily, from any place at any time using virtually any computing device.
You expect vendors to deliver more power at a lower cost and to make it easier to buy operate integrate and service their products.
You expect the information infrastructure to be reliable and available 24 hours a day, 365 days a year - whether you're talking about the network itself or the systems that support your on-line bank on-line bookstore or on-line grocery.
In this environment, Compaq determined that we needed to do more for our customers.
We wanted to take the attributes that had made us successful - industry standard platforms, strong partnerships, useful innovation and customer responsiveness - and apply them to the full range of computing - from the palmtop to the data center.
Compaq has developed significant enterprise strengths over the past few years. But we also needed capabilities that we could not build easily or quickly.
So earlier this year, Compaq announced its intention to acquire Digital Equipment Corporation - one of the premier suppliers of enterprise solutions and services and one of the pioneers of internetworked computing.
As most of you probably know, Compaq completed the acquisition last week after Digital shareholders voted overwhelmingly to approve the merger agreement.
This is an historic moment for Compaq as well as for our customers and the industry.
It brings together two companies with proud traditions of technology innovation and industry leadership.
With its minicomputers, DIGITAL defined the computing paradigm of the 1970s and much of the 1980s.
With its industry standard personal computers - including the first PC server - Compaq defined the computing paradigm of the 1980s and 1990s.
We now see an opportunity to set the standard for a new world of computing
One that expands on our vision of standards-based computing . . .
One that builds on the combined strengths of Compaq, Digital, Tandem and our strategic partnersAnd one that promises you more choice, more power and more freedom than ever before.
Our goal is really very simple: to empower customers by taking computing to new levels of flexibility simplicity and efficiency.
We will do this by offering a broad portfolio of Web-enabled clients and servers global life cycle services and best-of-breed partnerships with ISVs, channel partners and technology suppliers.
We will also strengthen our customer partnerships through:
Focused, global account management, Industry-leading service and support, and, A commitment to sell the way you want to buy, whether it is through our extensive network of resellers by phone or over the Internet.
What will differentiate Compaq from our competitors is our ability to innovate with industry standard solutions to help you achieve real value from your IT investments faster and more reliably and to respond more quickly and effectively to customer needs.
And when I talk about customers, I mean all of our customers from a family investing for the first time in a personal computer to a small or medium business that wants to sell its products on the Internet to a large global company that is implementing Windows NT across the enterprise.
The foundation for the new world of computing we envision is one that Compaq has been building and reinforcing since we introduced the first industry compatible portable computer 16 years ago - that is, standards-based computing.
I've been thinking a lot about that first Compaq product during the last few weeks.
I don't know how many of you remember it. It's nickname was the "luggable," and for a very good reason. It weighed 28 pounds - 7 to 8 times heavier than today's lightest notebook computers.
It was also about as rugged as they come.
For people whose machines would not boot-up, the tech support people had a unique solution: hold the computer about three to six inches above the floor and drop it.
Try that with your Think-pad.
Well, both Compaq and the industry have come a long way since then. In 1997, standards based platforms represented 70 percent of hardware spending worldwide. By the year 2001, that number is expected to exceed 75 percent.
Industry standards are behind two of the most important trends in computing - the emergence of Windows NT as a strategic, enterprise operating system and the expansion of the Internet into every corner of the world.
The continued enhancement of Windows NT - particularly with the upcoming release of NT 5.0 - is helping push standards-based computing higher and higher into the enterprise.
The standards that define the Internet make it possible for hundreds of millions of people to communicate, collaborate and conduct commerce on a global scale - regardless of which platforms they use.
Until now, the criticism of standards-based computing was that it could not deliver the performance, scalability and reliability of systems based on proprietary architectures.
Through our E2000 architecture, we are addressing that issue. During the next two years, Compaq will deliver high-performance, Windows NT-based systems that will support the most demanding enterprise needs.
But it is clear that the vast majority of enterprise customers will continue to have mixed environments. They will use PCs and mainframes Windows NT and UNIX and they will look to their IT partners to help them integrate these diverse computing environments.
With the acquisition of Digital and the continuing evolution of Compaq's enterprise strategy, we are expanding our vision of global, industry standards leadership to encompass every level of computing.
To us, industry standards leadership means not only providing industry standard products but also making those products work seamlessly with the rest of your IT environment.
It means providing industry standard solutions that protect customers' IT investments while enabling them to take greater advantage of standards-based platforms throughout the enterprise.
And it means having the vision and the skill to take emerging and leading edge technologies and make them standard as quickly as possible - expanding the power and the reach of industry standard platforms.
As a result, you will enjoy:
Wider choice and flexibility,
Faster return on your IT investments,
Greater agility in adapting to a dynamic world,
Increased security and confidence, and,
Uncompromising quality and value.
One of the most important ways that we are delivering these benefits is by working closely with partners to deliver comprehensive enterprise solutions.
With the acquisition of Digital, we have enhanced our ability to provide customized solutions for key markets like finance, manufacturing and communications.
But many of our customers - big and small - are looking for packaged, high-volume solutions that they can implement quickly and efficiently.
This is an area where Compaq has an opportunity to change the competitive landscape.
Let me explain.
Two strategic inflections have emerged over the last decade.
The first was standards based platforms.
The second was the replacement of custom applications with packaged applications from companies like SAP, Oracle, Microsoft and others. IDC projects that 72 percent of all new enterprise applications purchased this year will be shrink-wrapped.
Today, we are approaching a new inflection point based upon tools, information and methods that will simplify implementation of industry standard applications.
In fact, I foresee a day when enterprise applications will work almost as plug-and-play modules. An information manager will take the software module plug it in to his information infrastructure and see an immediate return on the company's investment.
It may be hard to conceive of today but it's going to happen.
Compaq is turning its knowledge and expertise into repeatable, volume-based solutions that we will make available to customers through Compaq's large reseller network and dedicated websites.
Next month, for example, we will introduce an enterprise extranet that will standardize the knowledge and best practices we have collected around planning, designing, implementing and managing enterprise solutions.
This knowledge will be available to channel partners and, ultimately, customers in the form of tools and enablers that will help them plan more effectively deploy more rapidly and operate more efficiently.
Today, we are also announcing a new service for small and medium businesses called Compaq Online Services.
This global initiative is designed to meet the needs of small and medium businesses for quicker access to online sales opportunities and more efficient ways of doing business.
In partnership with industry leaders like UPS, GTE and Microsoft as well as key Internet ISV's like INEX, Visto and E-Stamp Compaq Online Services will provide instant electronic commerce solutionselectronic postage secure, real-time delivery of electronic files and 24-hour access to back-up and restore services.
These services will be available soon through our SMB Solution Providers as well as through another innovative, Internet-based program we call Club Web.
Club Web is a community of providers that offer Internet solutions in a coordinated manner for the benefit of our customers.
Basically, it's a one-stop, on-line store stocked with products and services offered by Compaq partners.
The primary purpose of Club Web is to connect customers with providers such as Web developers Internet Service Providers and resellers who have special skills in planning, implementing and maintaining our Internet solutions.
What these examples demonstrate is the Internet's power as a tool not only to provide information but to deliver an even more valuable commodity - knowledge.
Our goal is to help customers turn information into knowledge and knowledge into a competitive advantage.
The combination of Compaq and Digital gives us a broad range of Web-based solutions for electronic commerce, Internet Service Providers, corporate Intranets and customer relationship management.
Earlier this year, Compaq introduced the industry's most flexible and comprehensive electronic business solutions.
These solutions build on our e-commerce and firewall servers as well as our key relationships with leading applications providers.
The highly scalable and reliable systems delivered by Digital and Tandem are particularly important in the 24x7 environment of Internet commerce, where downtime means lost business.
Compaq is also the leading supplier of solutions for Internet Service Providers.
Seven of the top eight ISPs have standardized on Compaq for their NT-based Web hosting services.
And Digital is #2 in the ISP market - with more than 15 percent share.
Compaq also plans to build on Digital's AltaVista franchise, which includes one of the leading search engines on the World Wide Web.
Just last week we announced a new line of consumer PCs with buttons that provide direct Internet access, including a link to AltaVista.
We believe this will help establish AltaVista as one of the most popular sites on the Web.
One of the most important synergies between Compaq and Digital - one that matters a lot to our customers - is services.
Some observers have suggested that the only reason Compaq bought Digital was to get its service organization.
That was not the only reason, but it is true that service is a significant part of the value equation.
Customers have told us over the past few years that they want to deal with fewer vendors, and they want those vendors to be more accountable for the products and solutions they provide.
After all, when you implement a complex enterprise solution, you want the assurance that you will have the support you need to get it done quickly and efficiently.
With the acquisition of Digital, we now have one of the premier service organizations in the world working even more closely with our customers and partners.
The combined company has more than 5,000 IT architects to guide customer implementations as well as 3,000 UNIX engineers and 700 NetWare certified engineers deployed around the world.
Overall, we have more than 25,000 service professionals who can deliver support and availability services systems integration and operations management in more than 100 countries.
And we have a worldwide network of channel partners with whom we are working to jointly implement integrated, multivendor lifecycle solutions.
Our goals are to lower customers' total cost of ownership and reduce risk by offering service solutions which incorporate industry standards and by driving innovation in service creation, tools and delivery.
We will also help you achieve your business objectives more rapidly, more cost effectively and with greater predictability.
Building strong customers relationships also means giving you maximum flexibility in doing business with Compaq - how you want where you want and when you want.
With the acquisition of Digital, we now have a world-class team of 10,000 sales and marketing professionals worldwide who work directly with our large customers.
We also have the largest network of channel partners in the industry, who offer value-added expertise and solutions.
In addition, Compaq has fundamentally changed its core business model so that we can meet - and exceed - your expectations.
These changes include new manufacturing methods an optimized supply chain and reduced channel inventories.
Why is this important to you?
Because it enables us to meet our objective of doing business more efficiently and that means lower product prices and improved product availability.
Last week, for example, we announced a new program called Compaq Built for You in partnership with leading retail chains like CompUSA Office Depot and Computer City. v This program allows customers to self-configure a selected group of Compaq PCs in the store. Once the customer has configured the system he wants, the he pays the retailer. All orders are then custom manufactured by Compaq and shipped either directly to the customer or to the retailer. It's your choice.
As of today, Compaq Built For You is available in about 100 stores. By the end of August, we will be up in 2,000 stores. And by Christmas we will be configuring customers' computers in 4,000 stores across the country.
We are also enhancing the ability of customers to purchase products over the Internet, both from Compaq and our worldwide network of retailers.
In fact, Compaq and its resellers today sell more than $6 million dollars a day over the Internet - and that is more than Dell.
We are proving that Compaq can bring together the widest array of products and services combined with the extensive capabilities of our resellers to offer you the best value in the industry.
How you buy is important but what you buy is just as critical.
With the acquisition of Digital, Compaq has one of the broadest product portfolios in the industry - from handheld PCs to the most powerful enterprise servers.
Since this is PC Expo, let me start with PCs.
Now that we have completed the acquisition of Digital, we will merge the two companies' PC product lines. This will give Compaq the most extensive and competitive line of desktop and networked PCs in the industry.
According to first quarter numbers from International Data Corporation, Compaq remains the #1 desktop PC company in the world. I am particularly pleased that Compaq regained the #1 position in portable PCs in North America - in both the commercial and consumer segments.
What that should tell you is that we are determined to maintain our position as the number one PC company worldwide. And we will do it by continuing to offer standards-based, innovative and easily managed desktops and portables that integrate seamlessly into your enterprise environment.
To those in the audience who are Digital customers, I want to assure you that we are not taking your business for granted. We intend to earn your trust and confidence.
Although we will move the Digital PC line to Compaq-branded products, we will do so over a period of time that allows you to make the transition at your own pace.
I believe our customers will be well-served by this combination.
Our desktop businesses are very compatible. Both companies lead the industry in reducing cost of ownership by providing the best managed PCs. We lead the Windows NT market for desktops. And Compaq is Microsoft's only lead partner for the early deployment of Windows NT 5.0 in corporate environments.
That leads me to my next point - our commitment to Windows NT.
As I said earlier, Windows NT is one of the most important trends in industry standard computing. And Compaq is committed to advance Windows NT as an enterprise operating system.
This is another instance where Compaq and Digital have tremendous synergies. We can now deliver the widest range of Windows NT systems and solutions in the industry - from portable computers to Digital's high-end AlphaServer systems.
Our strong partnership with Microsoft as well as our own experience deploying Windows NT throughout Compaq puts us in the best position to help customers implement NT solutions.
Through advanced technologies like clustering and ServerNet - the system area network developed by Tandem - Compaq is also improving NT's performance, reliability and scalability.
Compaq already owns the performance benchmark for Windows NT systems with more than 27,000 transactions per minute.
By the year 2000, we expect to deliver clustered NT systems that deliver 500,000 transactions per minute.
Through Digital's AllConnect and Affinity programs and Tandem's "Best of Both Worlds" program Compaq also offers industry leading NT inoperability with Digital UNIX, OpenVMS and NSK.
This will help protect your IT investments while enabling you to take greater advantage of industry standard technology.
Finally, Compaq's new services organization has more than 2,000 Microsoft certified engineers around the globe to help customers deploy Windows NT-based solutions for the enterprise.
One question I often get from customers is about Compaq's commitment to Digital's 64-bit architecture, including Alpha, Digital UNIX and OpenVMS.
The answer is easy. Compaq will continue to invest in this high-performance, 64-bit platform because it represents the future of computing.
Alpha gives Compaq a leadership, 64-bit architecture at least two-years ahead of Merced - which, I should add, will also be an integral part of our product portfolio.
We see Alpha as an extension of Compaq's current product line and as a strategic platform for power-hungry applications like data warehousing, high-performance technical computing and Internet commerce.
We also see an opportunity to establish Alpha as an open industry standard, building on Digital's licensing agreements with Intel and Samsung and its proposed agreement with AMD.
I think it is important to note that Microsoft is using Alpha as the development platform for 64-bit Windows NT.
We also see significant opportunities to deliver customer value with Digital UNIX, which is widely regarded as the leader in 64-bit UNIX. It is also the most Windows NT-friendly UNIX on the market.
Digital has attracted several partners to help develop Digital UNIX for Merced. This gives us an opportunity to establish Digital UNIX as the standard for 64-bit UNIX on Alpha today and on Alpha and Merced in the future.
In addition, we will continue to partner with SCO to offer UNIXWARE to the 32-bit Intel volume market I also want to reassure customers who rely on Digital's OpenVMS operating system as well as on Tandem's NonStop Kernel that we will continue to support and enhance these products.
They are important to us because they are important to our customers, who depend on them for the most demanding, business-critical computing.
But we also plan to exploit the technologies behind these operating systems to provide greater reliability and scalability in our industry standard platforms.
I have covered a lot of ground today, so let me conclude by summarizing our vision for the new world of computing.
First, we believe that this new world will be built on open, industry-standard technology. Anywhere there is standards-based computing, Compaq wants to be the driver -- whether it's in your home your business or your car.
Second, we will build on our leadership in business-critical computing. This will enable us to accelerate both new and existing technologies into industry standard platforms and to deliver even more scalable and reliable systems.
Third, we will lead in delivering global service and support. This will give our customers a single point of accountability as well as a lower total cost of ownership and reduced risk.
Fourth, we will focus on solutions that build on ourleadership in enterprise platforms our expertise in key markets our service capabilities and our partnerships with industry-leading companies.
And finally, we will build even stronger relationships with you, our customers. I hope you will look at Compaq not only as a computing company, but as a strategic partner whose mission is to give you what you need when you need it and how you want it, at the lowest total cost.
Welcome to the new world of computing.