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A year ago: Compaq poised for all-out war on IBM

We analyse the Digital take over

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As we all know, up until last Monday Digital was a company that had been going through a painful reconstruction and downsizing owning to the unfortunate decline of its mid-range market. It has been selling off various divisions over the years, but the bottom line remained that it was fighting on too many fronts for the resources it had available. It's been maintaining development of a Risc processor line, Alpha, when the remains of the companies that should to be in the 'upscale of the PC' sector were slowly giving in and heading for either Intel or Wintel. It had been trying to maintain an uneasy and expensive balance between Alpha and Intel platforms and NT and Unix software (plus Open VMS), it had been trying to develop USPs in Internet/intranet, and it had been maintaining a large sales and support arm. So what did it want to be? Sun? IBM? Compaq? EDS? All of the above? The large pile of Digital strategies did connect to one another, and they all had some plausibility to them, so 'all of the above' was effectively the right answer, except that Digital couldn't afford it. Couldn't afford it, that is, until last Monday. Skip the obvious analysis that Eckhard Pfeiffer and his trusties at Compaq (given his recent employment record we'd like to know who they are) are going to storm in there and make Digital efficient. Obviously the PC line and the execs across the board will bear the brunt of the savagery, but Compaq's ability to fund Digital means that most of the rest could - and we think, will - be transformed into a pretty efficient fighting machine. Pfeiffer reckons he's beaten HP already, so IBM is the only target left (we don't think he's thought deeply about Sun yet). Our Register Man of the Year actually rates Alpha, and while Compaq doesn't seem to want to get into the fab business, it could use a non-Intel mid-range to mainframe platform for taking a pop at IBM's mid-range. Compaq also could use NT and Unix development teams, and Eckhard could use the clout of Alpha and Merced development of both to shoulder his way into the strategic planning rooms at Microsoft and Intel. Microsoft actually appears to need Digital Alpha NT development for the 64-bit version of NT 5.0, while Intel execs may now be having another look at which particularly Digital patents it might need for Merced. Just imagine our Eckhard poring over the Digital-Intel lawsuit secret files - what will he do with them? Sure, Compaq might just slash and burn and add a huge sales force to its existing operations, but the combination of vastly enhanced political power and across-the-board ('soup to nuts,' as Lou B Lou delightfully puts it - not where we put our soup, but there you go) assault on the last enemy must be an entrancing one. Careful though Eckhard - people can choke on nuts. ®

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