Q&A: Compaq CEO likes
healthy competition
August 30, 2000
by Jerry Borrell
From the October 2000 issue of Upside
Magazine
Michael Capellas attended Kent State
University in Ohio, where he majored in
business and computer science. He then
worked for Republic Steel, Schlumberger
(SLB), Benchmark Partners, SAP and
Oracle (ORCL). In 1998, Capellas became
president of Compaq (CPQ), where he has
been CIO and now CEO. There is (or has
been) a sign on his huge mahogany desk
noting that dancing is not allowed with
shoes on.
As CEO, Capellas
oversees more than
60,000 employees and
is responsible for the
company's fiscal 1999
revenues of more than
$38 billion. Under his
direction, the firm has
successfully
integrated its Digital
Equipment Corp.
(DEC) and Tandem
Corp. acquisitions.
These acquisitions gave Compaq, among
other assets and businesses, a significant
research arm, a huge storage-area network
business and 17 percent of the shares of
CMGI (CMGI). It also has the closest
relationship with Microsoft (MSFT) of any
of the major computer vendors.
His projects at Compaq include rebuilding
the brand of the company, directing new
business development, and helping to
establish Compaq as an investment and
acquisition company. Capellas is smart,
friendly and direct; he's one of the nicest
people in the world running a company the
size of Compaq. During our visits to the
Compaq offices, we saw a raft of new
computing devices, from handheld devices
to pocket PCs to new home devices such as
MP3 players, and a newly acquired
BlackBerry line of products for which
Compaq is the exclusive U.S. distributor. A
host of other new products and alliances
were also discussed.
UPSIDE: You've spent most of your career at
Schlumberger. How did that qualify you to
work at Compaq?
Capellas: There are several things in my
history that people don't know about me. I
was customer No. 3 of SAP and eventually
went to work for that firm, so I knew the
supply-chain side of business very well. At
Oracle, I built a very successful energy
practice for that firm in Houston. I went
there to run that segment of their business,
but in reality I developed Oracle's first
vertical market. And many people do not
recall that Schlumberger had purchased and
owned Fairchild Semiconductor (FCS) for a
period. I spent two years of my life working
at Fairchild's semiconductor-wafer lab as an
executive for Schlumberger. Schlumberger
also provided great exposure in
manufacturing training.
U: How did you make the transition to
Compaq?
C: I had turned down calls from their
recruiter three times. But this guy was so
persistent. He caught me on the phone
while I was traveling somewhere, I don't
remember where. He convinced me to talk
with him during a layover on a plane flight
somewhere, on a Newark connection.
U: What did he say that interested you?
C: He told me that they wanted a head of
their information technology, a CIO. He told
me they were also looking for a person who
could be a general manager. And he told me
they needed someone who knew supply
chain inside out. They wanted all of these
things rolled into one, so I was a model
candidate for their position. And you know
these executive recruiters, once they have
decided they want you, the good ones don't
give up.
U: And?
C: So he set up a meeting with Eckhard
Pfeiffer. I had met Eckhard a couple of times.
We both lived and worked in Houston.
Compaq was at $31 billion at that point. And
they had a great challenge to redesign their
supply chain. I was, I am, a geek at the core,
an IT manager at the core. And they knew
that I knew how to make sales calls. I saw
the Digital Equipment integration as a major
challenge. I told them I wanted to be in a
line-management position downstream,
even if it was a lateral move.
I came into Compaq, I was supposed to
have a 90-minute discussion about
supply-chain issues with Eckhard. But as
those kind of things go, we had a great
meeting and a longer conversation. We
came out of that knowing that we would get
along. He asked me to come in and meet
with the people here; I took time to
interview with each of the key people. [I]
met with the whole team.
U: So you joined Compaq?
C: He asked me to join as soon as possible,
but I told him Oracle was a partner company
of Compaq, and so we worked out a
transition. It took over a month; they kept
all of my customers. It was a collegial
transition, especially important to Oracle.
U: What was it like joining an even bigger
company just a few miles away?
C: I started work, and it was stranger than
fiction. We were doing a SAP conversion,
and in the middle of that we stopped
shipping entirely. It was my baptism by fire.
I knew SAP very well, but I went to my
predecessor and asked him if he wanted me
to get involved. I stayed out of his way for
two days, and then I stepped in. |
