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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Maxer who wrote (15519)	1/28/1998 8:25:00 PM
From: S.C. Barnard	Respond to of 97611

04:04 AM ET 01/28/98 Compaq buy may hurt Digital chip sale to Intel-WSJ NEW YORK, Jan 28 (Reuters) - Compaq Computer Corp's buyout of Digital Equipment Corp could imperil an earlier deal between Digital and Intel Corp , the Wall Street Journal said Wednesday in its electronic edition. Late last year, Digital agreed to sell a chip-making plant and production rights to its ultrafast Alpha processor to Intel for a package valued at $1.5 billion, including $700 million in cash. That deal is still under review by federal antitrust enforcers. Citing sources close to the situations, the newspaper said Compaq has the resources to sustain Alpha, if it chooses to do so -- meaning the chip no longer would need an Intel cash infusion. During negotiations on its buyout, Compaq signaled that if the Intel deal is rejected by the FTC, it would take responsibility for the Alpha manufacturing plant and either sell it or close it down, the newspaper said. Citing lawyers close to the talks with the FTC, the newspaper said one option under review is a requirement that Digital sell the plant and rights to the Alpha, to keep it out of Intel's hands. ((--New York Newsdesk, 212-859-1610))

To: Maxer who wrote (15519)	1/28/1998 8:49:00 PM
From: John Koligman	Respond to of 97611

Max and thread, some opinion on the service part of the merger from a PCWEEK columnist: Off the Cuff Service edge will keep Compaq flying By Peter Coffee, PC Week Labs 01.28.98 Any fool can build a pretty good computer. The hard part is making lots of computers work, all the time, despite the antics of all those pesky users. And that's why Compaq wants to buy Digital Equipment. Enterprise IT vendors, in a league to which Compaq aspires, are in the same situation as any major airline. To wit: Airlines all fly the same planes, just as computer makers use the same chips. Airlines' on-time arrivals depend on a common air traffic control system, just as computers' perceived performance increasingly depends on a shared public data/communications network. Airlines increasingly serve well-informed customers, who have the means and the inclination to shop for bargains, just as computer makers are finding that traditional retail channels (with markups on every tier) aren't worth the cost to well-informed PC buyers. So, why do airlines stay in that business? Because breaking even on the seats in the planes is something they have to live with if they want to keep playing the profitable game, which is selling a high-margin Leisure Experience. Likewise, selling computers at razor-thin margins is something that enterprise IT companies have to do if they want a crack at making the real money. The big bucks come from selling corporate IT a high-margin Productivity Experience. That means being in the service sector, where the profit picture is healthy and long-lived. Service profits are secure, I say, because computers are so tightly coupled into business that companies lose huge sums with every hour of downtime. In this situation, you'll pay a lot to get the system up when it crashes--the return on avoided downtime is astronomical. Heck, downtime costs are forbidding even to individuals, let alone to companies. When my computer isn't working, neither am I. My personal hardware preferences reflect this situation. For example, I recently praised the Iomega Zip drive and got a lot of hate mail from readers who assured me that other technologies could back up more data at lower media cost. Why don't I care about those "cheaper" products? Because, when my hard disk dies, I don't think about replacing the disk and restoring my whole configuration. That might take an hour or more. I don't have that kind of time. When a computer goes down, I think about finding another computer and continuing my work. I don't want to restore a 2GB hard disk from last night's tape; I want to swap a Zip disk from one machine to another and resume the task that was just interrupted. The only thing that matters to me is being able to use my removable media on the largest possible number of machines, and that's why the ubiquitous Zip gets my vote. I mean the kind of vote that I cast with little green ballots bearing pictures of dead presidents. That's what downtime means to me, and big companies hate it even more than I do. This is why Compaq and Digital make such a great combination. Compaq makes more than a good enough computer. DEC keeps good-enough systems up and running. Few are the companies that can make that kind of end-to-end promise. And just as travel agents can make or break a tourist destination, the new expanded Compaq will have enormous leverage over which hardware and software technologies wind up on the corporate IT itinerary. Let Microsoft ask, "Where do you want to go?" It takes a Compaq, or an IBM, to say, "We can get you there and have your room and dinner waiting." What hot new spot would you like to visit on Compaq Air? Tell me at peter_coffee@zd.com. Off the Cuff, an online exclusive column, appears on Monday, Wednesday and Friday. John