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

To: ed who wrote (21826)	3/14/1998 6:37:00 PM
From: Jason W. France	Read Replies (2) \| Respond to of 97611

hmmm I'm not sure how to respond to this, I think you want me to state what would happen to CPQ if they didn;t merge with DEC. will for one they could continue to be a leader in high end 8-way clustered NT servers, which by the way is where the market is moving. But if I could paint CPQs future that would be best for shreholders 1) leverage DEC service and sales force go direct and once and for all shed the reseller channel 2) suck up the tandem cluster technology, integrate it into the cpw server line and jettison that himeleya tnadem stuff 3) forget about the first time consumer mkt 4) focus on securing their leadership position in desktops. notebooks severs and workstations for large organizations around the world I know this not precisley what you asked, but thought it might address your question about a hypothetical cpq future. unfortunate for all CPQ shareholders they will do very little of the above Jason

To: ed who wrote (21826)	3/14/1998 7:42:00 PM
From: Harry Landsiedel	Respond to of 97611

Ed. Re: "So, it is always the competion which change the rules of the game." I believe you put your finger on why CPQ and DEC merger is a good idea AND why "vertical integration" as Jason defines it is not a passe idea. The way I see it is that horizontal companies (intc, MSFT, etc.) worked fine and beat the pants off the old line IBM's because AT THAT TIME they were pioneering a paradigm shift. IBM was vertically integrated cause they had to control all the pieces. There were no other suppliers making the components of mainframes when they were pioneers. Now what's changed to make the pure horizontal model no longer right for the situation? In a few words: more powerful CPUs. When the PC revolution started it was product oriented: Just selling boxes. Now as Intel keeps moving up the food chain, the cpq's and dells can sell servers. With Merced just a year away, the 70 billion workstation/enterprise market will shortly open. Now you have to be in the solutions business to succeed. Second what comes with enterprise computing? Ans: the need for more services. Voila: CPQ HAS to get into the service business or it will be squeezed from the bottom (DELL) or the top (HP/IBM). The key to the future success in the PC business will be: DONT GET STUCK IN THE MIDDLE. So the NEW model of the successful PC mfger is NOT horizontal or vertical. It is a HYBRID. After all CPQ is not going into the chip or software business, but relying in intc and msft for that. But they had to have services, 'cause there was no outside company doing that who was not a cpq competitor. Stepping back, the horizontal vs. vertical issue is moot. The key question is "Who's got the customers?" And EP sees that. That's why, he said of the DEC deal, "We wanted their customers." It's that simple. Second, CPQ's success has been to recognize the power of the PC before anyone else in computing and push it harder. For THAT model to grow going forward, he needed more customers and different ones too. Finally, the failures in this business are those who DONT change fast enough. By biting the bullet on inventory and leveling the playing field with their competitors (at a fearsome cost), they increase the chance of not getting left behind. HL