This is what Our Lord and Saviour said today in his key-note address. If you want to hear and see him say it, without ruffling his hairdo go to compaq.com
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Eckhard Pfeiffer
Keynote
Innovate Forum '99
April 13, 1999
Welcome to Houston and to Compaq's Innovate Forum '99.
Whether you are an Innovate newcomer . . . or a seasoned veteran . . . I think you will find that this is our best Innovate ever . . . and one of the premier enterprise computing events in the industry.
As you are all aware, Compaq released preliminary first quarter results last Friday showing lower sales and earnings. We have discussed this with analysts, shareholders, employees and the press.
This will not slow us down. We will move aggressively to grow our business.
While market conditions will continue to be competitive, we fully intend to expand our business and grow market share profitably in 1999.
Today, I want to concentrate on Innovate and on the messages we will deliver during the conference.
Innovate is a unique opportunity for Compaq, its customers and partners to come together to discuss the rapid changes in the information technology industry . . . and how Compaq can help you take advantage of them.
Of all the changes in our industry, none is having a more dramatic impact than the Internet.
The theme for this conference is better answers for the Web-enabled enterprise.
But the development of the Internet of the future is about more than business.
It is about transforming society as well.
The potential for revolutionizing education. . . for re-invigorating our national political dialogue. . . for transcending geographic and national boundaries. . . is almost unlimited.
The Internet is transforming everything about our world - the way we communicate . . . the way we buy and sell . . . the way we compete . . . the way we learn . . . and the way we work and play.
It is also abundantly clear that the Internet will become the dominant means of doing business worldwide.
Consider some key data points.
According to International Data Corporation, the number of Internet users will grow from more than 140 million last year to more than half a billion users by the year 2003.
And IDC estimates that electronic commerce will explode - from $50 billion dollars last year . . . to more than $1.3 trillion dollars in 2003.
It wasn't too long ago that e-mail was the province of computer specialists - not the average worker or consumer. Today the number of e-mails in the United States exceeds the volume of regular mail.
And it's not even close - 3.4 trillion e-mails in 1998 . . . versus 107 billion first class letters.
According to Datamonitor, a market research company, Internet Protocol-based traffic is growing about 1,000 percent a year, compared to only 10 percent for voice traffic.
Datamonitor expects the volume of IP traffic to surpass the volume of voice traffic sometime next year.
And if you need evidence that people are more and more comfortable doing business on line, consider this.
According to a recent report, more than one-quarter of all stock trades are now executed on line. On line brokers currently manage more than $324 billion dollars in customer assets.
This example demonstrates that the Internet is much more than an IT phenomenon.
It is also re-writing the competitive rules and forcing companies in every industry to re-examine their business models.
To compete in this environment, companies will need to meet three fundamental requirements.
First, you will need a Web-enabled enterprise that gives you the ability to maintain continuous connections with your customers, partners, suppliers and employees.
Second, you will need networked storage solutions that help you manage the vast amount of business and customer data that the Web-enabled enterprise will generate.
Third, you will need mission-critical solutions that deliver the highest levels of availability . . . scalability . . . performance . . . and security.
Why?
Because the Internet will be your most powerful sales channel - and in the 24x7x365 world of the Internet, downtime is not an option.
It will be the most important link between you and your customers . . . your primary source of business intelligence on customer needs and buying patterns . . . and the quickest way to turn that intelligence into a competitive edge.
It will be the foundation of your global supply chain, creating real-time connectivity with your customers, partners and suppliers.
And it will support much of your business - from knowledge management to enterprise resource planning applications.
In other words, the Internet will be an integral part of virtually everything you do.
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This is a world where Compaq is already playing a leadership role, as I will describe to you this morning.
I might not have been able to make that statement at the last Innovate two years ago.
But during the past three years, we have transformed Compaq from a PC company to a global IT leader.
One of the keys to this transformation was the acquisition of Tandem and Digital.
We acquired more than two great names in information technology.
We acquired:
A large, global customer base
A highly skilled, enterprise-focused sales force
One of the best services organizations in the industry
A wide range of IT solutions, and,
Broad Internet technologies and experience.
These assets - together with our leadership technologies and our expertise in mission-critical and high-performance computing - give us the strengths we need to drive the computing paradigm of the new millennium - the Internet.
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Now, that may sound a little ambitious. But Compaq has a history of setting - and achieving - ambitious goals.
Our goal now is Internet leadership.
To achieve this ambitious goal, we are announcing today - here at Innovate - Compaq's broad-based corporate strategy for our enterprise customers - that is, NonStop® eBusiness.
NonStop® eBusiness is Compaq's differentiated value proposition. It enables us to uniquely address customer solutions and requirements in a rapidly evolving, Internet-based economy - where the demand for continuous, mission-critical computing is only going to grow.
You're going to hear a lot during Innovate about NonStop® eBusiness Solutions, so I want to clearly define what these three words mean.
NonStop means scalability . . . availability . . . data integrity and security - the key elements of a continuous, online business.
eBusiness means the electronic connection of business operations to customers, partners and suppliers. I think it's also important to note that no company owns the word eBusiness. It is a generic term that has been widely adopted by IT companies and customers alike.
Solutions, of course, means that our strategy is focused on you, our customers, and on helping you achieve a competitive Internet advantage.
In a moment, I will give you some examples of how we are doing this today.
Our strategy is based on a simple but compelling premise:
The enterprises that embrace and exploit the Internet will be the market leaders of the future.
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If you are familiar with the leadership fault-tolerant systems from our Tandem business, then you are probably familiar with the term NonStop.
Tandem's NonStop Himalaya systems support some of the world's most mission-critical operations in areas such as stock trading . . . banking . . . and telecommunications.
For example, Compaq supports 106 out of 112 stock exchanges worldwide.
We enable 60 percent of the world's inter-bank transactions.
And we provide the systems that support more than 50 percent of all emergency 911 calls in the United States.
But we are now giving the term NonStop broader application to a wide range of solutions, including those powered by our Alpha- and Intel-based systems and by operating systems such as Compaq's Tru64 UNIX, OpenVMS and Windows NT.
And we are targeting NonStop® eBusiness solutions on those areas that you tell us are most important to you, including knowledge management, customer relationship management and the global value chain.
NonStop® eBusiness represents our commitment to provide the products, services and solutions that support continuous business operations . . . that assure the integrity of your data . . . that provide the scalability you need to support uninterrupted growth . . . and that give you advanced management capabilities.
It describes the industry-leading environments and practices that result when companies use the Internet as a tool to market themselves . . . drive new business . . . enhance customer relationships . . . and generate revenue.
But it goes beyond using the Internet for transactions.
It also enables the integration of core business processes with the Internet - to reduce cycle times . . . manage extended, global supply chains . . . improve customer service . . . and achieve profitable growth.
Our mission is to enable our customers to achieve competitive advantage by delivering robust NonStop® eBusiness solutions to more levels of your organization more affordably than any other computing company.
And that applies to businesses of all sizes: small and medium businesses . . . large companies . . . and global enterprises.
All of you need to operate in a NonStop environment.
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I talked earlier about our goal of achieving Internet leadership, but let me be a little more specific about our eBusiness objectives.
What I want to communicate to our total audience today - an audience that includes not only our customers but partners, Compaq employees, analysts and the press - is how we will measure our success in meeting the NonStop® eBusiness needs of our customers.
We want to be the No. 1 architect of NonStop® eBusiness solutions delivered with ISV and SI partners and with Compaq Services
. . . No.1 on the approved enterprise vendor list of our customers
. . . the No. 1 preferred partner of ISVs
. . . No. 1 in servers
. . . No. 1 in storage, and,
. . . No. 1 in clients.
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When it comes to NonStop® eBusiness solutions, Compaq is building from a strong base.
We support many of the companies that are pioneering eCommerce and eServices - companies like Amazon.com . . . Priceline.com . . . Auto-by-Tel . . . Netgrocer . . . Microsoft Network . . . Lycos . . . Excite . . . and, of course, AltaVista.
Compaq, for example, manages Microsoft's Internet infrastructure, including the Microsoft Network. MSN runs on more than 1,600 ProLiant and AlphaServer systems.
Microsoft's Internet infrastructure also includes four international data centers . . . more than 2,000 Microsoft SQL databases . . . and more than 3 terabytes of information.
Compaq is also supporting one of the newest Internet start-ups - drugstore.com, which sells health and beauty products over the Web.
The company needed a powerful, scalable and reliable infrastructure to supports its e-commerce plans.
So it chose Compaq's AlphaServer and ProLiant systems running Tru64 UNIX, Windows NT and PeopleSoft to power its Web site, related data base and business applications.
These companies all have one thing in common - the Internet is the only entrance to their business.
If the door is closed - in other words, if their systems are down, if their network can't handle the load - their business suffers.
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We're also helping established companies turn the Internet into a competitive advantage.
Take Barnes and Noble, the world's largest bookseller, for example.
Barnes and Noble first launched its Web site in 1997, but as the 1998 holiday season approached, the company decided to design and deploy a new Internet platform.
The key demands were reliability, scalability and usability.
Barnes and Noble chose Microsoft for its software and Compaq for systems and services. Compaq ProLiant servers and Fibre Channel storage arrays are clustered together to provide the redundancy - and thus the reliability - that the company needs.
With the Compaq/Microsoft platform, Barnes and Noble enjoyed a non-stop holiday season online - even with 380 percent annual user growth.
As a result, the company improved from the No. 31 e-commerce site on the Web in 1997 . . . to the No. 4 shopping site in terms of traffic in December 1998.
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E-commerce is only one of the many NonStop® eBusiness solutions we are offering today. We're also helping companies use the Internet to gather and analyze customer information.
We are working with Sprint, a major telecommunications company, to deploy a new Operational Data Store, which runs on a NonStop Himalaya system with 32 processors and eight terabytes of storage capacity.
The data store enables Sprint to collect billing and performance data from its network. Customers and employees will be able to access this data via a Web interface.
The data store also provides a single reference point for network performance and billing data. Long range plans include data mining, evolving into knowledge discovery.
Why did Sprint choose Compaq? Because we could provide the continuous availability and scalability that the company needs.
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These examples help demonstrate the strength of our NonStop® eBusiness offerings in three key areas: products, services and solutions.
Compaq has the broadest range of enterprise server capabilities, from ProLiant servers and 64-bit Alpha systems . . . to fault-tolerant Himalaya servers. With clusters and other high-availability technologies, we are able to offer NonStop® eBusiness solutions across our product line.
According to market research by Ziff Davis, Compaq is the clear leader in the market for Web servers. We have more than 34 percent of the U.S. market -- twice the share of the number two company, Sun.
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But scalable, high-performance servers alone will not give you the mission-critical capabilities you need to be a NonStop® eBusiness.
You also need robust storage solutions that will enable you to manage the vast amounts of data that your Web-enabled business will generate.
IDC predicts that by the year 2002, companies will purchase more than 1.3 million terabytes of online storage - compared with only 105,000 terabytes in 1998.
Compaq is the market leader in multi-user storage. And through our Enterprise Network Storage Architecture, we are making storage a more flexible, shared resources throughout the enterprise.
We recently announced new enterprise storage area network solutions that provide you with more scalable, high-availability storage systems with a very low total cost of ownership.
By leveraging industry standards, we are able to meet your requirements for open storage solutions that work with multiple platforms and operating systems.
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Enterprise clients are also a critical element of your NonStop® eBusiness infrastructure . . . and Compaq remains committed to delivering the best clients in the industry - from palmtops to portables and desktop platforms.
Our objective is to extend our leadership position in clients by partnering with our customers to deliver business-specific PC products and services for Internet-enabled computing.
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Of course, you're looking for more than leadership systems. You want a partner who can help you plan, design and operate NonStop® eBusiness solutions . . . a partner who will be accountable for implementation and support.
Compaq is in a strong position to support your business with customer services . . . network and systems integration . . . and operations management.
With more than 27,000 service professionals deployed around the world, Compaq Services has significant expertise in business critical services and infrastructure solutions.
Let me give you a few examples.
We have completed more than 20,000 enterprise network projects.
We have provided Internet solutions for more than 1,000 enterprises.
And we manage the infrastructure for Internet service providers with more than 10 million subscribers.
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The combination of leadership products and services - together with strong partnerships - enables us to create robust solutions.
One of our major differentiators is ActiveAnswers, our unique, online knowledge repository and virtual solutions community.
ActiveAnswers simplifies and standardizes enterprise solutions by providing guides, technical information, e-services and tools to solutions providers and customers.
You get the benefit of Compaq's experience and the knowledge of our partners.
The result is faster deployment . . . reduced risk and complexity . . . and improved returns on your IT investments.
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One of the keys to ActiveAnswers and our other solutions is our deep partnerships with key ISVs like Microsoft, Novell, Oracle, SAP, PeopleSoft and many others.
These partnerships enable us to deliver NonStop® eBusiness solutions that not only provide high availability but also improve business performance and customer access.
For example, Compaq believes that directory services will play a key role in the next generation networks that are a critical part of NonStop® eBusiness solutions.
So we are working with Novell and Microsoft to help customers architect their networks and applications to capitalize on directories, which help you understand your customers and manage your resources more effectively.
We are also working with Novell to improve the performance of Web-based applications and NonStop® eBusiness solutions with caching appliances, which will help you serve your customers more quickly and efficiently.
By combining the best of Compaq and the best of our partners, we are able to deliver the best NonStop® eBusiness solutions to you.
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The key to a successful NonStop® eBusiness solution, of course, is choosing the right partner - a partner who understands your business . . . and takes accountability for meeting your needs.
One of the most important elements of Compaq's transformation has been our decision to take ownership of our relationships with large customers - to be a strategic partner, not just a hardware provider.
We are able to deliver the best of both worlds: account executives with total accountability for meeting your needs . . . and the best network of resellers, systems integrators and other channel partners in the industry.
Our objective is to do business the way you want to do business.
We call this customer choice . . . and it is superior to the direct-only model because it reflects the way you actually buy.
Consumers, for example, can buy Compaq products from a retail store . . . from one of our configure-to-order kiosks . . . by telephone . . . or through Compaq.com, which we recently redesigned to make it easier for customers to use and understand.
Small and medium businesses can buy through a Compaq authorized reseller . . . one of our reseller agents . . . a retailer . . . by telephone . . . or through Compaq.com.
Large and global accounts can work directly with a Compaq account team as well as with resellers . . . Compaq.com . . . or one of our customer call centers.
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I mentioned earlier that Compaq's goal is Internet leadership. To achieve that goal we are taking advantage of new Internet opportunities.
One opportunity that is very attractive is the rapidly growing market for Internet content and services.
To tap into this new market, we recently created a new Internet subsidiary, The AltaVista Company.
I'm sure that many of your are already familiar with the AltaVista search site, the fastest search engine on the Web.
Building on these industry-leading capabilities, we are adding significant e-commerce and personalized content services.
For example, we recently acquired Shopping.com. We plan to turn this asset into a leading commerce site by creating the most satisfying and trusted shopping experience . . . with leading brands and a streamlined purchase process.
We will also partner with leading retailers and other online e-commerce providers.
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Another key to our AltaVista strategy is to provide local and personalized content.
We just completed the acquisition of Zip2, whose local content platform is used by leading media companies, including The New York Times, The Boston Globe and the Houston Chronicle.
We believe that making content more personal and relevant is one of the keys to satisfying the rapidly growing Internet user base.
AltaVista also serves as a robust demonstration of our NonStop® eBusiness solutions - including our leading edge technology and a broad range of Compaq products and services.
The performance and scalability of Compaq's Alpha systems has enabled the AltaVista search service to keep up with dramatic growth in demand.
AltaVista started on a mid-range server . . . moved up to an AlphaServer 8400 system . . . and now runs on a cluster of multiple Alpha systems.
As a result, AltaVista has been able to sustain a fast response time - even when handling more than 1 billion page views per month.
Our goal with AltaVista is very simple: to become the leading destination site for content and e-commerce on the Internet.
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Over the next two days you will hear a lot about Compaq's strategy as well as our products, services and solutions.
If there is one message you take away from Innovate, I hope it will be this: Compaq is uniquely positioned to be your strategic partner and to help you achieve a competitive Internet advantage with NonStop® eBusiness solutions.
That means delivering solutions that offer scalability . . . availability . . . data integrity and security.
. . . solutions that connect your business with customers, partners and suppliers
. . . and, most important, solutions that are tailored to meet your specific needs.
We look forward to demonstrating to you over the next two days - and in the weeks and months to come - just how much Compaq and its partners can do for your business.
Thank you.
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