was a
Personal Computer company founded in
1982 by
Rod Canion ,
Jim Harris and
Bill Murto . During the
1980 s Compaq produced some of the first
IBM PC Compatible computers at a low-cost. The term "COMPAQ" is an acronym for "'''Comp'''atibility '''a'''nd '''Q'''uality". It existed as a standalone entity until
2002 when it was purchased by
Hewlett-Packard .
Compaq was founded in February
1982 by
Rod Canion ,
Jim Harris and
Bill Murto , three senior managers from semiconductor manufacturer
Texas Instruments . Each invested $1,000 to form the company. Their first venture capital came from Ben Rosen and Sevin-Rosen partners. It is often told that the architecture of the original Compaq PC was first sketched out on a placemat by the founders while dining in the Houston restaurant, House of Pies.
]]In November
1982 Compaq announced their first product, the
Compaq Portable , a portable
IBM PC Compatible Personal Computer . It was released in March
1983 at $2995, considerably more affordable than competitors at the time. The Compaq Portable was one of the progenitors of today's
Laptop . It was the second IBM PC compatible, being capable of running all software that would run on an
IBM PC . It was a commercial success, selling 53,000 units in its first year. The Compaq Portable was the first in the range of the
Compaq Portable Series . Compaq was able to market a legal IBM clone because
IBM mostly used "off the shelf" parts for their
PC . Furthermore,
Microsoft had kept the right to license
The Operating System to other computer manufacturers. The only part which had to be duplicated was the
BIOS , which Compaq did legally by using
Reverse-engineering for $1 million. Numerous other companies soon followed their lead.
In
1985 Compaq released the
Compaq Deskpro 286 , a 16-bit
Desktop Computer using an
Intel 80286 microprocessor running at 6 MHz and capable of 7MB RAM, it was considerably faster than an
IBM PC and was, like the
Compaq Portable , also capable of running IBM software. It cost $2000 for the 40MB hard disk model. It was the first of the
Compaq Deskpro line of computers.
]]After making half a billion dollars turnover, in
1986 Compaq released the
Compaq Portable II . The Portable II was significantly lighter and smaller than its predecessor, featuring a revised design with an 8 MHz processor and 10MB hard disk. It was cheaper than the
IBM PC/AT at $3199, or $4799 with a hard disk. A year later in
1987 , Compaq introduced the first PC based on
Intel 's new
80386 microprocessor, with the
Compaq Portable 386 and
Compaq Portable III . IBM was not yet using this processor, and subsequently Compaq established what was known disparagingly as the
PC Clone business.
In the early-
1990s , Compaq entered the retail computer market with the
Presario , and was one of the first manufacturers in the mid-1990s to market a sub-$1,000 PC. In order to maintain the prices it wanted, Compaq became the first first-tier computer manufacturer to utilize CPUs from
AMD and
Cyrix . The price war resulting from Compaq's actions ultimately drove numerous competitors, most notably
IBM and
Packard Bell , from the marketplace.
In
1997 , Compaq bought
Tandem Computers , known for their
NonStop server line. This acquisition instantly gave Compaq a presence in the higher end business computing market. In
1998 , Compaq acquired
Digital Equipment Corporation , the leading company in the previous generation of computing during the
1970s and early
1980s . This acquisition made Compaq, at the time, the world's second largest computer maker in the world in terms of revenue. Unfortunately for the company, CEO
Eckhart Pfeiffer , who engineered both mergers, had little vision for what the combined companies should do, or indeed how the three dramatically different cultures could work as a single entity, and Compaq struggled as a result. Pfeiffer was forced out as CEO in
1999 in a coup led by board chairman Ben Rosen and was eventually replaced by
Michael Capellas , formerly CIO of the company. Capellas was able to restore some of the luster lost in the latter part of the Pfeiffer era, but the company still struggled against lower-cost competitors such as
Dell .
In
2001 , Compaq engaged in a merger with
Hewlett-Packard . Numerous large HP shareholders, including Walter Hewlett, publicly opposed the deal, which resulted in a nasty proxy battle between those for and against the deal. The merger was approved only after the narrowest of margins, and allegations of vote buying (primarily involving an alleged last-second back-room deal with
Bank Of America ) haunted the new company. Capellas left the company after serving less than a year as President of HP.
Carly Fiorina , the CEO of HP, added Capellas' responsibilities to her own. Fiorina helmed Compaq for nearly three years after Capellas left. During that time, HP laid off thousands of former Compaq employees, its stock price generally declined, profits did not perk up, and it continued to lose market share to
Dell . Facing dismissal from a hostile Board of Directors, Fiorina opted to leave in February 2005 before the board could fire her. Mark Hurd took her place as CEO of HP. Some Compaq products were re-branded with the HP nameplate, while the Compaq brand remained on other products, notably
PC ,
PDA , and
Server lines.
Two sports stadiums were named after the company:
HP Compaq competes against other computer manufacturers including
Dell ,
Lenovo ,
Gateway ,
Sony and
Toshiba among others. Originally the company competed against
IBM , making affordable
IBM PC Compatible s often cheaper and faster than the IBM alternative.
Lenovo , which purchased IBM's personal computer business in
2005 , is a new competitor, especially in
China where it is headquartered.
