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{{Short description|American information technology company (1982–2013)}}
{{Use British English|date=May 2025}}
{{Use dmy dates|date=May 2025}}
{{Infobox company
| name = Compaq Computer Corporation
| type = [[Public company|Public]]
| trade_name = Compaq
| traded_as = {{NYSE was|CPQ}}<ref>{{cite web | last=Staff writer | date=January 2, 2002 | url=https://www.cnet.com/tech/tech-industry/compaq-buys-back-1-bln-in-stock/ | title=Compaq buys back $1 bln in stock | work=CNET | publisher=Red Ventures }}</ref>
| logo = Compaq logo 1993.svg<!-- Please stop replacing this with the 2007 logo; the infobox is about the company BEFORE being acquired by HP; Compaq was never a subsidiary of HP under their ownership, just a brand -->
| logo_caption = Wordmark logo used from 1993 to 2007{{efn|A slightly modified version of the wordmark logo appeared as early as 1998, with some minor modifications to the letterforms, and was used alongside the 1993 version from 1998 to 2007.<ref>{{cite journal | last=Greene | first=Tim | date=June 15, 1998 | url=https://www.proquest.com/docview/215962238 | title=Compaq airs post-merger plan | journal=Network World | publisher=IDG Publications | volume=15 | issue=24 | page=7 | id={{ProQuest|215962238}} }}</ref>}}
| image = HewlettPackardCampusHarrisCoTX.png
| image_caption = Aerial photo of Compaq's former headquarters in unincorporated [[Harris County, Texas]] (circa 2002)
| genre = Computer
| successor = Itself (as a brand of Hewlett-Packard; 2002−2013)<br/>[[Hewlett-Packard]] (2013−2015)<br/>[[HP Inc.]] (2015−present){{efn|Some remnants of Compaq (such as the [[HP ProLiant|ProLiant]] server line) are currently owned by [[Hewlett Packard Enterprise]] {{as of|lc=y|2017}}.}}
| founders = [[Rod Canion]]<br/>[[Jim Harris (entrepreneur)|Jim Harris]]<br/>Bill Murto
| foundation = 1982
| defunct = {{end date and age|2002}} (as a separate company)<br/>{{end date and age|2013}} (as a brand of HP; still active outside of North America)<!--Check the address and you will see it is outside of the Houston city limits-->
| location_city = [[Harris County, Texas]]
| location_country = U.S.
| locations = 
| area_served = {{hlist|United States|Canada|United Kingdom|Mexico|Brazil|Argentina|India}}
| industry = [[Computer hardware]]<br/>[[Computer software]]
| products = [[Desktop computer|Desktops]], [[laptop]]s, servers, telecom equipment, software
| owner = 
| fate = Acquired by [[Hewlett-Packard]], brand name retired by HP in 2013
| subsid = [[Tandem Computers]]<br/>[[Digital Equipment Corporation]]
| footnotes = 
| website = {{Plain list|
* Former brand website: {{web archive|url=https://web.archive.org/web/20010711121953/http://www.compaq.com/|title=compaq.com}}
* Current brand website: {{web archive|url=https://web.archive.org/web/20250812085454/https://www.compaq.com/|title=compaq.com}}
}}
| intl = 
}}

'''Compaq Computer Corporation'''{{Efn|Sometimes abbreviated to CQ prior to the 2007 rebranding}} was an American [[information technology|information]] [[technology company]] founded in 1982 that developed, sold, and supported computers and related products and services. Compaq produced some of the first [[IBM PC compatible]] computers, being the second company after [[Columbia Data Products]]<ref>[https://books.google.com/books?id=14Kfbrc6cbAC&pg=PA451 Aboard the Columbia], By Bill Machrone, p. 451, Jun 1983, PC Mag.</ref> to legally [[Reverse engineering|reverse engineer]] the [[BIOS]] of the [[IBM Personal Computer]].<ref>{{cite web |url = http://oldcomputers.net/compaqi.html |title = Compaq I Portable computer |access-date = 29 June 2016 }}</ref><ref>[http://oldcomputers.net/byte-compaq.html ''The Compaq computer is a full-function portable business computer that resembles the IBM PC in almost every way...'', Byte review]. {{webarchive |url=https://web.archive.org/web/20100513152926/http://oldcomputers.net/byte-compaq.html |date=May 13, 2010 }}.</ref> It rose to become the [[Market share of personal computer vendors|largest supplier of PC systems]] during the 1990s. The company was initially based in [[Harris County, Texas]].

The company was formed by [[Rod Canion]], [[Jim Harris (entrepreneur)|Jim Harris]], and [[Bill Murto]], all of whom were former [[Texas Instruments]] senior managers. All three had left the company in 1991 due to an internal shakeup, and saw [[Eckhard Pfeiffer]] appointed as president and CEO, who served throughout the 1990s. [[Benjamin M. Rosen|Ben Rosen]] provided the [[venture capital financing]] for the fledgling company and served as chairman of the board for 17 years from 1983 until September 28, 2000, when he retired and was succeeded by [[Michael Capellas]], who served as its last chairman and CEO until its merger.<ref name="h41131.www4.hp.com">{{cite web |title=Compaq Names Michael Capellas Chairman |url=http://h41131.www4.hp.com/za/en/press/Compaq_Names_Michael_Capellas_Chairman.html |access-date=2012-08-26 |publisher=H41131.www4.hp.com |archive-date=8 July 2012 |archive-url=https://archive.today/20120708202559/http://h41131.www4.hp.com/za/en/press/Compaq_Names_Michael_Capellas_Chairman.html |url-status=dead }}</ref><ref>{{cite web |title=Compaq Appoints Michael D. Capellas President and Chief Executive Officer |url=http://h41131.www4.hp.com/za/en/press/Compaq_Appoints_Michael_D_Capellas_President_and_Chief_Executive_Officer.html |access-date=2012-08-26 |publisher=H41131.www4.hp.com |archive-date=15 July 2012 |archive-url=https://archive.today/20120715154403/http://h41131.www4.hp.com/za/en/press/Compaq_Appoints_Michael_D_Capellas_President_and_Chief_Executive_Officer.html |url-status=dead }}</ref>

Compaq was overtaken by [[Dell]] as the top global [[Personal computer|PC]] maker two times; one in 1999<ref name="dellovertake99">Rivkin, Jan W., and Porter, Michael E. Matching Dell, Harvard Business School Case 9-799-158, June 6, 1999.</ref> and the other in 2001.<ref name="dellovertake01">{{Cite news |date=2001-04-20 |title=Dell becomes world's top PC maker |url=http://news.bbc.co.uk/2/hi/business/1287345.stm |access-date=2024-09-21 |language=en-GB}}</ref> Struggling to keep up against its competitors with the price wars against Dell, the launch of a [[joint venture]] with [[ADI Corporation]] in 1994, and a risky acquisition of [[Digital Equipment Corporation|DEC]] in 1998 (which includes the inheritance of the [[DEC Alpha]] family of CPUs),<ref>[http://www.mhhe.com/business/management/updates/thompson12e/case/dell10.html Dell Computer Corporation Online Case] {{Webarchive|url=https://archive.today/20130104110939/http://www.mhhe.com/business/management/updates/thompson12e/case/dell10.html |date=2013-01-04 }}. Mhhe.com. Retrieved on 2016-06-10.</ref> Compaq was acquired by [[Hewlett-Packard]] (HP) for US$25 billion in 2002.<ref name="compaq a">{{cite press release |title = Hewlett-Packard and Compaq Agree to Merge, Creating $87 Billion Global Technology Leader |publisher = Hewlett-Packard |date = September 3, 2001 |url = http://www.hp.com/hpinfo/newsroom/press/2001/010904a.html |access-date = October 4, 2008 }}</ref><ref name="compaq b">{{cite news |url = https://query.nytimes.com/gst/fullpage.html?res=9C02E7DE1739F937A3575AC0A9679C8B63 |title = Hewlett-Packard in Deal to Buy Compaq for $25 Billion in Stock |date = 2001-09-04 |newspaper = The New York Times |access-date = October 4, 2008 |url-access=limited }}</ref> Despite using the Compaq name in HP's own [[HP business desktops|HP Compaq]] brand of business computers, which served as a replacement for the [[Compaq Evo]] in 2003 as well as the [[HP ProBook]] brand in 2009, the Compaq brand as a whole remained in use by HP for lower-end systems until 2013 when it was discontinued;<ref>{{cite web |author = Chris Ziegler |url = https://www.theverge.com/2012/5/23/3039627/hp-compaq-low-end-branding |title = 'HP Compaq' branding to end next year, Compaq name will live on for 'basic computing at entry-level pricing' |website = The Verge |date = 2012-05-23 |access-date = 2012-11-16 }}</ref> two years after the Compaq brand was discontinued, HP itself was later split up into two companies in 2015, leading to its legal successors [[HP Inc.]] and [[Hewlett Packard Enterprise]].<ref>{{Cite news |last1=Mukherjee |first1=Supantha |last2=Chan |first2=Edwin |date=October 6, 2014 |title=Hewlett-Packard to split into two public companies, lay off 5,000 |url=https://www.reuters.com/article/us-hp-restructuring-idUSKCN0HV0U720141006 |access-date=May 6, 2025 |website=[[Reuters]]}}</ref>

{{as of|2025}}, the Compaq brand is currently licensed to third parties outside of North America for use on electronics in [[Latin America]] (e.g. [[Mexico]] and [[Brazil]]) and [[India]].<ref name="compaqglobalk" /><ref name="compawossify" />

==History==

===1982–1990===
{{plain image with caption|Compaq logo 1982.svg|Original logo, used from 1982 to 1993}}
[[File:Rod Canion - SiliconCowboys-MFF16.jpg|thumb|Compaq co-founder [[Rod Canion]], pictured in 2016]]
Compaq was founded in February 1982 by [[Rod Canion]], [[Jim Harris (entrepreneur)|Jim Harris]], and Bill Murto, three senior managers from semiconductor manufacturer [[Texas Instruments]]. The three of them had left due to lack of faith and loss of confidence in TI's management and initially considered but ultimately decided against starting a chain of Mexican restaurants.<ref name="scribd1">{{cite web |url = https://www.scribd.com/doc/23519983/Martin-Puris-Comeback |title = Martin Puris – Comeback |publisher = Scribd.com |access-date = 2012-11-16 }}</ref><ref>{{cite web |url = https://tshaonline.org/handbook/online/articles/dnc01 |title = COMPAQ COMPUTER CORPORATION &#124; The Handbook of Texas Online&#124; Texas State Historical Association (TSHA) |publisher = Tshaonline.org |access-date = 2012-11-16 }}</ref> Each invested $1,000 to form the company, which was founded with the temporary name ''"Gateway Technology"''. The name ''"COMPAQ"'' was said to be derived from ''"'''Compa'''tibility and '''Q'''uality"'', but this explanation was an afterthought. The name was chosen from many suggested by [[Ogilvy & Mather]], it being the name least rejected. The first [[Compaq Portable|Compaq PC]] was sketched out on a placemat by Ted Papajohn while dining with the founders in a pie shop,<ref name="scribd1" /><ref>{{cite news |url = https://www.usatoday.com/tech/techinvestor/2001-09-04-compaq-history.htm |title = Compaq: From place mat sketch to PC giant |date = 2001-09-04 |newspaper = USA Today |access-date = 2009-11-01 }}</ref> (named [[House of Pies]] in Houston). Their first venture capital came from [[Benjamin M. Rosen]] and [[Sevin Rosen Funds]], who helped the fledgling company secure {{US$|long=no|1.5 million}} to produce their initial computer.<ref name="ezinearticles_com">[http://ezinearticles_com/?Compaq-Computer---Joseph-R.-Rod-Canions-Success-Story&id=219879]{{dead link|date=May 2017|bot=InternetArchiveBot|fix-attempted=yes}}</ref> Overall, the founders managed to raise $25 million from venture capitalists, as this gave stability to the new company as well as providing assurances to the dealers or middlemen.

Compaq differentiated its offerings from other [[IBM PC clone]]s by not focusing mainly on price, but instead concentrating on new features such as portability and better technology, at prices comparable to those of IBM's PCs.{{r|halfhill198612}}{{r|bane19881120}} In contrast to Dell and [[Gateway 2000]], Compaq hired veteran engineers with an average of 15 years' experience, which lent credibility to Compaq's reputation of reliability among customers.<ref name="entrepreneur1">{{cite web |url = http://www.entrepreneur.com/article/197620 |title = Joseph R. "Rod" Canion |publisher = Entrepreneur.com |date = 2008-10-10 |access-date = 2012-11-16 }}</ref><ref name="britannica1">{{cite encyclopedia |url = https://www.britannica.com/EBchecked/topic/129604/Compaq-Computer-Corporation |title = Compaq Computer Corporation (American corporation) – Britannica Online Encyclopedia |encyclopedia = Britannica.com |access-date = 2012-11-16 }}</ref> Due to its partnership with [[Intel]], Compaq was able to maintain a technological lead in the market place as it was the first one to come out with computers containing the next generation of each Intel [[x86]] processors.<ref name="scribd1"/>

Under Canion's direction, Compaq sold computers only through dealers to avoid potential competition that a direct sales channel would foster, which helped foster loyalty among resellers. By giving dealers considerable leeway in pricing Compaq's offerings, either a significant markup for more profits or discount for more sales, dealers had a major incentive to advertise Compaq.<ref name="entrepreneur1"/><ref name="britannica1"/>

During its first year of sales (second year of operation), the company sold 53,000 PCs for sales of {{US$|long=no|111 million}}, the first start-up to hit the {{US$|long=no|100 million}} mark that fast. Compaq went public in 1983 on the NYSE and raised {{US$|long=no|67 million}}. In 1986, it enjoyed record sales of {{US$|long=no|329 million}} from 150,000 PCs and became the youngest-ever firm to make the [[Fortune 500]]. In 1985, sales reached $504 million.<ref name=":0">{{Cite web |last=Ramstad |first=Evan |date=1998-01-27 |title=Compaq to Acquire Digital, Once an Unthinkable Deal |url=https://www.wsj.com/articles/SB885817641399131000 |access-date=2022-12-03 |website=[[The Wall Street Journal]] |language=en-US}}</ref> The company shipped its 500,000th computer in April 1986.<ref name="halfhill198612">{{cite news | url=https://archive.org/stream/1986-12-compute-magazine/Compute_Issue_079_1986_Dec#page/n33/mode/2up | title=The MS-DOS Invasion / IBM Compatibles Are Coming Home | work=Compute! | date=December 1986 | access-date=9 November 2013 | author=Halfhill, Tom R. | pages=32}}</ref> In 1987, Compaq hit the {{US$|long=no|1 billion}} revenue mark, taking the least amount of time to reach that milestone.<ref name="ezinearticles_com"/><ref name="entrepreneur1"/> By 1991, Compaq held the fifth place spot in the PC market with {{US$|long=no|3 billion}} in sales that year.<ref>{{cite news |author = LAURENCE ZUCKERMANPublished: June 16, 1997 |url = https://www.nytimes.com/1997/06/16/business/compaq-computer-looks-back-and-sees-the-competition-gaining.html?pagewanted=print&src=pm |title = Compaq Computer Looks Back and Sees the Competition Gaining – New York Times |work = [[The New York Times]] |date = 1997-06-16 |access-date = 2012-11-16 |url-access=limited }}</ref>

Two key marketing executives in Compaq's early years, Jim D'Arezzo and Sparky Sparks, had come from [[IBM Personal Computer|IBM's PC Group]]. Other key executives responsible for the company's meteoric growth in the late 1980s and early 1990s were Ross A. Cooley, another former IBM associate, who served for many years as SVP of GM North America; Michael Swavely, who was the company's chief marketing officer in the early years, and eventually ran the North America organization, later passing along that responsibility to Cooley when Swavely retired. In the United States, Brendan A. "Mac" McLoughlin (another long time IBM executive) led the company's field sales organization after starting up the Western U.S. Area of Operations. These executives, along with other key contributors, including Kevin Ellington, Douglas Johns, Steven Flannigan, and Gary Stimac, helped the company compete against the IBM Corporation in all personal computer sales categories, after many predicted that none could compete with the behemoth.

The soft-spoken Canion was popular with employees and the culture that he built helped Compaq to attract the best talent. Instead of headquartering the company in a downtown Houston skyscraper, Canion chose a West Coast-style campus surrounded by forests, where every employee had similar offices and no-one (not even the CEO) had a reserved parking spot. At semi-annual meetings, turnout was high as any employee could ask questions to senior managers.<ref name="scribd1"/><ref name="entrepreneur1"/>

In 1987, company co-founder Bill Murto resigned to study at a religious education program at the University of St. Thomas. Murto had helped to organise the company's marketing and authorized-dealer distribution strategy and held the post of senior vice president of sales since June 1985. Murto was succeeded by Ross A. Cooley, director of corporate sales. Cooley would report to Michael S. Swavely, vice president for marketing, who was given increased responsibility and the title of vice president for sales and marketing.<ref>{{cite news |url = https://www.nytimes.com/1987/04/08/business/business-people-compaq-founder-shifts-to-religion.html |work = The New York Times |title = BUSINESS PEOPLE; Compaq Founder Shifts to Religion |date = 1987-04-08 |url-access=limited }}</ref>

====Introduction of Compaq Portable====
[[File:Compaq portable.jpg|thumb|right|[[Compaq Portable]] (1983)]]
In November 1982, Compaq announced its first product, the [[Compaq Portable]], a portable [[IBM PC compatible]] [[personal computer]]. It was released in March 1983 at {{US$|long=no|2995}}. The Compaq Portable was one of the progenitors of today's [[laptop]]; some called it a "suitcase computer" for its size and the look of its case. It was the second IBM-compatible PC, capable of running all software that would run on an [[IBM Personal Computer|IBM PC]]. It was a commercial success, selling 53,000 units in its first year and generating {{US$|long=no|111 million}} in sales revenue. 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 its [[IBM Personal Computer|PC]]. Furthermore, [[Microsoft]] had kept the right to license [[MS-DOS]], the most popular and de facto standard operating system<ref>but not the only one</ref> for the IBM PC, to other computer manufacturers. The only part which had to be duplicated was the [[BIOS]], which Compaq did legally by using [[clean room design]] at a cost of {{US$|long=no|1 million}}.<ref>{{cite web |url = http://www.extremetech.com/article2/0,1697,21218,00.asp |title = Loyd Case: A Trip Down Memory Lane with Hewlett-Packard & Compaq |access-date = 2008-01-31 |work = extremetech.com |url-status = dead |archive-url = https://web.archive.org/web/20080120121139/http://www.extremetech.com/article2/0%2C1697%2C21218%2C00.asp |archive-date = 2008-01-20 }}</ref><ref>{{cite web |url = https://www.pbs.org/cringely/pulpit/1999/pulpit_19990930_000400.html |title = Real Trouble: How Reverse Engineering May Yet Kill Real Networks |access-date = 2008-01-31 |author = Robert X. Cringely |publisher = PBS |archive-url = https://web.archive.org/web/20071211074325/https://www.pbs.org/cringely/pulpit/1999/pulpit_19990930_000400.html |archive-date = 2007-12-11}}</ref><ref>{{cite web |url = http://www.islandnet.com/~kpolsson/comphist/comp1982.htm |title = Chronology of Personal Computers (1982) |access-date = 2008-01-31 |author = Ken Polsson }}</ref> Compaq also developed [[COMPAQ-DOS]], its own MS-DOS variant. Microsoft later licensed COMPAQ-DOS and resold it as MS-DOS.<ref name="edwards20250616">{{Cite web |last=Edwards |first=Gareth |date=2025-06-16 |title=The Man Who Beat IBM |url=https://every.to/the-crazy-ones/the-man-who-beat-ibm |access-date=2025-08-07 |website=Every}}</ref>

Unlike other companies, Compaq did not [[bundled software|bundle application software]] with its computers. Vice President of Sales and Service H. L. Sparks said in early 1984:<ref name="zientara19840402">{{cite magazine |url = https://books.google.com/books?id=kC4EAAAAMBAJ&pg=PA84 |title = Q&A: H.L. Sparks |magazine = [[InfoWorld]] |date = 1984-04-02 |access-date = 10 February 2015 |last = Zientara |first = Marguerite |pages = 84–85 | volume = 6 | issue = 14}}</ref>

{{Blockquote|We've considered it, and every time we consider it we reject it. I don't believe and our dealer network doesn't believe that bundling is the best way to merchandise those products.

You remove the freedom from the dealers to really merchandise when you bundle in software. It is perceived by a lot of people as a marketing gimmick. You know, when you advertise a {{US$|long=no|3000}} computer with {{US$|long=no|3000}} worth of free software, it obviously can't be true.

The software should stand on its merits and be supported and so should the hardware. Why should you be constrained to use the software that comes with a piece of hardware? I think it can tend to inhibit sales over the long run.}}

Compaq instead emphasized PC compatibility, of which Future Computing in May 1983 ranked Compaq as among the "Best" examples.<ref name="ward198311">{{cite magazine |url = https://archive.org/stream/byte-magazine-1983-11/1983_11_BYTE_08-11_Inside_the_IBM_PC#page/n249/mode/2up |title = Levels of PC Compatibility |magazine = [[Byte (magazine)|BYTE]] |date = November 1983 |access-date = 19 March 2016 |last = Ward | first = Ronnie |pages = 248–249 | volume = 8 | issue = 11}}</ref> "Many industry observers think [Compaq] is poised for meteoric growth", ''[[The New York Times]]'' reported in March of that year.<ref name="pollack19830327">{{Cite news |last=Pollack |first=Andrew |url=https://www.nytimes.com/1983/03/27/business/big-ibm-has-done-it-again.html |title=Big I.B.M. Has Done It Again |date=1983-03-27 |work=The New York Times |access-date=2020-03-16 |page=Section 3, Page 1 |language=en-US |issn=0362-4331 |url-access=limited }}</ref> By October, when the company announced the Compaq Plus with a {{val|10|ul=MB}} hard drive, ''[[PC Magazine]]'' wrote of "the reputation for compatibility it built with its highly regarded floppy disk portable".<ref name="pc19840124">{{cite magazine |url = https://books.google.com/books?id=kSzKzjWHeVEC&pg=PA39 |title = PC-Compatible Portables |magazine = [[PC Magazine]] |date = 1984-01-24 |access-date = 23 October 2013 |author1 = Cook, Karen |author2 = Langdell, James |page = 39 | volume = 3 | issue = 1 }}</ref> The company bragged that it was more IBM compatible than IBM itself,<ref name="watt19840716">{{Cite magazine |last=Watt |first=Peggy |date=1984-07-16 |title=Compaq Line Has 'Overdrive' |url=https://books.google.com/books?id=yS4EAAAAMBAJ&pg=PA47 |access-date=2025-04-27 |magazine=InfoWorld |pages=47–51 |volume=6 |issue=29}}</ref> such as the [[IBM Portable PC]].{{r|edwards20250616}} Compaq computers remained the most compatible PC clones into 1984,<ref name="mace19840109_16">{{cite magazine |url = https://books.google.com/books?id=ey4EAAAAMBAJ&pg=PA79 |title = IBM PC clone makers shun total compatibility |magazine = [[InfoWorld]] |date = 9–16 January 1984 |access-date = 4 February 2015 |author = Mace, Scott |pages = 79–81 | volume = 6 | issue = 2 & 3 }}</ref> and maintained its reputation for compatibility for years,{{r|iw19890123}} even as clone BIOSes became available from [[Phoenix Technologies]] and other companies that also reverse engineered IBM's design, then sold their version to clone manufacturers.

====Compaq Deskpro====
On June 28, 1984, Compaq released the [[Compaq Deskpro|Deskpro]], a 16-bit desktop computer using an [[Intel 8086]] microprocessor running at {{val|7.14|ul=MHz}}. It was considerably faster than an [[IBM Personal Computer|IBM PC]] and was, like the original [[Compaq Portable]], also capable of running IBM software. It was Compaq's first non-portable computer and began the Deskpro line of computers.

====Compaq DeskPro 386====
[[File:Compaq Deskpro 386 16Mhz edit.jpg|thumb|upright=0.75|The [[Compaq Deskpro 386|Deskpro 386]] was the first personal computer to feature an [[i386|Intel 386]] microprocessor.]]
In 1986, Compaq introduced the [[Compaq Deskpro 386|Deskpro 386]], the first PC based on [[Intel]]'s new [[i386|80386]] microprocessor.{{r|lewis19891022}}<ref>{{cite web |url = http://www.techhive.com/article/126692/greatest_pcs_of_all_time.html?page=9 |title = PC World – The 25 Greatest PCs of All Time |date = 11 August 2006 |access-date = 2008-01-31 |archive-date = 2013-07-25 |archive-url = https://web.archive.org/web/20130725093306/http://www.techhive.com/article/126692/greatest_pcs_of_all_time.html?page=9 |url-status = dead }}</ref> [[Bill Gates]] of Microsoft later said<ref name="millergates19970325">{{Cite interview |last=Gates |first=Bill |interviewer=Michael J. Miller |title=Interview: Bill Gates, Microsoft |url=https://books.google.com/books?id=wVDB2C8IJRYC&pg=PA230 |date=1997-03-25 |pages=230-235 |magazine=[[PC Magazine]] |volume=16 |issue=6}}</ref>

{{Blockquote|the folks at IBM didn't trust the 386. They didn't think it would get done. So we encouraged Compaq to go ahead and just do a 386 machine. That was the first time people started to get a sense that it wasn't just IBM setting the standards, that this industry had a life of its own, and that companies like Compaq and Intel were in there doing new things that people should pay attention to.}}

The Compaq 386 computer marked the first CPU change to the PC platform that was not initiated by IBM.{{r|lewis19891022}} Compaq had concluded, according to ''PC'', that it could do so because "IBM's DOS standard is now bigger than IBM"; IBM could not make changes to the PC architecture it had created to hurt Compaq, without also obsoleting millions of real IBM PCs.<ref name="howard19861125">{{Cite magazine |last=Howard |first=Bill |date=1986-11-25 |title=386 Compatibility: What, Me Worry? |url=https://books.google.com/books?id=UwLE_FWJ-_0C&pg=PA141 |access-date=2024-11-01 |magazine=PC |page=141}}</ref> An IBM-made 386 machine reached the market almost a year later,<ref name="lewis19891022">{{Cite news |last=Lewis |first=Peter H. |date=1989-10-22 |title=THE EXECUTIVE COMPUTER; The Race to Market a 486 Machine |language=en-US |work=The New York Times |url=https://www.nytimes.com/1989/10/22/business/the-executive-computer-the-race-to-market-a-486-machine.html |access-date=2020-05-20 |issn=0362-4331 |url-access=limited }}</ref> but by that time Compaq was the leading 386 supplier with 28% market share, compared to IBM's 16%.{{r|bane19881120}}

For the first three months after announcement, the Deskpro 386 shipped with Windows/386. This was a version of Windows 2.1 adapted for the 80386 processor. Support for the [[virtual 8086 mode]] was added by Compaq engineers.  (Windows, running on top of the MS-DOS operating system, would not become a popular "operating environment" until at least the release of Windows 3.0 in 1990.)

====Compaq SystemPro====
Compaq's technical leadership and the rivalry with IBM was emphasized when the [[Compaq SystemPro|SystemPro]] server was launched in late 1989 – this was a true server product with standard support for a second CPU and [[RAID]], but also the first product to feature the [[Extended Industry Standard Architecture|EISA]] bus, designed in reaction to IBM's MCA ([[Micro Channel Architecture]]) which was incompatible with the original AT bus.<ref name="Texas State Historical Association">{{cite web |title=The Rise and Fall of Compaq: A Texas Tech Pioneer |url=https://www.tshaonline.org/handbook/entries/compaq-computer-corporation |publisher=Texas State Historical Association |access-date=19 September 2025}}</ref>

Although Compaq had become successful by being 100 percent IBM-compatible, it decided to continue with the original AT bus—which it renamed [[Industry Standard Architecture|ISA]]{{r|iw19890123}}—instead of licensing IBM's MCA. Prior to funding the prototype for EISA, Compaq had invested significant resources into reverse engineering MCA, but its executives correctly calculated that the $80 billion already spent by corporations on IBM-compatible technology would make it difficult for even IBM to force manufacturers to adopt the new MCA design. Instead of cloning MCA, Compaq led an alliance with Hewlett Packard and seven other major manufacturers, known collectively as the "[[Gang of Nine]]", to develop EISA.<ref name="britannica1"/>{{r|iw19890123}}<ref name=bane19881120>{{cite journal | last=Bane | first=Michael | date=November 20, 1988 | url=https://www.chicagotribune.com/news/ct-xpm-1988-11-20-8802180783-story.html | title=9 Clonemakers Unite to Take On the Industry Giant | journal=Chicago Tribune | page=11 | archiveurl=https://web.archive.org/web/20201112024817/https://www.chicagotribune.com/news/ct-xpm-1988-11-20-8802180783-story.html | archivedate=November 12, 2020}} {{ProQuest|282556133}}</ref> Within a year, when it became apparent that MCA was dying, IBM also licensed the EISA standard. Thanks to Compaq's leadership, the concept of open-systems within the PC industry was preserved.<ref name="Texas State Historical Association"/>

====Compaq SLT and LTE====
{{multiple image|direction=horizontal|total_width=440
|image1=Compaq SLT-286.jpg|caption1=The [[Compaq SLT|SLT/286]], Compaq's first laptop, was released in 1988.
|image2=Compaq LTE 1st generation.jpg|caption2=The [[Compaq LTE|LTE]] was the first commercially successful [[notebook computer]] on its release in 1989.
}}
Development of a truly mobile successor to the Portable line began in 1986, the company releasing two stopgap products in the meantime, the [[Compaq SLT|SLT]] (Compaq's first [[laptop]]) and the [[Compaq Portable III]] (a lighter-weight, lunchbox-sized entry in the Portable line). In 1989, they introduced the [[Compaq LTE|LTE]], their first [[Notebook computer|notebook-sized laptop]] which competed with [[NEC]]'s [[NEC UltraLite|UltraLite]] and [[Zenith Data Systems]]'s [[Zenith MinisPort|MinisPort]]. However, whereas the UltraLite and MinisPort failed to gain much uptake due to their novel but nonstandard data storage technologies, the LTE succeeded on account of its use of the conventional floppy drive and spinning hard drive, allowing users to transfer data to and from their [[desktop computer]]s without any hassle. As well, Compaq began offering [[docking station]]s with the release of the [[Compaq LTE/386s|LTE/386s]] in 1990, providing performance comparable to then-current desktop machines.<ref name=doesitagain>{{cite journal | last=Lewis | first=Peter H. | date=October 17, 1989 | url=https://www.nytimes.com/1989/10/17/science/personal-computers-compaq-does-it-again.html | title=Compaq Does It Again | journal=The New York Times | page=C8 | archiveurl=https://archive.today/20231019055439/https://www.nytimes.com/1989/10/17/science/personal-computers-compaq-does-it-again.html | archivedate=October 19, 2023}}</ref> Thus, the LTE was the first commercially successful notebook computer, helping launch the burgeoning industry.<ref>{{cite journal | last=Bridges | first=Linda | date=March 1, 1999 | url=https://link.gale.com/apps/doc/A53975770/GPS?sid=wikipedia | title=Making a Difference | journal=eWeek | publisher=Ziff-Davis | page=76 | via=Gale}}</ref> It was a direct influence on both [[Apple Inc.|Apple]] and [[IBM]] for the development of their own notebook computers, the [[PowerBook]] and [[ThinkPad]], respectively.<ref name=managing>{{cite book | chapter=Apple PowerBook: Design Quality and Time to Market | last=Thomke | first=Stefan H. | date=2007 | chapter-url=https://archive.org/details/managingproducts0000thom/page/59/ | title=Managing Product and Service Department: Text and Cases | publisher=McGraw-Hill/Irwin | pages=59–82 | isbn=9780073023014 | via=the Internet Archive}}</ref><ref name=blue>{{cite book | last=Dell | first=Deborah A. | date=2000 | url=https://archive.org/details/isbn_9780672317569/page/75/ | title=ThinkPad: A Different Shade of Blue | publisher=Sams Publishing | pages=75–78 | isbn=9780672317569 | via=the Internet Archive}}</ref>

===1990–1994===

====Decline of IBM's offer====
Before announcing EISA, Canion turned down an offer by [[William C. Lowe]] of IBM to instead cooperate on PC technology, essentially dividing the industry between the two companies.{{r|edwards20250616}} By 1989, ''The New York Times'' wrote that being the first to release a 80386-based personal computer made Compaq the leader of the industry and "hurt no company more - in prestige as well as dollars - than" IBM.{{r|lewis19891022}}  The company was so influential that observers and its executives spoke of "Compaq compatible". ''InfoWorld'' reported that "In the [ISA market] Compaq is already IBM's equal in being seen as a safe bet", quoting a [[sell-side analyst]] describing it as "now ''the'' safe choice in personal computers". Even rival [[Tandy Corporation]] acknowledged Compaq's leadership, stating that within the ''Gang of Nine'' "when you have 10 people sit down before a table to write a letter to the president, someone has to write the letter. Compaq is sitting down at the typewriter".<ref name="iw19890123">{{cite news |url = https://books.google.com/books?id=KzoEAAAAMBAJ&pg=PP1 |title = Compaq Vying To Become the IBM of the '90s |work = InfoWorld |date = 1989-01-23 |access-date = 17 March 2016 |author1 = LaPlante, Alice |author2 = Furger, Roberta |pages = 1, 8 }}</ref> A 1990 [[American Institute of Certified Public Accountants]] member survey found that 16% of respondents used Compaq computers, second only to IBM (23%). Epson (4%) and all other PC-compatible vendors had single-digit shares.<ref name="aicpa1990">{{Cite report |url=https://egrove.olemiss.edu/cgi/viewcontent.cgi?article=1563&context=aicpa_guides |title=1990 AICPA survey of computer usage |author-link=American Institute of Certified Public Accountants |year=1990 |id=561 |access-date=2025-04-30}}</ref>

====Ouster of co-founders====
Michael S. Swavely, president of Compaq's North American division since May 1989, took a six-month sabbatical in January 1991 (which would eventually become retirement effective on July 12, 1991). [[Eckhard Pfeiffer]], then president of Compaq International, was named to succeed him. Pfeiffer also received the title of chief operating officer, with responsibility for the company's operations on a worldwide basis, so that Canion could devote more time to strategy.<ref>{{cite news |url = http://topics.nytimes.com/topics/reference/timestopics/people/p/eckhard_pfeiffer/index.html?offset=10&s=newest |newspaper = The New York Times |first = Thomas C. |last = Hayes |title = Pfeiffer |access-date = 2012-11-16 |url-access=limited }}</ref> Swavely's abrupt departure in January led to rumours of turmoil in Compaq's executive suite, including friction between Canion and Swavely, likely as Swavely's rival Pfeiffer had received the number two leadership position. Swavely's U.S. marketing organization was losing ground with only 4% growth for Compaq versus 7% in the market, likely due to short supplies of the LTE 386s from component shortages, rivals that undercut Compaq's prices by as much as 35%, and large customers who did not like Compaq's dealer-only policy.<ref name=autogenerated2>"{{cite magazine |url=http://www.businessweek.com/stories/1991-02-03/coming-to-america-compaqs-european-star |archive-url=https://archive.today/20131208000636/http://www.businessweek.com/stories/1991-02-03/coming-to-america-compaqs-european-star |url-status=dead |archive-date=December 8, 2013 |title=Coming To America: Compaq's European Star |magazine=Businessweek<!-- Bot generated title --> |url-access=subscription}}</ref> Pfeiffer became president and CEO of Compaq later that year, as a result of a boardroom coup led by board chairman [[Benjamin M. Rosen|Ben Rosen]] that forced co-founder [[Rod Canion]] to resign as president and CEO.<ref>{{cite news |url = https://www.nytimes.com/1992/04/02/business/company-news-compaq-payment-to-former-chief.html?src=pm |work = The New York Times |title = COMPANY NEWS; Compaq Payment To Former Chief |date = April 2, 1992 |url-access=limited }}</ref>

Pfeiffer had joined Compaq from [[Texas Instruments]], and established operations from scratch in both Europe and Asia. Pfeiffer was given US$20,000 to start up Compaq Europe<ref name=vcfed>{{cite web |title = Compaq Computer Corporation [Archive] - Vintage Computer Forum |url = http://www.vcfed.org/forum/archive/index.php/t-32148.html |website = www.vcfed.org |access-date = 26 July 2016 |archive-date = 18 September 2016 |archive-url = https://web.archive.org/web/20160918102625/http://www.vcfed.org/forum/archive/index.php/t-32148.html |url-status = dead }}</ref> He started up Compaq's first overseas office in Munich in 1984. By 1990, Compaq Europe was a $2 billion business and number two behind IBM in that region, and foreign sales contributed 54 percent of Compaq's revenues.<ref>{{cite news |url = https://www.nytimes.com/1992/10/25/business/sound-bytes-he-who-fielded-compaq-s-swat-team.html?src=pm |work = The New York Times |first = Peter H. |last = Lewis |title = Sound Bytes; He Who Fielded Compaq's 'SWAT Team' |date = October 25, 1992 |url-access=limited }}</ref><ref name="nytimes.com">{{cite news |url = https://www.nytimes.com/1991/10/26/business/no-headline-626391.html?ref=eckhardpfeiffer |work = The New York Times |first = Thomas C. |last = Hayes |title = No Headline |date = October 26, 1991 |url-access=limited }}</ref> Pfeiffer, while transplanting Compaq's U.S. strategy of dealer-only distribution to Europe, was more selective in signing up dealers than Compaq had been in the U. S. such that European dealers were more qualified to handle its increasingly complex products.<ref name=autogenerated2 />

During the 1980s, under Canion's direction Compaq had focused on engineering, research, and quality control, producing high-end, high-performance machines with high profit margins that allowed Compaq to continue investing in engineering and next-generation technology. This strategy was successful as Compaq was considered a trusted brand, while many other IBM clones were untrusted due to being plagued by poor reliability. However, by the end of the eighties many manufacturers had improved their quality and were able to produce inexpensive PCs with off-the-shelf components, incurring none of the R&D costs which allowed them to undercut Compaq's expensive computers.<ref name="scribd1"/> Faced with lower-cost rivals such as [[Dell]], [[AST Research]], and [[Gateway 2000]], Compaq suffered a $71 million loss for that quarter, their first loss as a company, while the stock had dropped by over two-thirds.<ref name="ReferenceA">{{cite news |url = https://www.nytimes.com/1997/06/16/business/compaq-computer-looks-back-and-sees-the-competition-gaining.html?pagewanted=print&src=pm |work = The New York Times |first = Laurence |last = Zuckerman |title = Compaq Computer Looks Back and Sees the Competition Gaining |date = June 16, 1997 |url-access=limited }}</ref><ref>{{cite news |url = https://www.nytimes.com/1991/11/06/business/compaq-computer-outlines-new-lower-cost-approach.html?src=pm |work = The New York Times |first = Lawrence M. |last = Fisher |title = Compaq Computer Outlines New Lower-Cost Approach |date = November 6, 1991 |url-access=limited }}</ref> An analyst stated that "Compaq has made a lot of tactical errors in the last year and a half. They were trend-setters, now they are lagging". Canion initially believed that the 1990s recession was responsible for Compaq's declining sales but insisted that they would recover once the economy improved, however Pfeiffer's observation of the European market noted that it was competition as rivals could match Compaq at a fraction of the cost. Under pressure from Compaq's board to control costs as staff was ballooning at their Houston headquarters despite falling U.S. sales, while the number of non-U.S. employees had stayed constant, Compaq made its first-ever layoffs (1400 employees which was 12% of its workforce) while Pfeiffer was promoted to EVP and COO.<ref name="scribd1"/>

Rosen and Canion had disagreed about how to counter the cheaper Asian PC imports, as Canion wanted Compaq to build lower cost PCs with components developed in-house in order to preserve Compaq's reputation for engineering and quality, while Rosen believed that Compaq needed to buy standard components from suppliers and reach the market faster. While Canion developed an 18-month plan to create a line of low-priced computers, Rosen sent his own Compaq engineering team to [[COMDEX]] without Canion's knowledge and discovered that a low-priced PC could be made in half the time and at lower cost than Canion's initiative.<ref name="scribd1"/><ref>{{cite web |url = http://www.entrepreneur.com/article/197620 |title = Joseph R. "Rod" Canion |publisher = Entrepreneur.com |date = 2008-10-10 |access-date = 2012-08-26 }}</ref>

Rosen initiated a 14-hour board meeting, and the directors also interviewed Pfeiffer for several hours without informing Canion. At the conclusion, the board was unanimous in picking Pfeiffer over Canion. As Canion was popular with company workers, 150 employees staged an impromptu protest with signs stating, "We love you, Rod." and taking out a newspaper ad saying "Rod, you are the wind beneath our wings. We love you."<ref name="entrepreneur1"/> Canion declined an offer to remain on Compaq's board<ref name="nytimes.com"/> and was bitter about his ouster as he did not speak to Rosen for years, although their relationship became cordial again. In 1999, Canion admitted that his ouster was justified, saying "I was burned out. I needed to leave. He [Rosen] felt I didn't have a strong sense of urgency". Two weeks after Canion's ouster, five other senior executives resigned, including remaining company founder [[Jim Harris (entrepreneur)|James Harris]] as SVP of Engineering. These departures were motivated by an enhanced severance or early retirement, as well as an imminent demotion as their functions were to be shifted to vice presidents.<ref name="businessweek.com">{{cite web |url = http://www.businessweek.com/1999/99_30/b3639001.htm |title = Ben Rosen: The Lion in Winter |publisher = Businessweek.com |date = 1999-07-26 |access-date = 2012-08-26 |url-status = dead |archive-url = https://web.archive.org/web/20110909135243/http://www.businessweek.com/1999/99_30/b3639001.htm |archive-date = 2011-09-09 }}</ref>

====Introduction of Compaq Presario====
[[File:Compaq Presario 425 (31404884663).jpg|thumb|An early-1990s [[Compaq Presario]] [[All-in-one computer|all-in-one]]]]
Under Pfeiffer's tenure as chief executive, Compaq entered the retail computer market with the [[Compaq Presario]] as one of the first manufacturers in the mid-1990s to market a sub-$1000 PC. In order to maintain the prices it wanted, Compaq became the first first-tier computer manufacturer to utilise CPUs from [[AMD]] and [[Cyrix]]. The two price wars resulting from Compaq's actions ultimately drove numerous competitors from the market, such as [[Packard Bell]] and [[AST Research]]. From third place in 1993, Compaq had overtaken Apple Computer and even surpassed IBM as the top PC manufacturer in 1994, as both IBM and Apple were struggling considerably during that time.<ref name="Money.cnn.com">{{cite magazine |url = https://money.cnn.com/magazines/fortune/fortune_archive/1996/04/01/210990/index.htm |title = FAST TIMES AT COMPAQ WITH ECKHARD PFEIFFER AT THE WHEEL, COMPAQ IS PASSING OTHER PC MAKERS. THE COMPANY RECENTLY HIT A SPEED BUMP--BUT THE FUTURE'S SO BRIGHT THE CEO HAS TO WEAR SHADES. |magazine = Fortune.com |first = DAVID |last = KIRKPATRICK |date = April 1, 1996 |access-date = November 16, 2012 }}</ref> Compaq's inventory and gross margins were better than that of its rivals which enabled it to wage the price wars.<ref name="ReferenceA"/><ref>{{cite news |url = https://www.nytimes.com/1994/08/16/business/company-news-wide-range-of-price-cuts-by-compaq.html?src=pm |work = The New York Times |first = Lawrence M. |last = Fisher |title = COMPANY NEWS; Wide Range Of Price Cuts By Compaq |date = August 16, 1994 |url-access=limited }}</ref> ''[[Fortune (magazine)|Fortune]]'' noted in February 1996 that $1,000 invested in Compaq ten years earlier would be worth $22,000 by then, compared to $2,900 in Apple.<ref name="fortune19960219">{{Cite magazine |last1=Schendler |first1=Brent |last2=Martin |first2=Michael H. |date=1996-02-19 |title=Paradise Lost: Apple's Quest for Life after Death |url=https://money.cnn.com/magazines/fortune/fortune_archive/1996/02/19/207747/index.htm |access-date=2025-06-28 |magazine=Fortune}}</ref>

Compaq decided to make a foray into printers in 1989, and the first models were released to positive reviews in 1992. However, Pfeiffer saw that the prospects of taking on market leader [[Hewlett-Packard]] (who had 60% market share) was tough, as that would force Compaq to devote more funds and people to that project than originally budgeted. Compaq ended up selling the printer business to Xerox and took a charge of $50 million.<ref name="scribd1"/><ref name=autogenerated4>{{cite news |url = https://www.bloomberg.com/news/articles/1995-07-30/compaq-all-things-to-all-networks |title = Compaq: All Things To All Networks? |first = Gary |last = Mcwilliams |newspaper = Bloomberg.com |date = 31 July 1995 |access-date = 29 June 2016 | url-access=subscription}}</ref>
{| class="wikitable floatright"
|+United States PC market unit shipments (1994)<ref>{{cite web | url=https://www.tech-insider.org/statistics/research/1996/0126.html | title=Worldwide PC Market Grew 24 Percent in 1995 }}</ref>
!Company
!Shipments (000s)
!% Market Share
|-
|'''Compaq'''
|2,335
|12.6
|-
|[[Apple Inc.|Apple]]
|2,165
|11.6
|-
|[[Packard Bell]]
|2,130
|11.4
|-
|[[IBM]]
|1,669
|9.0
|-
|[[Gateway 2000]]
|960
|5.2
|-
|[[Dell]]
|790
|4.2
|-
|[[AST Research]]
|720
|3.9
|-
|[[Toshiba]]
|676
|3.6
|}

===1994–2002===

====Joint ventures, partnerships and alliances====
In 1994, Compaq formed a joint venture with [[ADI Corporation]], a Taiwanese manufacturer who produced the bulk of Compaq's monitors, to raise multiple factories in Mexico, Brazil, and Europe to assemble and store ADI's monitors.<ref>{{cite journal | last=Kanellos | first=Michael | date=November 28, 1994 | url=https://www.proquest.com/docview/227487080 | title=ADI develops offshore sites with Compaq's aid | journal=Computer Reseller News | publisher=CMP Publications | issue=607 | page=26 | id={{ProQuest|227487080}} }}</ref> Compaq sold many of the monitors that they offered to customers of their Deskpro and Presario lines as standalone units to third-party resellers, including their popular 171FS monitor.<ref>{{cite journal | last=Silverman | first=Dwight | date=May 15, 1994 | url=https://www.newspapers.com/article/indiana-gazette-dont-scrimp-on-a-monito/146922017/ | title=If you have the bucks, here are two monitors to buy | journal=Houston Chronicle | publisher=Hearst Communications | page=F2 | via=Newspapers.com}}</ref><ref>{{cite journal | last=Barnes | first=Katie | date=September 12, 1995 | url=https://books.google.com/books?id=GL59pngdbfQC&pg=PA152 | title=Compaq 171FS | journal=PC Magazine | publisher=Ziff-Davis | volume=14 | issue=15 | page=152 | via=Google Books}}</ref>

On June 26, 1995, Compaq reached an agreement with [[Cisco Systems|Cisco Systems, Inc.]], in order to get into networking, including digital modems, routers, and switches favoured by small businesses and corporate departments, which was now a $4 billion business and the fastest-growing part of the computer hardware market. Compaq also built up a network engineering and marketing staff.<ref name=autogenerated4 />

[[Image:Compaq and SCO baseball cap.jpg|thumb|right|upright=0.6|Promotional baseball cap showcasing the alliance between Compaq and SCO]]
Most of Compaq's server sales were for systems that would be running Microsoft's [[Windows NT]] operating system, and indeed Compaq was the largest hardware supplier for Windows NT.<ref name="cnet-1997"/>  However, some 20&nbsp;percent of Compaq servers went for systems that would be running the [[Unix operating system]].<ref name="cnet-1997"/> This was exemplified by a strategic alliance formed in 1997 between Compaq and the [[Santa Cruz Operation]] (SCO), which was known for its server Unix operating system products on Intel-architecture-based hardware.<ref name="cnet-1997">{{cite news | url=https://www.cnet.com/tech/tech-industry/compaq-partners-with-sco/ | title=Compaq partners with SCO | author-first= Brooke | author-last=Crothers | publisher=CNet | date=August 19, 1997 }}</ref> Compaq was also the largest hardware supplier for SCO's Unix products,<ref name="cnet-1997"/> and some 10&nbsp;percent of Compaq's [[ProLiant]] servers ran SCO's [[UnixWare]].<ref name="cnet-1998"/>

In 1998, Compaq signed new sales and equipment alliance with [[NaviSite]]. Under the pact, Compaq agreed to promote and sell NaviSite Web hosting services. In return, NaviSite took Compaq as a preferred provider for its storage and [[Intel]]-based servers.

During November 1999, Compaq began to work with [[Microsoft]] to create the first in a line of small-scale, web-based computer systems called [[MSN Companion]]s.<ref>{{cite web |title = MSN Web Companion |url = http://www.wince.ne.jp/review/okamon/20000107.htm |access-date = 2007-03-04 |archive-date = 2012-02-06 |archive-url = https://web.archive.org/web/20120206221311/http://www.wince.ne.jp/review/okamon/20000107.htm |url-status = dead }}</ref>

====Management shuffle, acquisitions and ouster of Pfeiffer====
In 1996, despite record sales and profits at Compaq, Pfeiffer initiated a major management shakeup in the senior ranks.<ref>{{cite news |url = https://www.nytimes.com/1996/10/25/business/compaq-shakes-up-its-top-management.html?src=pm |work = The New York Times |first = Laurence |last = Zuckerman |title = Compaq Shakes Up Its Top Management |date = October 25, 1996 |url-access=limited }}</ref> John T. Rose, who previously ran Compaq's desktop PC division, took over the corporate server business from SVP Gary Stimac who had resigned. Rose had joined Compaq in 1993 from Digital Equipment Corporation where he oversaw the personal computer division and worldwide engineering, while Stimac had been with Compaq since 1982 and was one of the longest-serving executives. Senior Vice-president for North America Ross Cooley announced his resignation effective at the end of 1996. CFO Daryl J. White, who joined the company in January 1983 resigned in May 1996 after 8 years as CFO. Michael Winkler, who joined Compaq in 1995 to run its portable computer division, was promoted to general manager of the new PC products group.<ref name="nytimes1996">{{cite news |url = https://www.nytimes.com/1996/07/03/business/compaq-regroups-into-3-management-units.html |title = Compaq Regroups Into 3 Management Units – New York Times |work = [[The New York Times]] |date = 1996-07-03 |access-date = 2012-11-16 |url-access=limited }}</ref><ref name="businessweek1996">{{cite magazine |url = http://www.businessweek.com/stories/1996-07-21/compaq-at-the-crossroads |archive-url = https://web.archive.org/web/20141026092331/http://www.businessweek.com/stories/1996-07-21/compaq-at-the-crossroads |url-status = dead |archive-date = October 26, 2014 |title = Compaq At The 'Crossroads' |magazine = Businessweek |date = 1996-07-21 |access-date = 2012-11-16 }}</ref> Earl Mason, hired from Inland Steel effective in May 1996, immediately made an impact as the new CFO. Under Mason's guidance, Compaq utilised its assets more efficiently instead of focusing just on income and profits, which increased Compaq's cash from {{US$|long=no|700 million}} to nearly {{US$|long=no|5 billion}} in one year. Additionally, Compaq's return on invested capital (after-tax operating profit divided by operating assets) doubled to 50 percent from 25 percent in that period.<ref name="ReferenceA"/>

Compaq had been producing the PC chassis at its plant in [[Shenzhen]], [[China]] to cut costs. In 1996, instead of expanding its own plant, Compaq asked a Taiwanese supplier to set up a new factory nearby to produce the mechanicals, with the Taiwanese supplier owning the inventory until it reached Compaq in Houston.<ref name="businessweek1996"/> Pfeiffer also introduced a new distribution strategy, to build PCs made-to-order which would eliminate the stockpile of computers in warehouses and cut the components inventory down to two weeks, with the supply chain from supplier to dealer linked by complex software.<ref name="nytimes1996"/>

Vice-president for Corporate Development Kenneth E. Kurtzman assembled five teams to examine Compaq's businesses and assess each unit's strategy and that of key rivals. Kurtzman's teams recommended to Pfeiffer that each business unit had to be first or second in its market within three years—or else Compaq should exit that line. Also, the company should no longer use profits from high-margin businesses to carry marginally profitable ones, as instead each unit must show a return on investment.<ref name="businessweek1996"/> Pfeiffer's vision was to make Compaq a full-fledged computer company, moving beyond its main business of manufacturing retail PCs and into the more lucrative business services and solutions that IBM did well at, such as computer servers which would also require more "customer handholding" from either the dealers or Compaq staff themselves.<ref name="nytimes1996"/> Unlike IBM and HP, Compaq would not  build up field technicians and programmers in-house as those could be costly assets, instead Compaq would leverage its partnerships (including those with Andersen Consulting and software maker SAP) to install and maintain corporate systems. This allowed Compaq to compete in the "big-iron market" without incurring the costs of running its own services or software businesses.<ref>{{cite news |url = https://www.bloomberg.com/news/articles/1996-07-21/compaq-at-the-crossroads |title = Compaq At The 'Crossroads' |first = Gary |last = Mcwilliams |newspaper = Bloomberg.com |date = 22 July 1996 |access-date = 29 June 2016 | url-access=subscription}}</ref>

Pfeiffer also made several major and some minor acquisitions. In 1997, Compaq bought [[Tandem Computers]], known for their [[NonStop (server computers)|NonStop]] server line.<ref name=cnet19970623>{{cite web |url = https://www.cnet.com/news/compaq-buys-tandem/ |title = Compaq buys Tandem |publisher=cnet |date = 1997-06-23 |access-date = 2016-04-26 }}</ref> This acquisition instantly gave Compaq a presence in the higher end business computing market. The alliance between Compaq and SCO took advantage of this to put out the [[UnixWare NonStop Clusters]] product in 1998.<ref name="cnet-1998">{{cite news | url=https://www.cnet.com/tech/tech-industry/compaq-sco-team-on-server-technology/ | title=Compaq, SCO team on server technology | author-first=Michael | author-last=Kanellos | publisher=CNet | date=August 19, 1998 }}</ref>

Minor acquisitions centred around building a networking arm and included [[NetWorth]] based in Irving, Texas and [[Thomas-Conrad]] based in Austin, Texas—both acquired in 1995.<ref>{{cite news |title = COMPAQ COMPUTER TO BUY THOMAS-CONRAD |url = https://www.nytimes.com/1995/10/19/business/company-news-compaq-computer-to-buy-thomas-conrad.html |access-date = 26 July 2016 |work = The New York Times |date = 19 October 1995 |url-access=limited }}</ref>  In 1997, [[Microcom]] was also acquired, based in Norwood, MA, which brought a line of modems, Remote Access Servers (RAS) and the popular Carbon Copy software.<ref>{{cite news |title = Compaq buys Microcom: Compaq Computer Corp. grabbed for a... |url = https://www.chicagotribune.com/1997/04/10/compaq-buys-microcom-compaq-computer-corp-grabbed/ |access-date = 26 July 2016 |agency = Chicago Tribune |date = April 10, 1997 }}</ref>
[[File:Assabet Woolen Mill - Maynard, Massachusetts - DSC04913.jpg|thumb|Former headquarters of [[Digital Equipment Corporation]] (DEC) in [[Maynard, Massachusetts]]. Compaq acquired DEC in 1998.]] 
In 1998, Compaq acquired [[Digital Equipment Corporation]] for a then-industry record of $9.6 billion.<ref>{{Cite magazine |title=Compaq to Acquire Digital |language=en-US |magazine=Wired |url=https://www.wired.com/1998/01/compaq-to-acquire-digital/ |access-date=2022-12-03 |issn=1059-1028}}</ref> The merger made Compaq, at the time, the world's second largest computer maker in the world in terms of revenue behind IBM.<ref name="ReferenceA"/><ref name=":0" /> Digital Equipment, which had nearly twice as many employees as Compaq while generating half the revenue, had been a leading computer company during the 1970s and early 1980s. However, Digital had struggled during the 1990s, with high operating costs. For nine years, the company had lost money or barely broke even, and had recently refocused itself as a "network solutions company". In 1995, Compaq had considered a bid for Digital but only became seriously interested in 1997 after Digital's major divestments and refocusing on the Internet. At the time of the acquisition, services accounted for 45 percent of Digital's revenues (about $6 billion) and their gross margins on services averaged 34 percent, considerably higher than Compaq's 25% margins on PC sales and also satisfying customers who had demanded more services from Compaq for years. Compaq had originally wanted to purchase only Digital's services business but that was turned down.<ref name="cnn.com">{{cite news |url = https://money.cnn.com/magazines/fortune/fortune_archive/1999/05/24/260278/ |title = Eckhard's Gone But the PC Rocks On Compaq's CEO blames his ouster on a savagely competitive industry. But other PC makers are fine |access-date = 2013-11-15 |url-status = dead |archive-url = https://web.archive.org/web/20131203034053/https://money.cnn.com/magazines/fortune/fortune_archive/1999/05/24/260278/ |archive-date = 2013-12-03 |website=CNN Money}}</ref> When the announcement was made, it was initially viewed as a master stroke as it immediately gave Compaq a 22,000 person global service operation to help corporations handle major technological purchases (by 2001 services made up over 20% of Compaq's revenues, largely due to the Digital employees inherited from the merger), in order to compete with IBM. However, it was also a risky merger, as the combined company would have to lay off 2,000 employees from Compaq and 15,000 from Digital which would potentially hurt morale. Furthermore, Compaq fell behind schedule in integrating Digital's operations, which also distracted the company from its strength in low-end PCs where it used to lead the market in rolling out next-generation systems which let rival [[Dell]] grab market share.<ref name="scribd1"/><ref>{{cite web|url=http://www.mhhe.com/business/management/updates/thompson12e/case/dell10.html|archive-url=https://archive.today/20130104110939/http://www.mhhe.com/business/management/updates/thompson12e/case/dell10.html|url-status=dead|archive-date=2013-01-04|title = Dell Computer Corporation Online Case}}</ref> Reportedly Compaq had three consulting firms working to integrate Digital alone.<ref name="businessweek1999">{{cite web |url = http://www.businessweek.com/1999/99_18/b3627136.htm |title = CHART: Compaq's Stock Price |publisher = Businessweek.com |date = 1999-05-03 |access-date = 2012-11-16 |url-status = dead |archive-url = https://web.archive.org/web/20121027010439/http://www.businessweek.com/1999/99_18/b3627136.htm |archive-date = 2012-10-27 }}</ref>

However, Pfeiffer 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 from strategy indecisiveness and lost focus, as a result being caught in between the low end and high end of the market.<ref>{{cite web |author = 24/7 Wall St. |url = http://www.businessinsider.com/the-worst-ceos-in-american-history-2010-5?op=1 |title = The 15 Worst CEOs In American History |website = Business Insider |date = 2010-05-04 |access-date = 2012-11-16 }}</ref> Mark Anderson, president of Strategic News Service, a research firm based in Friday Harbor, Wash. was quoted as saying, "The kind of goals he had sounded good to shareholders – like being a $50 billion company by the year 2000, or to beat I.B.M. – but they didn't have anything to do with customers. The new C.E.O. should look at everything Eckhard acquired and ask did the customer benefit from that. If the answer isn't yes, they should get rid of it." On one hand, Compaq had previously dominated the PC market with its price war but was now struggling against [[Dell]], which sold directly to buyers, avoiding the dealer channel and its markup, and built each machine to order to keep inventories and costs at a minimum.<ref name="businessweek1999"/> At the same time, Compaq, through its acquisitions of the Digital Equipment Corporation in 1998 and Tandem Computers in 1997, had tried to become a major systems company, like IBM and Hewlett-Packard. While IBM and HP were able generate repeat business from corporate customers to drive sales of their different divisions, Compaq had not yet managed to make its newly acquired sales and services organizations work as seamlessly.<ref name="ReferenceB">{{cite news |url = https://www.nytimes.com/1999/04/25/business/business-compaq-at-a-crossroad-the-challenges-for-the-next-chief.html?ref=eckhardpfeiffer |newspaper = The New York Times |first = Saul |last = Hansell |title = BUSINESS; Compaq at a Crossroad: The Challenges for the Next Chief |access-date = 2016-06-13 |date = 1999-04-25 |url-access=limited }}</ref><ref name="ReferenceC">{{cite news |url = https://www.nytimes.com/1999/04/20/business/reinventing-compaq-tasks-for-next-chief.html?ref=eckhardpfeiffer |newspaper = The New York Times |first = Lawrence M. |last = Fisher |title = Reinventing Compaq: Tasks for Next Chief |access-date = 2016-06-13 |date = 1999-04-20 |url-access=limited }}</ref>

In January 1998, Compaq was at its height. CEO Pfeiffer boldly predicted that the [[Wintel|Microsoft/Intel "Wintel" duopoly]] would be replaced by "Wintelpaq". In early 1998, Compaq had the problem of bloated PC inventories, and by summer 1998, Compaq was suffering from product-quality problems. Robert W. Stearns, SVP of Business Development, said "In [Pfeiffer's] quest for bigness, he lost an understanding of the customer and built what I call empty market share—large but not profitable", while Jim Moore, a technology strategy consultant with GeoPartners Research in Cambridge, Mass., says Pfeiffer "raced to scale without having economies of scale." The "colossus" that Pfeiffer built up was not nimble enough to adapt to the fast-changing computer industry. That year Compaq forecast demand poorly and shipped too many PCs, causing resellers to dump them at fire sale prices, and since Compaq protected resellers from heavy losses it cost them two quarters of operating profits.<ref name="cnn.com"/>

Pfeiffer also refused to develop a potential successor, rebuffing Rosen's suggestion to recruit a few executives to create the separate position of Compaq president. The board complained that Pfeiffer was too removed from management and the rank-and-file, as he surrounded himself with a "clique" of Chief Financial Officer Earl Mason, Senior Vice-President John T. Rose, and Senior Vice-President of Human Resources Hans Gutsch. Current and former Compaq employees complained that Gutsch was part of a group of senior executives, dubbed the "A team", who controlled access to Pfeiffer. Gutsch was said to be a "master of corporate politics, pitting senior vice presidents against each other and inserting himself into parts of the company that normally would not be under his purview". Gutsch, who oversaw security, had an extensive security system and guard station installed on the eight floor of CCA-11, where the company's senior vice presidents worked.<ref name="dwightsilverman.com">{{cite web |url = http://www.dwightsilverman.com/cpq-mgmt.htm |title = Schism in management blamed for Compaq woes |access-date = 29 June 2016 |archive-date = 15 April 2016 |archive-url = https://web.archive.org/web/20160415215516/http://www.dwightsilverman.com/cpq-mgmt.htm |url-status = dead }}</ref> There were accusations that Gutsch and others sought to divide top management, although this was regarded by others as sour grapes on the part of executives who were shut out of planning that involved the acquisitions of Tandem Computers and Digital Equipment Corp.<ref name="businessweek.com"/><ref>{{cite web |url = http://www.dwightsilverman.com/gutsch.htm |title = Compaq's Gutsch quits post |publisher = Dwightsilverman.com |date = 1999-06-16 |access-date = 2012-11-16 |archive-date = 2013-10-04 |archive-url = https://web.archive.org/web/20131004224413/http://www.dwightsilverman.com/gutsch.htm |url-status = dead }}</ref> Pfeiffer reduced the size of the group working on the deal due to news leaks, saying "We cut the team down to the minimum number of people—those who would have to be directly involved, and not one person more". Robert W. Stearns, Compaq's senior vice president for business development, with responsibility for mergers and acquisitions, had opposed the acquisition of Digital as the cultural differences between both companies were too great, and complained that he was placed on the "B team" as a result.<ref>{{cite web |url = http://amarillo.com/stories/060199/bus_heart.shtml |archive-url = https://web.archive.org/web/20131007130647/http://amarillo.com/stories/060199/bus_heart.shtml |url-status = dead |archive-date = 7 October 2013 |title = Access to Pfeiffer may have been heart of Compaq woes - Amarillo.com - Amarillo Globe-News |access-date = 29 June 2016 }}</ref>

Compaq entered 1999 with strong expectations. Fourth-quarter 1998 earnings reported in January 1999 beat expectations by six cents a share with record 48 percent growth. The company launched ''Compaq.com'' as the key for its new direct sales strategy, and planned an IPO for [[AltaVista]] toward the end of 1999 in order to capitalize on the dotcom bubble.<ref name=autogenerated1>{{cite web |url =https://www.cnet.com/news/for-compaq-1999-was-the-year-that-wasnt/|title = For Compaq, 1999 was the year that wasn't |publisher =CNET|access-date = 11 June 2020 }}</ref> However, by February 1999, analysts were sceptical of Compaq's plan to sell both direct and to resellers. Compaq was hit with two class-action lawsuits, as a result of CFO Earl Mason, SVP John Rose, and other executives selling {{US$|50 million}} of stock before a conference call with analysts, where they noted that demand for PCs was slowing down.<ref name="Resign">{{cite magazine |author = Om Malik |url = https://www.forbes.com/1999/04/19/mu1.html|title = Compaq's CEO Pfeiffer and CFO Mason resign |magazine = Forbes.com |access-date = 2012-11-16 }}</ref><ref name="WSJ Stepdown">{{cite news |url=https://www.wsj.com/articles/SB928336284926775812 |work = The Wall Street Journal |title = Compaq's Rose Steps Down as Head Of Firm's Computer-Server Business | url-access=subscription}}</ref><ref>{{cite web |url = http://securities.stanford.edu/1010/CPQ98/cv981148complaint031699.htm |title = Compaq Computer Corporation - Class Action Case 98CV01148 - Securities Class Action Complaint |access-date = 2013-11-15 |url-status = dead |archive-url = https://web.archive.org/web/20131202232146/http://securities.stanford.edu/1010/CPQ98/cv981148complaint031699.htm |archive-date = 2013-12-02 }}</ref>

On April 17, 1999, just nine days after Compaq reported first-quarter profit being at half of what analysts had expected, the latest in a string of earnings disappointments, Pfeiffer was forced to resign as CEO in a coup led by board chairman [[Benjamin M. Rosen|Ben Rosen]]. Reportedly, at the special board meeting held on April 15, 1999, the directors were unanimous in dismissing Pfeiffer. The company's stock had fallen 50 percent since its all-time high in January 1999.<ref name="businessweek1999"/> Compaq shares, which traded as high as {{US$|long=no|51.25}} early in 1999, dropped 23 percent on April 12, 1999, the first day of trading after the first-quarter announcement and closed the following Friday at {{US$|long=no|23.62}}.<ref name="Resign"/> During three out of the last six quarters of Pfeiffer's tenure, the company's revenues or earnings had missed expectations.<ref name="autogenerated1999">{{cite news |url = https://money.cnn.com/1999/07/22/technology/compaq/ |title = Compaq picks new CEO|publisher = Money.cnn.com |date = 1999-07-22 |access-date = 2012-11-16 }}</ref> While rival [[Dell]] had 55% growth in U.S. PC sales in the first quarter of 1999, Compaq could only manage 10%.<ref name="businessweek.com"/><ref name="ReferenceB"/><ref name="ReferenceC"/><ref name="WSJ Stepdown"/> Rosen suggested that the accelerating change brought about by the Internet had overtaken Compaq's management team, saying "As a company engaged in transforming its industry for the Internet era, we must have the organizational flexibility necessary to move at Internet speed." In a statement, Pfeiffer said "Compaq has come a long way since I joined the company in 1983" and "under Ben's guidance, I know this company will realize its potential."<ref>{{cite news |url = https://www.nytimes.com/1999/04/19/us/compaq-computer-ousts-chief-executive.html?pagewanted=2&src=pm |work = The New York Times |title = Compaq Computer Ousts Chief Executive |date = April 19, 1999 |first = Steve |last = Lohr |url-access=limited }}</ref> Rosen's priority was to have Compaq catchup as an E-commerce competitor, and he also moved to streamline operations and reduce the indecision that plagued the company.<ref name="businessweek.com"/>

Roger Kay, an analyst at International Data Corporation, observed that Compaq's behaviour at times seemed like a personal vendetta, noting that "Eckhard has been so obsessed with staying ahead of Dell that they focused too hard on market share and stopped paying attention to profitability and liquidity. They got whacked in a price war that they started."<ref name=autogenerated3>{{cite web |url =https://www.cnet.com/news/compaq-ousts-ceo-in-major-shakeup/|title = Compaq ousts CEO in major shakeup |publisher =CNET|access-date = 29 June 2016 }}</ref> Subsequent earnings releases from Compaq's rivals, Dell, Gateway, IBM, and Hewlett-Packard suggested that the problems were not affecting the whole PC industry as Pfeiffer had suggested.<ref name="dwightsilverman.com"/> Dell and Gateway sold direct, which helped them to avoid Compaq's inventory problems and compete on price without dealer markups, plus Gateway sold web access and a broad range of software tailored to small businesses. Hewlett-Packard's PC business had similar challenges like Compaq but this was offset by HP's extremely lucrative printer business, while IBM sold PCs at a loss but used them to lock in multi-year services contracts with customers.<ref name="cnn.com"/>

After Pfeiffer's resignation, the board established an office of the CEO with a triumvirate of directors; Rosen as interim CEO and vice chairmen Frank P. Doyle and Robert Ted Enloe III.<ref>{{cite news |author = <!--Start Byline--><!--End Byline--> |url = https://money.cnn.com/1999/04/19/companies/cpq/ |title = CEO Pfeiffer is out at Compaq – Apr. 19, 1999 |publisher = Money.cnn.com |date = 1999-04-19 |access-date = 2012-11-16 }}</ref> They began "cleaning house", as shortly afterward many of Pfeiffer's top executives resigned or were pushed out, including John J. Rando, Earl L. Mason, and John T. Rose. Rando, senior vice president and general manager of Compaq Services, was a key player during the merger discussions<ref>{{cite web |url = https://archive.org/stream/merginginformati00ross/merginginformati00ross_djvu.txt |title = Full text of "Merging information technology and cultures at Compaq-Digital : case study" |access-date = 29 June 2016 }}</ref> and the most senior executive from Digital to remain with Compaq after the acquisition closed<ref>{{cite news |url = http://news.bbc.co.uk/2/hi/business/111676.stm |work = BBC News |title = Compaq sacks 6% to absorb Digital |date = 1998-06-12 }}</ref><ref>{{cite news |url = https://money.cnn.com/1998/06/10/technology/digital/ |work = CNN |title = Palmer to leave Digital |date = 1998-06-10 }}</ref><ref>{{cite news |url = https://www.nytimes.com/1999/05/12/business/compaq-losing-a-top-officer.html |work = The New York Times |title = Compaq Losing A Top Officer |date = 1999-05-12 |url-access=limited}}</ref> and had been touted by some as the heir-apparent to Pfeiffer. Rando's division had performed strongly as it had sales of {{US$|long=no|1.6 billion}} for the first quarter compared to {{US$|long=no|113 million}} in 1998, which met expectations and was anticipated to post accelerated and profitable growth going forward. At the time of Rando's departure, Compaq Services ranked third behind those of IBM and EDS, while slightly ahead of [[Hewlett-Packard]]'s and [[Andersen Consulting]], however customers switched from Digital technology-based workstations to those of HP, IBM, and Sun Microsystems.<ref>{{cite web |url = http://www.swlearning.com/management/hitt/sm6e/isc/focus/sf01_02.html |title = Strategic Focus |access-date = 29 June 2016 |archive-date = December 3, 2013 |archive-url = https://web.archive.org/web/20131203000552/http://www.swlearning.com/management/hitt/sm6e/isc/focus/sf01_02.html |url-status = dead }}</ref> Mason, senior vice president and chief financial officer, had previously been offered the job of chief executive of Alliant Foodservice, Inc., a foodservice distributor based in Chicago, and he informed Compaq's board that he accepted the offer.<ref>{{cite web |url = http://www.prnewswire.com/news-releases/alliant-foodservice-inc-names-earl-l-mason-as-president-and-chief-executive-officer-74097312.html |title = Alliant Foodservice, Inc. Names Earl L. Mason as President and Chief Executive Officer |access-date = 29 June 2016 |archive-url = https://web.archive.org/web/20160423160944/http://www.prnewswire.com/news-releases/alliant-foodservice-inc-names-earl-l-mason-as-president-and-chief-executive-officer-74097312.html |archive-date = 23 April 2016 |url-status = dead }}</ref><ref name=autogenerated3 /><ref>{{cite web|url=https://www.cnet.com/news/compaq-management-exodus-cranking-up/ |title = Compaq management exodus cranking up|publisher = CNET |date = 2002-01-02 |access-date = 2012-08-26 }}</ref><ref>{{cite web |url = https://www.cnet.com/news/compaq-exec-steps-down/|title = Compaq exec steps down|publisher = CNET |date =2002-01-02|access-date = 2020-06-11 }}</ref> Rose, senior vice president and general manager of Compaq's Enterprise Computing group, resigned effective as of June 3 and was succeeded by Tandem veteran Enrico Pesatori. Rose was reportedly upset that he was not considered for the CEO vacancy, which became apparent once [[Michael Capellas]] was named COO. While Enterprise Computing, responsible for engineering and marketing of network servers, workstations and data-storage products, reportedly accounted for one third of Compaq's revenues and likely the largest part of its profits, it was responsible for the earnings shortfall in Q1 of 1999.<ref name="findarticles.com">{{cite news |url = http://findarticles.com/p/articles/mi_m0CGN/is_3676/ai_54809066/ |work = [[Computergram International]] |title = Another Top Exec Hits the Road at Compaq |year = 1999 |url-status = dead |archive-url = https://web.archive.org/web/20150903220005/http://findarticles.com/p/articles/mi_m0CGN/is_3676/ai_54809066/ |archive-date = 2015-09-03 }}</ref> In addition, Rose was part of the "old guard" close to former CEO Pfeiffer, and he and other Compaq executives had been criticized at the company's annual meeting for selling stock before reporting the sales slowdown.<ref name="TopExec">{{cite web |url = https://www.cnet.com/news/compaq-names-coo-top-exec/ |title = Compaq names COO, top exec |publisher =CNET|access-date = 11 June 2020 }}</ref> Rose was succeeded by SVP Enrico Pesatori, who had previously worked as a senior executive at [[Olivetti S.p.A.|Olivetti]], [[Zenith Data Systems]], [[Digital Equipment Corporation]], and [[Tandem Computers]].<ref name="WSJ Stepdown"/> Capellas was appointed COO after pressure mounted on Rosen to find a permanent CEO, however it was reported that potential candidates did not want to work under Rosen as chairman.<ref name=autogenerated1 /> Around the same time Pesatori was placed in charge of the newly created Enterprise Solutions and Services Group, making him Compaq's second most powerful executive in operational responsibility after Capellas.<ref>{{cite web|url=https://www.zdnet.com/article/enrico-pesatori-will-he-ever-be-no-1/|title = Enrico Pesatori: Will he ever be No.1?|website = [[ZDNet]]}}</ref><ref>{{cite web|url=https://www.theregister.co.uk/2000/05/08/compaqs_enrico_the_cloak_takes/|title=Compaq's Enrico the Cloak takes wing|website=[[The Register]]}}</ref>

Pfeiffer's permanent replacement was Michael Capellas, who had been serving as Compaq's SVP and [[Chief information officer|CIO]] for under a year. A couple months after Pfeiffer's ouster, Capellas was elevated to interim [[chief operating officer]] on June 2, 2000,<ref name="findarticles.com"/> and was soon appointed president and CEO. Capellas also assumed the title of chairman on September 28, 2000, when Rosen stepped down from the board of directors.<ref name="h41131.www4.hp.com"/> At his retirement, Rosen proclaimed "These are great achievements—to create 65,000 jobs, {{US$|long=no|40 billion}} in sales and {{US$|long=no|40 billion}} in market value, all starting with a sketch and a dream".<ref>{{cite news |url = http://usatoday30.usatoday.com/tech/techinvestor/2001-09-04-compaq-history.htm |title = Compaq: From place mat sketch to PC giant |publisher = Usatoday30.usatoday.com |date = 2001-09-04 |access-date = 2012-11-16 }}</ref>

====Struggles====
[[File:H3950.jpg|thumb|[[iPAQ|iPAQ H3950]]]]
Capellas was able to restore some of the luster lost in the latter part of the Pfeiffer era and he repaired the relationship with [[Microsoft]] which had deteriorated under his predecessor's tenure.<ref>{{cite web |url=https://www.cnet.com/news/compaq-reports-drop-in-revenue/ |title = Compaq reports drop in revenue |publisher = CNET |access-date = 2020-06-11 }}</ref>

However, Compaq still struggled against lower-cost competitors with direct sales channels such as [[Dell]] who took over the top spot of PC manufacturer from Compaq in 2001.<ref>{{cite news |url = https://www.nytimes.com/2001/04/24/business/technology-compaq-s-results-fall-short-of-estimates.html?src=pm |work = The New York Times |first = Chris |last = Gaither |title = TECHNOLOGY; Compaq's Results Fall Short of Estimates |date = April 24, 2001 |url-access=limited}}</ref> Compaq relied significantly on reseller channels, so their criticism caused Compaq to retreat from its proposed direct sales plan, although Capellas maintained that he would use the middlemen to provide value-added services.<ref name="autogenerated1999"/> Despite falling to No. 2 among PC manufacturers, Capellas proclaimed "We are No. 2 in the traditional PC market, but we're focused on industry leadership in the next generation of Internet access devices and wireless mobility. That's where the growth and the profitability will be." The company's longer-term strategy involved extending its services to servers and storage products, as well as handheld computers such as the [[IPAQ|iPAQ PocketPC]] which accounted for 11 percent of total unit volume.<ref>{{cite web |url =http://edition.cnn.com/2001/BUSINESS/04/23/earns.compaq/ |title =Compaq falls short, lowers guidance |date =2001-04-23 |access-date =2020-06-11 |archive-date =June 11, 2020 |archive-url =https://web.archive.org/web/20200611154720/http://edition.cnn.com/2001/BUSINESS/04/23/earns.compaq/ |url-status =dead }}</ref>

Compaq struggled as a result of the collapse of the [[dot-com bubble]], which hurt sales of their high-end systems in 2001 and 2002, and they managed only a small profit in a few quarters during these years. They also accumulated $1.7 billion in short-term debt around this time.<ref name="theinquirer1">{{cite web |url = http://www.theinquirer.net/inquirer/news/1019181/when-hp-bought-compaq-crock |archive-url = https://web.archive.org/web/20121203224508/http://www.theinquirer.net/inquirer/news/1019181/when-hp-bought-compaq-crock |url-status = unfit |archive-date = December 3, 2012 |title = When HP bought Compaq, did it buy a crock? |publisher = The Inquirer |date = 2003-08-10 |access-date = 2012-08-26 }}</ref> The stock price of Compaq, which was around $25 when Capellas became CEO, was trading at half that by 2002.<ref name="nytimes2001">{{cite news |url = https://www.nytimes.com/2001/09/04/business/hewlett-packard-in-deal-to-buy-compaq-for-25-billion-in-stock.html |work = The New York Times |title = Hewlett-Packard in Deal to Buy Compaq for $25 Billion in Stock |date = September 4, 2001 | last1 = Sorkin |first1 = Andrew Ross | last2 = Norris |first2 = Floyd |language = en-US |issn = 0362-4331| url-access=limited}}</ref>

====Acquisition by Hewlett-Packard====
On September 4, 2001, Compaq signed a merger agreement with [[Hewlett-Packard]] for {{US$|24.2 billion}},<ref name="nytimes2001"/> including {{US$|14.45 billion}} for [[Goodwill (accounting)|goodwill]], where each Compaq share would be exchanged for 0.6325 of a Hewlett-Packard share. There would be a termination fee of {{US$|675 million}} that either company would have to pay the other to break the merger.<ref name="awpagesociety1">{{cite web |url = http://www.awpagesociety.com/images/uploads/HP-Compaq-case.pdf |title = The Hewlett-Packard and Compaq Merger |access-date = 2012-11-16 |url-status = dead |archive-url = https://web.archive.org/web/20120913111505/http://www.awpagesociety.com/images/uploads/HP-Compaq-case.pdf |archive-date = 2012-09-13 }}</ref> Compaq shareholders would own 36% of the combined company while HP's would have 64%.<ref name="awpagesociety1"/> Hewlett-Packard had reported yearly revenues of {{US$|long=no|47 billion}}, while Compaq's was {{US$|long=no|40 billion}}, and the combined company would have been close to [[IBM]]'s {{US$|long=no|90 billion}} revenues. It was projected to have {{US$|long=no|2.5 billion}} in annual cost savings by mid-2004. The expected layoffs at Compaq and HP, 8500 and 9000 jobs respectively, would leave the combined company with a workforce of 145,000.<ref name="nytimes2001"/> The companies would dole out a combined {{US$|long=no|634.5 million}} in bonuses to prevent key employees from leaving if shareholders approve the proposed merger, with {{US$|long=no|370.1 million}} for HP employees and {{US$|long=no|264.4 million}} for Compaq employees.<ref>{{cite web|url=https://www.crn.com/news/channel-programs/18818870/on-the-money-trail.htm|title=On the Money Trail|date=17 January 2002}}</ref><ref>{{cite news|url=https://www.sfgate.com/business/article/Officers-named-for-post-merger-HP-Analysts-2868545.php|title=Officers named for post-merger HP / Analysts still skeptical about pending deal|newspaper=Sfgate |date=16 October 2001 |last1=Pimentel |first1=Benjamin }}</ref>

Both companies had to seek approval from their shareholders through separate special meetings.<ref>{{cite web|url=https://www.cnet.com/news/compaq-preps-for-life-after-hp-1/|title = Compaq preps for life after HP}}</ref> While Compaq shareholders unanimously approved the deal, there was a public proxy battle within HP as the deal was strongly opposed by numerous large HP shareholders, including the sons of the company founders, Walter Hewlett and David W. Packard, as well as the California Public Employees’ Retirement System ([[CalPERS]]) and the [[Ontario Teachers' Pension Plan]].<ref>{{cite web |author = Crn |url = http://www.crn.com/it-channel/18817715;jsessionid=D1MDU4QZ5SOHBQE1GHPCKHWATMY32JVN |archive-url = https://archive.today/20130120033658/http://www.crn.com/it-channel/18817715;jsessionid=D1MDU4QZ5SOHBQE1GHPCKHWATMY32JVN |url-status = dead |archive-date = 2013-01-20 |title = Walter Hewlett Files Proxy Against Compaq Merger |publisher = Crn.com |date = 2001-12-27 |access-date = 2012-08-26 }}</ref><ref>{{cite web |url = http://knowledge.wharton.upenn.edu/article.cfm?articleid=527 |title = Showdown in Silicon Valley: Will Fiorina or Hewlett Win the Battle for H-P Shareholders' Votes? – Knowledge@Wharton |publisher = Knowledge.wharton.upenn.edu |access-date = 2012-08-26 }}</ref> Walter Hewlett only reluctantly approved the merger, in his duty as a member of the board of directors, since the merger agreement "called for unanimous board approval in order to ensure the best possible shareholder reception".<ref name="awpagesociety1"/> While supporters of the merger argued that there would be economies of scale and that the sales of PCs would drive sales of printers and cameras, Walter Hewlett was convinced that PCs were a low-margin but risky business that would not contribute and would likely dilute the old HP's traditionally profitable Imaging and Printing division.<ref name="theinquirer1"/><ref>{{cite web |url = http://www.cata.ca/files/PDF/Resource_Centres/hightech/reports/studies/quebec-HPQ-merger.pdf |title = The HP-Compaq Merger |publisher = Cata.ca |access-date = 2012-11-16 |url-status = dead |archive-url = https://web.archive.org/web/20120917070518/http://www.cata.ca/files/PDF/Resource_Centres/hightech/reports/studies/quebec-HPQ-merger.pdf |archive-date = 2012-09-17 }}</ref> David W. Packard in his opposition to the deal "[cited] massive layoffs as an example of this departure from HP’s core values...[arguing] that although the founders never guaranteed job security, 'Bill and Dave never developed a premeditated business strategy that treated HP employees as expendable.'" Packard further stated that "[[Carly_Fiorina|[Carly] Fiorina]]’s high-handed management and her efforts to reinvent the company ran counter to the company’s core values as established by the founders". The founders' families who controlled a significant amount of HP shares were further irked because Fiorina had made no attempt to reach out to them and consult about the merger, instead they received the same standard roadshow presentation as other investors.<ref name="awpagesociety1"/>

Analysts on Wall Street were generally critical of the merger, as both companies had been struggling before the announcement, and the stock prices of both companies dropped in the months after the merger agreement was made public. Particularly rival Dell made gains from defecting HP and Compaq customers who were wary of the merger.<ref>{{cite news |author = <!--Start Byline--><!--End Byline--> |url = https://money.cnn.com/2001/10/23/technology/earns_compaq/ |title = Compaq logs 3Q loss, lowers 4Q target – Oct. 23, 2001 |publisher = Money.cnn.com |date = 2001-10-23 |access-date = 2012-11-16 }}</ref> Carly Fiorina, initially seen as HP's savior when she was hired as CEO back in 1999, had seen the company's stock price drop to less than half since she assumed the position, and her job was said to be on shaky ground before the merger announcement.<ref name="awpagesociety1"/> HP's offer was regarded by analysts to be overvaluing Compaq, due to Compaq's shaky financial performance in the past recent years (there were rumours that it could run out of money in 12 months and be forced to cease business operations had it stayed independent), as well as Compaq's own more conservative valuation of its assets.<ref name="theinquirer1"/><ref name="nytimes2001"/><ref>{{cite web |url = https://www.scribd.com/doc/37037239/Hp-Compaq-A-Failed-Merger |title = Hp Compaq-A Failed Merger |publisher = Scribd.com |access-date = 2012-11-16 }}</ref> Detractors of the deal noted that buying Compaq was a "distraction" that would not directly help HP take on IBM's breadth or Dell Computer's direct sales model. Plus there were significant cultural differences between HP and Compaq; which made decisions by consensus and rapid autocratic styles, respectively. One of Compaq's few bright spots was its services business, which was outperforming HP's own services division.<ref name="CNET">{{cite web |url = https://www.cnet.com/news/hp-compaq-merger-worth-the-wait/|title = HP-Compaq merger: Worth the wait?|publisher = CNET |date =2002-09-03|access-date = 2020-06-11 }}</ref>

The merger was approved by HP shareholders only after the narrowest of margins,{{Clarify|date=May 2012}} and allegations of vote buying (primarily involving an alleged last-second back-room deal with [[Deutsche Bank]]) haunted the new company. It was subsequently disclosed that HP had retained Deutsche Bank's investment banking division in January 2002 to assist in the merger. HP had agreed to pay Deutsche Bank {{US$|long=no|1 million}} guaranteed, and another {{US$|long=no|1 million}} contingent upon approval of the merger. On August 19, 2003, the [[United States Securities and Exchange Commission|U.S. SEC]] charged Deutsche Bank with failing to disclose a material conflict of interest in its voting of client proxies for the merger and imposed a civil penalty of {{US$|long=no|750000}}. Deutsche Bank consented without admitting or denying the findings.<ref>[https://www.sec.gov/news/press/2003-100.htm SEC Press Release:] "SEC Brings Settled Enforcement Action Against Deutsche Bank Investment Advisory Unit in Connection with Its Voting of Client Proxies for Merger Transaction; Imposes {{US$|long=no|750000}} Penalty"</ref>

On May 3, 2002, Hewlett-Packard announced that it had closed the acquisition of Compaq.<ref>{{cite web|url=http://www.hp.com/hpinfo/newsroom/press/03may02a.htm|title=HP Closes Compaq Merger|publisher=[[Hewlett-Packard]]|date=2002-05-03|access-date=2023-04-20|archive-date=2002-06-04|archive-url=https://web.archive.org/web/20020604190230/http://www.hp.com/hpinfo/newsroom/press/03may02a.htm|url-status=bot: unknown}}</ref> The newly merged HP-Compaq company would officially launch four days later on May 7.<ref>{{cite web|url=http://www.hp.com/hpinfo/newsroom/press/07may02a.htm|title=The New HP is Ready|publisher=[[Hewlett-Packard]]|date=2002-05-07|access-date=2023-04-20|archive-date=2002-06-01|archive-url=https://web.archive.org/web/20020601145231/http://www.hp.com/hpinfo/newsroom/press/07may02a.htm|url-status=bot: unknown}}</ref> Compaq's pre-merger [[ticker symbol]] was CPQ. This was combined with Hewlett-Packard's ticker symbol (HWP) to create the current ticker symbol (HPQ), which was announced on May 6.<ref>{{cite web|url=http://www.hp.com/hpinfo/newsroom/press/06may02c.htm|title=HP Rings in New Company and New Stock Symbol at NYSE Ceremony|publisher=[[Hewlett-Packard]]|date=2002-05-06|access-date=2023-04-20|archive-date=2002-06-04|archive-url=https://web.archive.org/web/20020604190448/http://www.hp.com/hpinfo/newsroom/press/06may02c.htm|url-status=bot: unknown}}</ref>

===2002–2013===
{{plain image with caption|Compaq logo new.svg|Logo used from 2007 to 2013; used since 2013 as leased trademarks in South America and India}}
Capellas, Compaq's last chairman and CEO, became president of the post-merger Hewlett-Packard, under chairman and CEO [[Carly Fiorina]], to ease the integration of the two companies. However, Capellas was reported not to be happy with his role, being said not to be utilised and being unlikely to become CEO as the board supported Fiorina. Capellas stepped down as HP president on November 12, 2002, after just six months on the job, to become CEO of [[MCI Communications|MCI Worldcom]] where he would lead its acquisition by [[Verizon]]. Capellas' former role of president was not filled as the executives who reported to him then reported directly to the CEO.<ref>{{cite web |url = http://www.silicon.com/technology/networks/2002/11/12/capellas-leaves-hp-11036342/ |title = TechRepublic – A Resource for IT Professionals |publisher = Silicon.com |access-date = 2012-08-26 |url-status = dead |archive-url = https://web.archive.org/web/20120403041405/http://www.silicon.com/technology/networks/2002/11/12/capellas-leaves-hp-11036342/ |archive-date = 2012-04-03 }}</ref><ref>{{cite web |url = http://www.itjungle.com/mid/mid111302-story01.html |title = Guild Companies |publisher = Itjungle.com |date = 2002-11-13 |access-date = 2012-08-26 |url-status = dead |archive-url = https://web.archive.org/web/20120325164459/https://www.itjungle.com/mid/mid111302-story01.html |archive-date = 2012-03-25 }}</ref>

Fiorina helmed the post-merger HP for nearly three years after Capellas left. HP laid off thousands of former Compaq, DEC, HP, and Tandem employees,<ref>{{cite web |last = Wong |first = Nicole C. |url = http://www.signonsandiego.com/uniontrib/20061226/news_1b26hp.html |title = HP hires workers as it lets others go &#124; The San Diego Union-Tribune |publisher = Signonsandiego.com |access-date = 2012-11-16 |url-status = dead |archive-url = https://web.archive.org/web/20110407145556/http://www.signonsandiego.com/uniontrib/20061226/news_1b26hp.html |archive-date = 2011-04-07 }}</ref><ref>{{cite news |url = http://www.denverpost.com/technology/ci_4893866 |title = HP turns to "churn" for survival |newspaper = The Denver Post |access-date = 2012-11-16 }}</ref> its stock price generally declined and profits did not perk up. Several senior executives from the Compaq side including Jeff Clarke and Peter Blackmore would resign or be ousted from the post-merger HP.<ref>{{cite web|url=https://www.networkworld.com/article/2324986/hp-fires-blackmore--other-sales-executives.html|title = HP fires Blackmore, other sales executives|date = 12 August 2004}}</ref> Though the combination of both companies' PC manufacturing capacity initially made the post-merger HP number one, it soon lost the lead and further market share to [[Dell]] which squeezed HP on low end PCs.<ref>{{cite news|url=https://www.sfgate.com/business/article/PROFILE-Duane-Zitzner-From-farmer-to-valley-2751782.php|title = PROFILE / Duane Zitzner / From farmer to valley VP / HP exec goes from milking cows to trying to revive computer sales| newspaper=Sfgate |date = 22 November 2002 | last1=Pimentel | first1=Benjamin }}</ref><ref name="CNET" /><ref>{{cite web |url =https://www.cnet.com/news/hp-works-to-reverse-its-pc-slide/|title = HP works to reverse its PC slide|publisher = CNET|date =2002-08-28 |access-date = 2020-06-11}}</ref> HP was also unable to compete effectively with IBM in the high-end server market. In addition, the merging of the stagnant Compaq computer assembly business with HP's lucrative printing and imaging division was criticized for obstructing the profitability of the printing/imaging segment.<ref name="autogenerated2b">{{cite news |url = http://tech.fortune.cnn.com/2012/03/29/hps-printer-problem/ |title = HP's printer problem – Fortune Tech |publisher = Tech.fortune.cnn.com |date = 2012-03-29 |access-date = 2013-06-10 |archive-url = https://web.archive.org/web/20130721185202/http://tech.fortune.cnn.com/2012/03/29/hps-printer-problem/ |archive-date = 2013-07-21 |url-status = dead }}</ref> Overall, it has been suggested that the purchase of Compaq was not a good move for HP, due to the narrow profit margins in the commoditized PC business, especially in light of IBM's 2004 announcement to sell its PC division to [[Lenovo]]. ''The Inquirer'' noted that the continued low return on investment and small margins of HP's personal computer manufacturing business, now named the Personal Systems Group, "continues to be what it was in the individual companies, not much more than a job creation scheme for its employees".<ref name="theinquirer1" /> One of the few positives was Compaq's sales approach and enterprise focus that influenced the newly combined company's strategy and philosophy.<ref>{{cite web|url=https://www.crn.com/news/mobility/231601009/the-hp-compaq-merger-partners-reflect-10-years-later.htm|title = The HP-Compaq Merger: Partners Reflect 10 Years Later|date = 8 September 2011}}</ref>

In February 2005, the board of directors ousted Fiorina, with CFO [[Robert Wayman]] being named interim CEO.<ref name="edition.cnn.com">{{cite news |url = http://edition.cnn.com/2005/BUSINESS/02/09/hp.fiorina.ousted/ |work = CNN |title = HP boss Fiorina ousted by board |date = February 9, 2005 }}</ref> Former Compaq CEO Capellas was mentioned by some as a potential successor, but several months afterwards, [[Mark Hurd]] was hired as president and CEO of HP. Hurd separated the PC division from the imaging and printing division and renamed it the Personal Systems Group, placing it under the leadership of EVP Todd R. Bradley. Hewlett Packard's PC business has since been reinvigorated by Hurd's restructuring and now generates more revenue than the traditionally more profitable printers. By late 2006, HP had retaken the #1 sales position of PCs from Dell, which struggled with missed estimates and poor quality, and held that rank until supplanted in the mid-2010s by [[Lenovo]].

Most Compaq products have been re-branded with the HP nameplate, such as the company's market leading ProLiant server line (now owned by [[Hewlett Packard Enterprise]], which spun off from HP in 2015), while the Compaq brand was repurposed for some of HP's consumer-oriented and budget products, notably Compaq Presario PCs. HP's business [[HP Vectra|Vectra]] desktop and [[HP OmniBook|OmniBook]] laptop computer line were discontinued in favour of Compaq's Evo line, which was initially rebranded HP Compaq but now use brands such as [[HP EliteBook|EliteBook]] and [[HP ProBook|ProBook]], among others, making it one of the last families of computers made by Compaq prior to the 2002 merger. HP has also since revived the OmniBook name in 2024 as the branding for HP's consumer laptop line.<ref>{{cite press release |url = https://www.heise.de/en/news/Tschuess-Pavilion-HP-besinnt-sich-zurueck-zum-OmniBook-9725337.html |title =Goodbye, Pavilion: HP returns to the OmniBook  |access-date = 2025-10-11 |publisher = Heise.de }}</ref> HP's Jornada PDAs were replaced by Compaq iPAQ PDAs, which were renamed HP iPAQ. Following the merger, all Compaq computers were shipped with HP software.

In May 2007, HP announced in a press release a new logo for their Compaq Division to be placed on the new model Compaq Presarios.<ref>{{cite press release |url = http://www.hp.com/hpinfo/newsroom/feature_stories/2007/07mobility.html |title = Connect at the speed of business: HP Feature story (May 2007) |access-date = 2008-01-31 |publisher = Hewlett-Packard }}</ref>

[[File:HP Compaq 6730b.jpg|thumb|An HP Compaq laptop]]

In 2009, HP sold part of Compaq's former headquarters to the [[Lone Star College System]].<ref name="lonestar1">{{cite press release |url = http://old.lonestar.edu/156806/ |title = LSCS purchases center core of HP north campus |access-date = 2009-07-21 |publisher = Lone Star College System }}{{dead link|date=May 2017 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

On August 18, 2011, then-CEO of HP [[Léo Apotheker]] announced plans for a partial or full spinoff of the Personal Systems Group. The PC unit had the lowest profit margin although it accounted for nearly a third of HP's overall revenues in 2010. HP was still selling more PCs than any other vendor, shipping 14.9 million PCs in the second quarter of 2011 (17.5% of the market according to [[Gartner]]), while Dell and Lenovo were tied for second place, each with more than a 12% share of the market and shipments of over 10 million units.<ref>{{cite news |url = https://money.cnn.com/2011/08/18/technology/hp_pc_spinoff/index.htm |work = CNN |title = HP kills TouchPad, looks to exit PC business |date = August 18, 2011 }}</ref><ref>{{cite magazine |url = https://www.macworld.com/article/161815/2011/08/hp_to_spin_off_pc_business_shutter_webos_device_division.html |title = HP to spin off PC business, shutter webOS device division |magazine = [[Macworld]] | first1=Agam |last1 = Shah | first2=Joab |last2=Jackson | date = 18 August 2011 |access-date = 2012-08-26 }}</ref> However, the announcement of the PC spinoff (concurrent with the discontinuation of WebOS, and the purchase of Autonomy Corp. for $10 billion) was poorly received by the market, and after Apotheker's ouster, plans for a divestiture were cancelled.<ref>{{cite news |last = Worthen |first = Ben |url = https://www.wsj.com/articles/SB10001424052970203499704576625434293946542 |title = H-P Rethinks PC Spinoff - WSJ.com |publisher = Online.wsj.com |date = 2011-10-12 |access-date = 2012-11-16 | url-access=subscription }}</ref><ref>{{cite web |url = http://www.ibtimes.com/hp-buy-autonomy-spin-pc-unit-stock-dropping-301481 |title = HP to Buy Autonomy; Spin Off PC Unit, Stock Dropping |date = 18 August 2011 |publisher = Ibtimes.com |access-date = 2012-11-16 }}</ref> In March 2012, the printing and imaging division was merged into the PC unit.<ref name="autogenerated2b"/> In October 2012, according to Gartner, Lenovo took the lead as the number one PC manufacturer from HP, while [[International Data Corporation|IDC]] ranked Lenovo just right behind HP.<ref>{{cite news |last = Gupta |first = Poornima |url = https://www.reuters.com/article/us-lenovo-hp-gartner-idUSBRE8991RF20121011 |title = Lenovo knocks HP from top of global PC market: Gartner |work = Reuters |date = 2012-10-11 |access-date = 2012-11-16 |archive-date = 2012-11-13 |archive-url = https://web.archive.org/web/20121113185153/http://www.reuters.com/article/2012/10/11/us-lenovo-hp-gartner-idUSBRE8991RF20121011 |url-status = live }}</ref> In Q2 2013, ''[[Forbes]]'' reported that Lenovo ranked ahead of HP as the world's number-one PC supplier.<ref>[https://www.forbes.com/sites/simonmontlake/2013/07/11/lenovo-shares-jump-as-pc-shipments-overtake-hp/ Lenovo Shares Jump As PC Shipments Overtake HP]. 7/11/2013</ref>

In 2013, HP discontinued the Compaq brand in North America entirely.

===2013–present===

After the Compaq brand was discontinued in North America, Globalk (a Brazilian-based retailer and licensing management firm) started a partnership with HP in 2013 to re-introduce the brand with a new line of desktop and laptop computers.<ref name=compaqglobalk>{{cite web|title=Sobre a Compaq|url=https://www.compaq.com.br/institucional/sobre-compaq|access-date=2021-11-13|website=www.compaq.com.br|archive-date=November 13, 2021|archive-url=https://web.archive.org/web/20211113185350/https://www.compaq.com.br/institucional/sobre-compaq|url-status=dead}}</ref> The brand has since been relicensed to [[Positivo Tecnologia]] (a Brazilian-based computer technology company) on April 13, 2021.<ref name=compaqpositivo>{{cite web|title=Sobre|url=https://www.compaq.com.br/sobre/|access-date=2024-11-18|website=www.compaq.com.br|archive-date=19 January 2025|archive-url=https://web.archive.org/web/20250119063930/https://www.compaq.com.br/sobre/|url-status=dead}}</ref><ref>{{Cite web|url=https://www.compaq.com.br/suporte/|title=Suporte - Compaq|access-date=2025-05-16|website=www.compaq.com.br|archive-date=19 May 2025|archive-url=https://web.archive.org/web/20250519021227/https://www.compaq.com.br/suporte/|url-status=dead}}</ref>

In 2015, Grupo Newsan (an Argentinian-based company) acquired the brand's license, along with a $3 million investment, and developed two new lines of Presario notebooks for the local market over the course of the year.<ref>{{cite web|url=http://www.newsan.com.ar/en/portfolio/grupo-newsan-y-hp-confirman-acuerdo-para-producir-en-el-pais/|title=Grupo Newsan y HP confirman acuerdo para producir en el paísGrupo Newsan y HP confirman acuerdo para producir en el país|website=Newsan|language=en-US|access-date=2019-05-30|archive-url=https://web.archive.org/web/20190530123130/http://www.newsan.com.ar/en/portfolio/grupo-newsan-y-hp-confirman-acuerdo-para-producir-en-el-pais/|archive-date=2019-05-30|url-status=dead}}</ref><ref>{{cite web|url=http://www.newsan.com.ar/es/portfolio/compaq-presenta-su-nueva-linea-de-notebooks-con-procesadores-intel-core-de-6ta-generacion/|title=Compaq presenta su nueva línea de Notebooks con procesadores Intel® Core de 6ta Generación|website=Newsan|language=es-AR|access-date=2019-05-30|archive-url=https://web.archive.org/web/20190530123128/http://www.newsan.com.ar/es/portfolio/compaq-presenta-su-nueva-linea-de-notebooks-con-procesadores-intel-core-de-6ta-generacion/|archive-date=2019-05-30|url-status=dead}}</ref> In March 2019, the website for Compaq's Argentine division went offline; the last archived copy of the site was made in October 2018, featuring the same models that were first introduced in 2016.<ref>{{cite web|url=http://compaq.com.ar|title=Compaq|last=Cuoma|archive-url=https://web.archive.org/web/20181023050347/http://www.compaq.com.ar/donde-comprar|archive-date=2018-10-23|url-status=dead|access-date=29 June 2016}}</ref>

In 2018, Ossify Industries (an Indian-based company) entered a licensing agreement with HP to use the Compaq brand name for the distribution and manufacturing of [[Smart TV]] sets.<ref name=compawossify>{{cite web|title=Compaq|url=http://compaq.tv/about|access-date=2021-11-13|website=compaq.tv|archive-date=2021-11-13|archive-url=https://web.archive.org/web/20211113185344/http://compaq.tv/about|url-status=dead}}</ref><ref>{{Cite web|url=https://compaq.com.in/about/|title=About|access-date=2025-05-16|website=compaq.com.in}}</ref>

==Headquarters==
The Compaq World Headquarters campus consisted of {{convert|80|acre|m2}} of land which contained 15 office buildings, 7 manufacturing buildings, a product conference centre, an employee cafeteria, mechanical laboratories, warehouses, and chemical handling facilities.<ref>"[http://www.matrixdesigncompanies.com/MatrixSpencer/Compaq-Houston.html Compaq Computer Corporation—World Headquarters]." Matrix Spencer - Matrix Design Companies. Retrieved on August 9, 2009.</ref><ref>"[http://virtualglobetrotting.com/map/hp-compaq-houston-campus/view/?service=0 Compaq Computer Corporation – World Headquarters]. "World Globetrotting Satellite imagery" and knowledge from a former employee. CCA1-CCA15 were office buildings, CCM1-CCM7 where the manufacturing buildings</ref>

Instead of headquartering the company in a downtown Houston skyscraper, then-CEO and co-founder Rod Canion chose a “California-style” or West Coast-style campus surrounded by forests,<ref>{{cite web |title=The Legacy of Compaq |url=https://www.houstonnwchamber.org/the-legacy-of-compaq/ |publisher=Houston Northwest Chamber of Commerce |access-date=19 September 2025}}</ref> where every employee had similar offices and no-one (not even the CEO) had a reserved parking spot.<ref name="scribd1"/><ref name="entrepreneur1"/> As it grew, Compaq became so important to Houston that it negotiated the expansion of [[Texas State Highway 249|SH&nbsp;249]] in the late 1980s, and many other technology companies appeared in what became known as the "249 Corridor".<ref name="ryan20130125">{{cite news |url = http://www.bizjournals.com/houston/print-edition/2013/01/25/what-houston-means-to-hp-tech-giant.html?page=all |title = What Houston means to HP: Tech giant opens former Compaq campus doors for rare tour |work = Houston Business Journal |date = 2013-01-25 |access-date = 24 October 2013 |author = Ryan, Molly }}</ref>

After Canion's ouster, senior vice-president of human resources, Hans W. Gutsch, oversaw the company's facilities and security. Gutsch had an extensive security system and guard station installed on the eight floor of CCA-1, where the company's senior vice presidents had their offices. Eckhard Pfeiffer, who succeeded Canion as president and CEO, introduced a whole series of executive perks to a company that had always had an egalitarian culture; for instance, he oversaw the construction of an executive parking garage, previously parking places had never been reserved.<ref name="dwightsilverman.com"/><ref>{{cite news |url = https://money.cnn.com/magazines/fortune/fortune_archive/1999/05/24/260278/ |work = CNN |first = David |last = Kirkpatrick |title = Eckhard's Gone But the PC Rocks On Compaq's CEO blames his ouster on a savagely competitive industry. But other PC makers are fine |date = 1999-05-24 |url-status = dead |archive-url = https://web.archive.org/web/20131203034053/https://money.cnn.com/magazines/fortune/fortune_archive/1999/05/24/260278/ |archive-date = 2013-12-03 }}</ref>

On August 31, 1998, the Compaq Commons was opened in the headquarters campus, which featured a conference centre, an employee convenience store, a wellness centre, and an employee cafeteria.<ref>{{cite web |url = http://www.thefreelibrary.com/The+Compaq+Commons+Opens+at+Company's+Worldwide+Headquarters+in...-a050273570 |title = The Compaq Commons Opens at Company's Worldwide Headquarters in Houston; New Facility Includes Advanced Fitness, Wellness Centers and Aggressive End Hunger Project. - Free Online Library |publisher = Thefreelibrary.com |date = 1998-08-31 |access-date = 2012-11-16 |archive-date = 2015-04-03 |archive-url = https://web.archive.org/web/20150403092820/http://www.thefreelibrary.com/The+Compaq+Commons+Opens+at+Company%27s+Worldwide+Headquarters+in...-a050273570 |url-status = dead }}</ref>

Compaq's former headquarters then became HP's United States campus after Compaq was acquired by HP in 2002. From May 2002 to April 2022, the site was one of HP's largest campuses, with 7,000 employees in all six of HP's divisions. In 2009, HP sold part of Compaq's former headquarters to the [[Lone Star College System]],<ref name="lonestar1"/> which became [[Lone Star College–University Park]] in 2010. Hewlett Packard Buildings #7 & #8, which consisted of two eight-story reinforced concrete buildings totaling 450,000 square feet plus a 1,200-car parking garage and a central chiller plant, were all deemed by the college to be too robust and costly to maintain,<ref>"[http://www.bizjournals.com/houston/news/2011/08/29/lone-star-campus-to-raze-former-hp.html Lone Star campus to raze former HP buildings]." ''[[Houston Business Journal]]''. Monday August 29, 2011. Retrieved on August 29, 2011.</ref> and so were subsequently demolished by implosion on September 18, 2011 to make way for a new green space where the buildings once stood.<ref>{{cite web |url = https://www.youtube.com/watch?v=neAOrRd0Uds |title = Former HP Building Implosion |date = September 19, 2011 |publisher = YouTube |access-date = 2012-11-16 }}</ref><ref>{{cite web |url = http://swamplot.com/the-coming-local-hp-implosion/2011-08-30/ |title = The Coming Local HP Implosion » Swamplot: Houston's Real Estate Landscape |publisher = Swamplot |date = 2011-08-30 |access-date = 2012-11-16 }}</ref><ref>{{cite web |url = https://www.youtube.com/watch?v=Lcb37yyHgT8 |title = Hewlett Packard Buildings #7 & #8 - Controlled Demolition, Inc.| date=September 29, 2011 |publisher = YouTube |access-date = 2012-11-16 }}</ref><ref>{{cite web |url = http://www.duskbeforethedawn.net/2011/09/compaq-building-implosion-hp-and-apple/ |title = COMPAQ: Building implosion, HP and Apple |publisher = Dusk Before the Dawn |date = 2011-09-18 |access-date = 2012-11-16 }}</ref><ref>"[https://www.chron.com/neighborhood/champions-klein/news/article/Lone-Star-College-plans-demolition-to-create-9430523.php Lone Star College plans demolition to create ‘green’ space]." ''[[Chron.com]]''. Monday August 29, 2011. Retrieved on October 16, 2025.</ref>

The campus was later inherited by [[Hewlett Packard Enterprise]], one of the successor companies when HP split into two in November 2015.{{r|ryan20130125}} In 2018, Hewlett Packard Enterprise announced the sale of the entire former Compaq headquarters, which was subsequently sold to Mexican beverage distributor Mexcor in April 2022.<ref>{{cite web|url=https://www.commercialsearch.com/news/hewlett-packard-sells-2-msf-houston-campus/|title=Hewlett Packard Enterprise Sells Houston Campus|publisher=Commercial Property Executive|date=April 1, 2022|access-date=January 17, 2024}}</ref><ref>{{Cite web|url=https://realtynewsreport.com/huge-hpe-campus-acquired-by-mexcor/|title=Huge HPE Campus Acquired by Mexcor|website=Realty News Report|date=March 31, 2022|access-date=January 8, 2025}}</ref> In March 2024, a major portion of Compaq's former headquarters and HP/HPE campus was then rebranded as Viva Center by the property owner, Morales Capital Group, which plans to turn the campus into a mixed-use tech hub featuring public gathering areas, events and apartments.<ref>{{Cite web|url=https://communityimpact.com/houston/cy-fair/development/2024/03/08/former-hpe-campus-in-northwest-houston-rebranded-as-viva-center/|title=Former HPE campus in northwest Houston rebranded as Viva Center|first=Danica|last=Lloyd|date=March 8, 2024|website=Community Impact|access-date=January 8, 2025}}</ref><ref>{{cite web|url=https://www.bizjournals.com/houston/news/2024/03/05/hpe-compaq-campus-now-viva-center-synergenx-lease.html|title=Former HPE, Compaq campus in northwest Houston is now Viva Center, signs tenant|first=Florian|last=Martin|website=Houston Business Journal|date=March 5, 2024|access-date=January 8, 2025}}</ref>

==Competitors==
Compaq originally competed directly against IBM, manufacturing [[IBM PC compatible|computer systems]] equivalent with the [[IBM Personal Computer|IBM PC]], as well as [[Apple Inc.|Apple Computer]]. In the 1990s, as IBM's own PC division declined, Compaq faced other IBM PC Compatible manufacturers like [[Dell]], [[Packard Bell]], [[AST Research]], and [[Gateway, Inc.|Gateway 2000]].

By the mid-1990s, Compaq's price war had enabled it to overtake IBM and Apple, while other IBM PC Compatible manufacturers such as Packard Bell and AST were driven out from the market. Dell overtook Compaq and became the number-one supplier of PCs in 1999,<ref name="dellovertake99" /> which Compaq briefly regained in 2000 before being overtaken again by Dell in 2001.<ref name="dellovertake01" />

At the time of their 2002 merger, Compaq and HP were the [[Market share of personal computer vendors|second and third]] largest PC manufacturers, so their combination made them number one. However, the combined HP-Compaq struggled and fell to second place behind Dell from 2003 to 2006. Due to Dell's struggles in late 2006, HP has led all PC vendors from 2007 to 2012.

During its existence as a division of HP, Compaq primarily competed against other budget-oriented personal computer series from manufacturers including [[Acer Inc.|Acer]], [[Lenovo]], and [[Toshiba]]. Most of Compaq's competitors except Dell were later acquired by bigger rivals like Acer (Gateway 2000 and Packard Bell) and Lenovo absorbing IBM's PC division. Since 2013, Lenovo has been the world leader for PCs.<ref>{{Cite web |title=Lenovo Statement on PC Industry Rankings |url=https://news.lenovo.com/pressroom/press-releases/lenovo-statement-on-pc-industry-rankings/ |access-date=2025-05-21 |website=Lenovo StoryHub |language=en-US}}</ref>

==Sponsorship==
Compaq sponsored [[Queens Park Rangers F.C.]] for the 1994–95 and 1995–96 seasons.

{{multiple image
| align  = center
| width  = 220
| image1 = Williams FW22 front-right Donington Grand Prix Collection.jpg
| image2 = Williams-BMW FW23 2001 Formula1 Racer Ralf Schumacher BMW Williams Racing LSideFront SATM 05June2013 (14598689524).jpg
| footer = Compaq-sponsored [[Williams FW22]] (2000) and [[Williams FW23|FW23]] (2001) Formula One cars
}}

Prior to its merger with HP in 2002, Compaq sponsored the [[Williams Racing]] [[Formula One]] team (then known as WilliamsF1 at the time) beginning in January 2000,<ref>{{cite press release|url=http://www1.compaq.com/pressrelease/0%2C1494%2Cwp~14583_2%21ob~24274_1_1%2C00.html|title=Compaq Enters the Formula One Championship with the BMW WilliamsF1 Team|website=Compaq.com|date=2000-01-24|url-status=dead|archive-url=https://web.archive.org/web/20000815224820/http://www1.compaq.com/pressrelease/0,1494,wp~14583_2!ob~24274_1_1,00.html|archive-date=2000-08-15|access-date=2024-12-07}}</ref> which also coincided with the team's first use of [[BMW engines]] for their cars as part of a then-partnership with [[BMW]] at the time. The company sponsored the [[2000 British Grand Prix|2000]] and [[2001 British Grand Prix]], with all of their cars and team equipment featuring prominent Compaq branding throughout among other brands. After Compaq was acquired by HP in 2002, HP inherited and continued the sponsorship deal for a few more years, replacing the Compaq branding on all cars and team equipment with the HP branding following the 2002 merger. HP then sponsored the [[2002 British Grand Prix]] up until the [[2005 British Grand Prix]], the latter of which also marked the last time the team used BMW engines for their cars before switching over to [[Cosworth]] engines [[2006 British Grand Prix|the following season]].

==See also==
{{Portal|Texas|Companies}}
* [[Compaq Portable series]]
* [[List of computer system manufacturers]]
* [[Market share of personal computer vendors]]

==Notes==
{{Notelist}}

==References==
{{Reflist|colwidth=30em}}

==External links==
* {{web archive|url=http://web.archive.org/web/20010711121953/http://www.compaq.com/|title=Official website}}
* {{web archive|url=https://web.archive.org/web/20250812085454/https://www.compaq.com/|title=Official website (brand)}}
* [https://compaqlatam.com/ Official website (Latin America)]
* [https://compaqmobile.com/ Official website (Latin America; mobile)]
* {{web archive|url=https://web.archive.org/web/20250531063628/https://www.compaq.com.br/|title=Official website (Brazil)}}
* [https://compaq.com.in/ Official website (India)]

{{Compaq}}
{{Hewlett-Packard}}
{{Digital Equipment Corporation}}
{{Queens Park Rangers F.C. shirt sponsors}}
{{Authority control}}

[[Category:Compaq| ]]
[[Category:1982 establishments in Texas]]
[[Category:2002 disestablishments in Texas]]
[[Category:American companies established in 1982]]
[[Category:American companies disestablished in 2002]]
[[Category:Computer companies established in 1982]]
[[Category:Computer companies disestablished in 2002]]
[[Category:Defunct companies based in Texas]]
[[Category:Defunct computer companies of the United States]]
[[Category:Defunct computer hardware companies]]
[[Category:Defunct computer systems companies]]
[[Category:Display technology companies]]
[[Category:Hewlett-Packard acquisitions]]
[[Category:Manufacturing companies based in Houston]]
[[Category:2002 mergers and acquisitions]]
[[Category:Texas Instruments spinoffs]]
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[[Category:Defunct computer companies based in Texas]]