The Fleeting 20 Years of Bygone Days.

Time rewinds to 1982, when computers had evolved from room-filling behemoths to desk-sized entities, yet they were far from being considered portable. Thus, three entrepreneurs decided to change this state of affairs. Rod Canion, Jim Harris, and Bill Murto founded a small company named "Compaq" with a starting capital of $3,000. The name "Compaq" is a portmanteau of the words "compatibility" and "quality," signifying the company's vision to challenge the giant known as International Business Machines Corporation (IBM) and to manufacture a PC (Personal Computer) that was as powerful as IBM's top desktop models but smaller and more portable. The company's first product to hit the market was the Compaq Portable in 1983.

A Portable IBM-Compatible PC

The Compaq Portable was roughly the size of today's typical PC tower case, but this all-in-one unit encompassed all the necessary computing functions, including a 9-inch monochrome display and a pull-out keyboard. This device was designed to fit in the overhead compartment of an airplane, which was Compaq's intention. The Compaq Portable was equipped with an Intel 4.77MHz 8088 processor, 128k of RAM, and two storage configuration options—either two double-sided double-density (360KB) 5.25-inch floppy drives or one floppy drive and a 10MB hard disk drive. It operated on MS-DOS with a proprietary BIOS, known as Compaq DOS 1.13.The starting price of the Compaq portable computer was as high as approximately $3,600 (equivalent to about $11,000 in 2024). This price was exorbitantly expensive for the average user, but it was a cost-effective deal for business professionals who often worked on the go. Compaq sold over 53,000 portable computers in the first year, generating a record-breaking revenue of $110 million. The sales of portable personal computers reached record sales figures of $329 million and $504 million in 1983 and 1984, respectively.

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The momentum of these years made Compaq a leader in the PC industry. In 1986, Compaq set another record by becoming the youngest company on the Fortune 500 list, just after the release of the Compaq Portable II. By 1987, the computer startup's revenue had exceeded $1 billion. Meanwhile, one of the founders and Senior Vice President of Sales, Bill Murto, left his position. But despite his departure, the company continued to thrive.

Compaq's success was largely attributed to the leadership of Rod Canion. Canion cultivated a relaxed company culture that attracted top talent in the industry. By 1991, Compaq's sales had exceeded $3 billion, and its market share ranked fifth.

However, 1991 was a tumultuous year for the company. A vision difference between CEO Canion and the board of directors led to the resignation of Canion and his co-founder and Senior Vice President of Engineering, Jim Harris.This conflict was partly due to competitors such as Dell, Hongzhi Computer, and Gateway entering the market, offering cheaper alternatives to Compaq computers. The company's growth rate dropped to 4%, while the industry average was 7%.

The board of directors wanted to change the status quo, but Kenion insisted on continuing to do what made the company famous—selling high-end commercial machines to corporate dealers at higher profit margins. After Compaq's first quarterly loss of $71 million and a stock drop of over 66%, Kenion was dismissed. Harris and four other long-term executives also left the company five weeks later.

Compaq Presario: Shifting to the Consumer Market

Chief Operating Officer Eckhard Pfeiffer became the new CEO and led the company in a new direction. Up until this point, Compaq had been focused on marketing and producing systems for the enterprise market, such as Compaq DeskPro and SystemPro.

Pfeiffer's vision was to introduce affordable personal computers to the general consumer. The first of these was the Compaq Presario. It was one of the earliest personal computers aimed at the consumer market with a price tag of under $1,000, and it was a huge success.

To achieve these new low prices, Compaq became one of the first major personal computer companies to start using AMD and Cyrix chips, a practice that eventually became the industry standard.

This new strategy sparked a price war, causing some other competitors, including Packard Bell and Hongzhi Computer, to exit the market. It also allowed Compaq to rise from third place behind Apple in 1993 to become the second-largest personal computer manufacturer. IBM still held the top spot, but not for long.

By 1994, Compaq had surpassed the commercial machine hegemon. A large part of this success was attributed to reducing the cost of entry. However, Compaq's reign was destined to be short-lived, followed by a series of poor decisions and acquisitions.Poor Acquisition Record

The company began manufacturing printers in 1989, which received positive reviews, but Pfeiffer believed that Compaq did not have sufficient resources to compete with the printer giant Hewlett-Packard, which held a 60% market share at the time. Compaq sold its printer division to Xerox in 1994 for a mere $50 million.

Subsequently, Compaq attempted to enter the $4 billion network business by partnering with Cisco in 1995. Pfeiffer invested a significant amount of effort and resources into establishing a network engineering department.

Starting from 1997, Compaq seemed to be caught in an acquisition frenzy. First, it acquired Tandem Computers for $3 billion. This was followed by the acquisition of Microcom later in the same year, and then NetWorth in 1998 to strengthen its networking division.

Before the end of 1998, the company acquired the legendary Digital Equipment Corporation (DEC) for a record-breaking $9.6 billion. The acquisition of DEC was the largest merger in the history of the computer industry, but it ultimately proved to be a poor decision.

In theory, DEC was to provide Compaq with leverage to gain recognition in the high-end enterprise market, but this never materialized. The new subsidiary owned a chip manufacturing division, yet Compaq had no interest in manufacturing silicon wafers or competing with Intel, and DEC's chips were not compatible with its computers.

DEC also manufactured minicomputers, which was not of interest to Compaq. Corporate consulting was another profitable division of DEC, but Compaq was not interested at all. Thus, this was an acquisition that was incompatible in every aspect.The Decline of Compaq

The acquisition by DEC can be considered the beginning of Compaq's decline. As often said, when one company takes over another, there is a clash of work cultures. Consequently, massive layoffs occurred, and company morale plummeted. This turmoil led to project delays and sluggish product sales.

Compaq shipped too many products to retailers, eventually having to sell off the remaining inventory at extremely low prices. The company had long supported dealers by absorbing these discounts, so this mistake cost the company tens of millions of dollars in losses and also caused conflicts with partners such as Microsoft.

In 1999, Compaq's board of directors felt that Phile had become disconnected from the rank-and-file employees. New leadership was needed to mend relationships with partners and boost company morale. Therefore, the board chairman, Ben Rosen, decided to replace Phile, a decision that was unanimously approved by the entire board.

From then on, Michael Capellas took over from Phile. Prior to his promotion, Capellas had briefly served as Chief Operating Officer, and before that, he was the Chief Information Officer. However, the management transition ultimately proved to be too late.

By this time, Compaq's stock price had already fallen by nearly 50%, leading to merger negotiations with competitor Hewlett-Packard. These negotiations led to further internal conflicts within the company. The board was deeply divided on the potential merger, and when it came to a vote, the decision barely passed.Hewlett-Packard's Merger

In 2002, Hewlett-Packard (HP) acquired Compaq for $42.2 billion. Compaq shareholders retained 36% of the merged company's shares, while HP held the remaining 64%. Despite offering over $634.5 million in bonuses to key personnel to retain them, more than 15,000 people were laid off after the two companies finalized the deal.

As tensions escalated, Compaq's market share further eroded to competitors. The growth of the Compaq division gradually shrank, and Dell subsequently surpassed it in sales.

Therefore, HP decided to incorporate Compaq into its own computer product line as a low-end "budget" brand. Of course, this was akin to a snake eating its own tail, as the Compaq product line suffered from quality issues due to internal company competition.

The Compaq brand still retained its name until the early 21st century, but HP began gradually rebranding its products into the EliteBook and ProBook series, and ceased production of Compaq series products in 2013.

However, the brand did not completely disappear. In 2015, the Argentine company Grupo Newsan obtained a license for the Compaq brand and started producing Compaq laptops in Argentina. In 2016, the company launched two new Presario notebook product lines. By 2019, Newsan had abandoned the Compaq brand. In the past few years, there have been other similar brand licensing deals, with third parties using the brand to launch (usually low-end) electronic products. This includes smart TVs in India and Latin America, laptops in Brazil, and generic Android tablets in various Latin American countries.