Compaq Promises Digital User Support -- For Now

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January 27, 1998 (12:09 PM EST)

Compaq Promises Digital User Support -- For Now

By Douglas Hayward and Andrew Craig,

Compaq's top executives said Tuesday they would continue to support Digital Equipment's software and hardware product lines after the two companies merge, but revealed few details about the future.

Senior Compaq officials meeting with analysts and reporters were determinedly tight-lipped about whether or when they plan to move users from Digital's Alpha microprocessor architecture and operating systems, OpenVMS and Digital Unix.

Compaq's $9.6 billion bid for Digital is widely expected to involve rationalizing of overlapping product lines and service portfolios between the two suppliers, as Compaq moves to restore Digital to profitability and high growth after years of stagnation and losses.

Compaq will announce in May how it intends to merge product lines of the two companies, said Eckhard Pfeiffer, Compaq's CEO. "We will support existing systems -- that is an absolute must for customers' business. Digital has a huge customer base worldwide," he said. "We will clearly focus on customers' needs first."

Compaq is already examining Digital's PC business, with a view to merging the corporate PC divisions of the two suppliers into a single entity, Pfeiffer added.

Moving customers from Digital's Alpha chip and OpenVMS and Unix OSes will be a gradual process, said Pfeiffer.

User migration toward servers based on Intel and Windows technology has not happened "as fast as we thought it would," he said, adding that many customers are continuing to invest heavily in Digital's traditional architectures. "We can drive it as hard as we want, but the transition is driven by customers," Pfeiffer said. "When global industry standards evolve -- and not the whole world will run on Merced -- then customers will make the transition themselves."

Compaq will continue Digital's Affinity program to move users of its OpenVMS OSes to Windows NT platforms, added Enrico Pesatori, president of Compaq's Tandem business and a former general manager of Digital's worldwide computer systems division.

One of the biggest questions raised by users and analysts is the future of Digital's Alpha microprocessor.

Compaq will continue supporting Alpha users, said Karl Walker, vice president of technology development at Compaq's enterprise computing group. "From a technical standpoint, Alpha is a very capable processor," Walker said. "Digital has done a very good job of developing it in terms of both architecture and silicon processor technology."

But in the long term, Compaq needs to figure out the future role of Alpha, Walker said. "For the foreseeable future, we will continue to support each installed base, both for Compaq and Digital. What will happen in the long term? That's open to question," he said.

But most analysts are skeptical about Alpha's future in the long term. Mike Welch, a consultant at Inteco, a U.K.-based technology market analyst, said he couldn't see a great future for Alpha "because I don't think Compaq will be stupid enough to put up a show against Intel."