Compaq Computer Corporation

Compaq Computer Corporation was a tech company that rose to prominence as a major player in personal computing in the 1980s and 1990s. Much of Compaq's success was directly attributable to its pioneering work producing portable personal computers (PCs) and IBM-compatible computers. Through its efforts in regard to the latter, Compaq also played a pivotal role in ensuring the preservation of the open-system model in the PC industry. For a time, Compaq was the world's largest supplier of personal computing systems. It remained one of the computer industry's biggest names until it encountered financial problems as a result of the dot-com bubble bust of the late 1990s and early 2000s and was purchased by Hewlett-Packard in 2002. Though Compaq lived on as the name brand of Hewlett-Packard's line of lower-end systems until 2013, the actual company ceased to exist. Regardless, Compaq's legacy as one of the most influential computer companies in history remains firmly cemented.

Background

Compaq's history begins with the emergence of the personal computing industry in the early 1980s. The key element of the PC's birth was the debut of the microprocessor, a small chip that contained all or most of a computer's central processing unit (CPU) functions and effectively acted as the computer's engine. The development of the microprocessor was a major breakthrough, mainly because it dramatically reduced the necessary size of computers and made the idea of selling computers to everyday consumers viable. The first company to capitalize on this opportunity was International Business Machines Corporation (IBM). In August 1981, IBM opened the PC marketplace by introducing its inaugural IBM Personal Computer. The IBM PC was an immediate success that undeniably marked the dawning of the PC era.

The arrival of personal computing in the early 1980s set the stage for a major economic shift across the United States. This was particularly true in Texas, which was struggling economically at the time because of rapidly falling oil prices. When the PC industry emerged, many intrepid entrepreneurs saw personal computing as a potentially fruitful new market for economic investment. Among the enterprising businesspeople interested in making such an investment were Rod Canion, James Harris, and William Murto, a trio of mid-level managers at Texas Instruments, a technology company that manufactured semiconductors and produced products like handheld calculators. Meeting one night at a diner in Houston, the three, who each had $1,000 to invest, discussed a number of different possible business ventures, including opening a Mexican restaurant or producing a device that would beep to help people find lost objects. Ultimately, they settled on doing something that was quickly becoming a popular way to enter the computer industry: producing a clone of the IBM PC. Part of the reason for the IBM PC's success was the speed with which IBM was able to put it on the market. To do this, IBM built its machines using off-the-shelf components that were available to any manufacturer. As a result, other computer companies could easily buy the same components and produce PCs that were virtually identical to IBM's. Rather than simply making IBM clones like other companies, however, Canion, Harris, and Murto hit on an idea that would make their computers different than the rest: portability.

Overview

Armed with a sketch of their portable PC that they had drawn on the back of a place mat, Canion, Harris, and Murto formed a company they called Compaq Computer Corporation and set to work. Their design was unique in that it was small enough to be portable, though it was still quite a bit larger than the laptop-style computers that would be developed years later. While most PCs were much smaller than the computers that preceded them, the Compaq Portable, as the machine was eventually called, was the first to be small enough that it could be moved from desk to desk with ease. The Compaq Portable's small size was not the only feature that made it unique, however. At the time, most IBM-clones were only compatible with IBM software to a limited degree. While they could run some of the programs and peripherals made for IBM PCs, they often could not run everything that IBM machines could. To make the Compaq Portable stand out from the crowd even more, the men took the extra step of ensuring that their computer was completely IBM-compatible and could run every available IBM program.

When the Compaq Portable hit the market in November 1982, it was an immediate hit. Within a year, Compaq sold 53,000 units and earned $111 million in sales. Although IBM soon responded with its own portable PC, its sales did not compare with those of Compaq's breakthrough machine. Compaq, in turn, positioned itself as a more direct competitor to IBM by releasing a line of fully functional desktop computers, some of which were among the first PCs to make use of Intel Corporation's trendsetting 386 microprocessor chip. Before long, Compaq began to supplant IBM as the computer industry's most influential company. In an effort to reassert its dominance, IBM briefly attempted to switch to a closed, proprietary system model that other companies could not clone, but Compaq's continuing success derailed its plans and saved the open-system model. In this way, Compaq helped to permanently establish the industry standard for the way PCs were designed and built.

For much of its time in existence, Compaq enjoyed incredible success. In 1987, just a year after it made the distinguished Fortune 500 list for the first time, Compaq became the fastest company in history to make $1 billion in revenue. That success continued in the 1990s as the company developed new cutting-edge computer systems and broadened its product line to include printers and other devices. In 1998, Compaq paid $8.55 billion to acquire Digital Equipment Corporation (DEC), a one-time giant in the early computer industry.

Although Compaq was the world's largest PC manufacturer by the late 1990s and early 2000s, its time at the top eventually came to an abrupt end. Faced with quickly changing computer industry trends and the financial damages it suffered during the collapse of the dot-com economic bubble in the late 1990s, Compaq was struggling to survive. In 2002, competitor Hewlett-Packard acquired Compaq as part of a $21 billion merger. For a time, Hewlett-Packard continued to use the Compaq brand as the name of its low-end computer line but ultimately abandoned it in 2013.

Bibliography

Canion, Rod. The Compaq Revolution: An American Success Story. Waterfront Digital Press, 2012.

Canion, Rod. Open: How Compaq Ended IBM's PC Domination and Helped Invent Modern Computing. BenBella Books, 2013.

Christensen, Jeff. "Compaq: From Place Mat Sketch to PC Giant." USA Today, 4 Sept. 2001, usatoday30.usatoday.com/tech/techinvestor/2001-09-04-compaq-history.htm. Accessed 20 Oct. 2024.

"Compaq Computers." Centre for Computing History, www.computinghistory.org.uk/det/8240/Compaq. Accessed 20 Oct. 2024.

Frontain, Michael. "Compaq Computer Corporation." Texas State Historical Association, 15 Nov. 2016, tshaonline.org/handbook/online/articles/dnc01. Accessed 20 Oct. 2024.

Hall, Lynn, et al. "Compaq Computer Corporation." International Dictionary of Company Histories, edited by Jay P. Pederson, St. James Press, 1999.

McCullough, Brian. "Behind 'Halt and Catch Fire': Compaq's Rise to PC Domination." Mashable, 29 May 2014, mashable.com/2014/05/29/halt-and-catch-fire-amc-compaq/#OOMZ8ArdOkqS. Accessed 20 Oct. 2024.

Tolentino, Mellisa. "Compaq Turns 30: A Brief History of Texas' Digital Gusher." SiliconAngle, 2 Nov. 2012, siliconangle.com/blog/2012/11/02/compaq-turns-30-a-brief-history-of-texas-digital-gusher. Accessed 2 Nov. 2016.