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====Acquisitions==== 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>
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