Pesatori's departure dampens Wildfire

The untimely departure of Enrico Pesatori, the head of Compaq's enterprise ivision, has taken the shine off the hardware supplier's proposed 16 May launch of Wildfire, its high-end Alpha server.

Pesatori joined Compaq in 1997 following the vendor's acquisition of Tandem omputers, where he had served as president and chief operating officer.

Before leaving to join little known startup Synaxia Networks, he was senior vice president and group general manager of Compaq's Enterprise Solutions and Services Group (ESSG), where he was responsible for its Non-Stop range of products. These include Intel and Alpha based servers and storage offerings.

But Pesatori's departure from Compaq has coincided with yet another management reorganisation that has stripped out the top tier of the ESSG structure. The official line is that the supplier intended to streamline the group anyway by taking out a level of management and simplifying its business processes.

Terry Shannon, long-time DEC watcher and Compaq analyst, believes the two announcements are closely related, however, and Pesatori agrees.

When asked whether Compaq was planning the reorganisation, Pesatori said: "I don't think so. It was prompted by my departure. The chief executive decided instead of replacing me, to have the three large divisions directly under him, and to put the professional services closer to the sales force."

"It's another way of running the business and he decided that was appropriate at the time I left the business, and I'm sure that will be successful," he added.

As a result, the company's entire hardware division will now report directly to Michael Capellas, Compaq's chief executive. Its services and solutions units will be combined with the global sales organisation. Professional services and solutions will report to Peter Blackmore, senior vice president of sales and services.

No comment
But Compaq is loathe to discuss the circumstances surrounding Pesatori's resignation, and a spokesperson was unavailable for comment on the reorganisation at the time of going to press.

However, Shannon said: "Whether Mr Pesatori's departure was precipitated by the four per cent year-over-year decline in first quarter enterprise revenue, which was due in part to a pre-WildFire sales freeze, or to slow growth in services revenue, is uncertain."

But Pesatori claims that the first quarter figures met with analysts' expectations and that the company achieved its objectives in reducing expenses.

Compaq's financial performance did not figure in his decision to leave, he said, and he had not actively been looking for another job. His aim in moving to Synaxia was based instead on a desire to take on the challenges that running a startup with 50 staff would bring.

Synaxia was set up in the UK in February 1998 to develop specialised servers and network attached storage devices. In January this year, it moved its corporate headquarters to Mountain View, California, but retains a research and development facility in Reading.

The company plans to launch its first products in the third quarter of this year, with the flagship offering being a "silicon server" based on ASIC technology. The company claims this technology will speed up the machine by 1000 per cent.

Life-changing decision
"I was very comfortable at Compaq in charge of 50 per cent of its revenue, but at a certain point you have to decide what to do with your life. This opportunity of joining a company that I think has a great future with great products and technology was something that I felt I really should do," he explained.

Pesatori is also a long-time friend of Synaxia's chairman, Gianluca Rattazzi. They worked together at Olivetti when Pesatori was president and chief executive of the company's North American business and head of its Systems Group.

Rob Enderle, an analyst at Giga Information Group, said: "[Pesatori] was acquired primarily for the power that he represents in the industry. He will get that company into accounts that it wouldn't otherwise have got into."

But will Pesatori's departure leave a big hole in Compaq? "No," said Shannon. "Bill Heil has direct responsibility for Alpha and Himalaya servers. Mary McDowell has similar responsibilities for Wintel servers, including the eight-ways." He added that Pesatori's departure will also have little effect on enterprise customers.

But Enderle believes that Pesatori's leadership will be missed, and that the reorganisation should be viewed as an interim measure.

"As far as leadership goes, he leaves a hole, and the real question is who will fill it. Clearly the chief executive is going to step in himself and have people looking to him as opposed to Pesatori, but they will have to grow or hire somebody eventually," he warned.

Playing with Wildfire
But the timing of Pesatori's decision is likely to cast a shadow, at least for the short term, over the launch of Wildfire, Compaq's 32 Alpha processor based high-end server line that it is positioning as central to its internet strategy.

"This may colour the Wildfire launch," said Enderle. "A bad time to have a critical departure is at a major launch because it detracts from it. What the buyer may hear and perceive is that Compaq is not doing very well, instead of hearing about this new server."

And making a success of Wildfire is important for the company because people have perceived Alpha machines to be 'near end of life' products, he added, particularly since Compaq abandoned its decision to port Windows 2000 to the chip.

He went on to say that Compaq may have a hard time changing that perception. "It doesn't have support for Windows so won't have a wide appeal. Their IA 32 stuff is on the horizon and that will probably displace it."

"Wildfire is critically important to Compaq's perception as an enterprise player, rather than just a PC vendor. And it's very important from a revenue standpoint as well," said Shannon.

But Compaq claims that it already has 120 orders for the new system, and says it expects to sell over $1bn worth of the machines between June and the end of this year.