Over the last few weeks, Compaq has taken the opportunity of using the established Decus user group conferences in Paris and Los Angeles and the 100-day anniversary of its Digital Equipment acquisition to trumpet what it claims is one of the first ever successful mega-mergers. The events have also given Digital users and the rest of the industry the chance to make up their own minds.
The first message to emerge from this "Compaq-ation", as Digital customers refer to it, is that Compaq got a bargain - and a better one than it realised at the time as the company's hidden assets slowly emerged. This discovery may well secure the future of much Digital technology, which has traditionally been excellently engineered, but poorly sold and supported.
John Rose, Compaq's enterprise systems vice president, says there are two factors that determine the success of a very large takeover - and this is the largest in the computer industry to date. One is financial considerations and whether too much was paid for the acquired company - the other is integration of product lines and staff, or how quickly and efficiently the purchase is carried out.
On the financial front, Digital insiders say Compaq got a steal - but not as big a bargain as it might have been. Two years ago, during similar negotiations, Compaq had offered to pay the same $8.4 billion (#4.9 billion) asking price for Digital but at that time the company also had its networking division which was sold off to Cabletron prior to the second bid for Digital.
Had Compaq succeeded with its first gambit, it would have fulfilled a growing need within the company to bolster its own nascent networking offshoot which is currently being fulfilled by this week's announcement of a strategic alliance with Cabletron.
For its money, Compaq received nearly $3.5 billion (#2 billion) in cash garnered by Digital from the sale of various divisions, such as its Alpha manufacturing and the networking business. The accountants also found a juicy equation: in its latter days Digital often made losses, whereas Compaq nearly always made profits. If one is offset against the other, the result is another $2 billion (#1.2 billion) in tax write-offs.
So what about integration? The fate of the product lines has been more or less sorted out, although customers are still waiting to see what Compaq will do with Digital's large collection of software tools and compilers for its proprietary operating systems. Interestingly, Compaq has already U-turned on its decision to stop manufacturing workstations based on the OpenVMS operating system - although only after a very vocal campaign by customers. Predictably, the news is not so good for Digital's PC and laptop ranges which will almost completely disappear.
Although Digital's services arm was widely seen as the prize of the acquisition, Clive Longbottom, head of analyst company CSL Consulting Services, notes that it now creates potential conflicts of interest. "Digital's services group could find itself in direct confrontation with parts of Compaq's channel as time goes on," he said. "Providing outsourcing, systems management, consultancy and training, the services group will be a major tool as Compaq grows but will also compete directly against existing Compaq partners as they move into solutions and services offerings themselves."
While the company would seem to have achieved a lot in the last 100 days, much of the groundwork was prepared before the acquisition was complete.
As a result, the integration has apparently gone smoothly and speedily - but a lot of infrastructure issues still have to be sorted out.
As far as the Decus events are concerned, Compaq's first mistake was the noticeable absence of Eckhard Pfeiffer, chairman and chief executive, from any of these events. He sent a short video only to the US event and, as a result, many users felt snubbed. Pfeiffer was apparently at a General Motors board meeting, where he is a director, but as one user said: "What, all week?"
Tony Ioele, president of Decus US, admits that a lot of people were annoyed by Pfeiffer's failure to attend, but says that Compaq's commitment to Digital's users has been strong so far. "Compaq knows it has an asset in the Digital customer base - it just has to work out how to get the most out of it," he said. "In return, we have to work out how you build an enterprise infrastructure in the Compaq style of computing."
On the Windows NT front, Compaq has set out its stall very clearly. It aims to offer the tightest integration on the market between its operating systems and NT, and to help NT scale across the enterprise. This, it admits, was the motivation - along with undisclosed financial terms - for giving Microsoft its Tandem acquisition's Non-Stop Kernel technology for integration into NT.
OpenVMS customers, while pleased that Compaq will continue to develop the operating system, remain unconvinced as to how far this support will go. Compaq also needs to clarify its channel strategy and work out how to avoid conflict in the services arena.
It must also clarify how it intends to achieve its stated aim of becoming a $50 billion (#29 billion) organisation by 2000.
As Compaq's UK managing director Joe McNally admitted last month, it may be difficult to get there by organic growth alone, so another acquisition may well be on the cards. Did somebody say SCO or Cabletron?
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