Compaq Bytes off Digital

By Vivek Bhatia

The hardware handshaking protocol has been created. With the $24-billion Compaq Computer's acquisition of the $14-billion Digital Equipment Corp.--interestingly, in the mid-1980s, Digital was three times as large as Compaq--a spate of M&A could well redefine competition in the computer business, as well as who you buy your next pc from.

Compaq's primary motive appears to have been two-fold: Digital's mid-range server capability, and its Multi-Vendor Consultancy Service. And both of them are crucial to Compaq's ambition of becoming the globe's largest computer manufacturer. The Texas (US)-based company is already the undisputed leader in desktop and PC servers but is weak in mid-range and enterprise servers. Digital's consultancy service will help Compaq--which has lacked a direct marketing team so far--to sell expensive and powerful servers, which need to be tailored to the customer's requirements.

On the face of it, the Digital acquisition plugs the gaps in Compaq's product portfolio. But beneath the surface lie the overlaps: like Compaq, Digital, too, makes desktop PCs, notebooks, and PC servers. But with Compaq being the stronger brand, the Digital products could be jettisoned pretty quickly. So could a large chunk of Digital's 54,000 employees; Compaq has just 34,000.

Then, there are two cultures to contend with. Will Compaq's aggressive marketers blend with Digital's techies? Says Sharad Talwar, 37, general manager (marketing), HCL Infosystems: "There aren't any instances of a smaller organisation being able to swallow a large one successfully. The combine may not be as strong as its constituents." Indeed, Compaq's problems may well be digital.

Making A New Copy At Xerox

By Vivek Bhatia

It has long called itself The Document Company. But it is only now that the $25-billion Xerox Corp. of the US--chiefly a manufacturer of black-and-white analog photocopiers-is trying to redefine itself. For, the digital revolution is upon the globocorp. And infotech companies like the $37-billion Hewlett-Packard are making products that offer digital copying which can print and scan too. To compete, Xerox must change--and fast. In an interview with bt's Vivek Bhatia, Alexander Wasilov, 41, president, Xerox Emerging Markets Organisation, who was in Delhi recently, sketches out the transformation that will take the transnational deeper into infotech territory--and the next millennium.

ON HOW XEROX'S MARKETS ARE CHANGING QUICKLY: Xerox's traditional market, copiers, is growing at a pretty flat rate. Other markets that the transnational participates in are growing faster--digital office is growing at 30 per cent while the small office-home office is growing faster, at 40 per cent. In response, Xerox is now making major changes in its strategy so that it can capture larger shares of the high growth areas. Not only does Xerox have an aggressive distribution strategy in place, it is putting special emphasis on new product development. Both strategies are extremely crucial to Xerox's competitiveness.

ON HOW TECHNOLOGY IS SHIFTING AND CONVERGING: As we examine the future, we know that digital technology will drive markets--and corporations. That is the future that Xerox increasingly has to contend with. Three technologies--computing, imaging, and telecom--are gradually converging. And the rules of doing business are changing. Five years from now, a large proportion of copiers across the world--including India--will be networked digital devices. Xerox must be an important part of the new business environment.

Browsing Through The Battle

By Vivek Bhatia

Let a thousand browsers bloom. By the beginning of March, 1998, the $170-million Netscape Communications, the $11.4-billion Microsoft's bitter rival in the big browser battle, is set to rewrite the rules of software development and marketing. Netscape, whose marketshare in browsers has fallen from over 70 per cent to around 60 per cent in less than 12 months, now offers its browsers free to its buyers. In a few weeks from now, it will also start giving away the source code of the browser free.

How good is the Netscape offer? What is the software manufacturer's ultimate motive? The source code of software is what the programmers write. This is then translated by another piece of software into the executable version that actually runs on the computer. It is this version that is distributed to buyers. Without the source code, software cannot be modified or reverse engineered. Nor can its components be employed in other software. The source code is always a closely guarded secret in the software business. But no more. Netscape is set to change all that.

While the flourishing free software culture on the Net has always been centred around readily-available source code, Netscape's move is a radical one for a corporate. The company hopes that with freely-available software code, the ever-increasing programmer community on the Net can co-develop software and, thus, accelerate the process of development, and even improve its quality. And corporate users can modify software to their individual requirements. But how will Netscape make money on the browser? Well, it won't. Free software will only help it cut its own development costs. But that doesn't matter; the infotech company wasn't making money on the browser anyways!

Lapping Up Low Price

By Vivek Bhatia

Price has made them the personal preserve of CEOs. But managers can stop envying their bosses if the contagion that affected desktop computers--sending their prices spiralling downwards by more than 40 per cent in the past 12 months--weakens the prices of laptops too.

A well-equipped laptop or notebook can set you back by at least Rs 1-2 lakh. Entry-level notebooks, like the Compaq Armada 1500 or the Wipro-Acer Acermate, cost just below Rs 1 lakh. But price may not be such a big barrier by the end of the year, since component prices are heading southwards. Already, the prices of hard disks, displays, and memory have crashed by between 20 per cent and 40 per cent in the past six months. And reasonably priced sub-notebooks are debuting: for instance, the Toshiba Liberetto--the smallest machine to run Windows--is available for just Rs 65,000. That is just the beginning.

While the customer might be able to celebrate the New Year with a bang, the manufacturer is unlikely to be enthused. For the $70-billion IBM, the $48.41-billion Toshiba, and the $24-billion Compaq, notebooks mean fat margins. Even then, what is good for the customer is good for his laptop too.

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