By Siobhan Kennedy
Compaq’s new CEO, Michael Capellas said yesterday he has spent the first seven weeks in office restructuring the business into three strategic units as part of an overall plan to reposition the ailing company as a full range provider and not just a PC shop. Customer confusion about what Compaq is must end, he said.
Speaking during his first press conference in Europe yesterday, Capellas admitted that Compaq hasn’t given its customers a clear message about the company’s products or plans. We haven’t told a clean story about who we are, he said, we haven’t said here’s the markets we play in, here’s the product suites…Compaq is sometimes the best kept secret in the industry.
More often than not, said Capellas, the perception of Compaq was one of a PC company competing with Dell. That’s one of the reasons we’re here today talking about non-stop e-business. We want to position ourselves as a full range provider, he said and that from now on Compaq is going to be clear about what market space we’ll be in…we’ll also make some tough decisions about what we’re not going to get in to.
To help drive that goal, Capellas said that Compaq is now divided into three divisions – enterprise solutions and services, personal PCs and consumer PCs – each with its own profit and loss responsibility and each controlling the company’s activities on a global basis. Although none has yet laid out any formal strategy or roadmap, announcements are expected some time in October. The reason we’ve divided ourselves into three groups is because we believe we have the ability to grow each one, he said, we want to give each one the ability to grow at the pace that makes sense for them.
The CEO would not be drawn on which business he expected to grow fastest, that’s like asking me to name my favorite child, he said, adding that the consumer market was currently on fire while the personal computer space was experiencing crazy growth in terms of unit sales but that prices were continuing to fall and that the market was continuing to decline. The enterprise group, he said, was absolutely on fire fueled particularly by the growth of server sales and service, which is growing at 20% a year.
In addition, he said that Compaq has made great efforts to put its own house in order, rolling out SAP’s R/3 across the organization worldwide and installing Siebel’s front office software alongside i2’s supply chain product. He said the move would help it streamline the organization’s business processes and enable it to cut inventory times to two weeks by the end of the year. But, he warned: We’re not going to pretend there are no challenges, the fact that you have a new CEO says there is some acknowledgement of the fact that there are some challenges in front of us.
In particular, he said he would make it his personal strategy to concentrate on customers and drive shareholder value. I’m absolutely fanatical about what I call customer advocacy and visiting with customers is how I’ll spend most of my time, he said. He added: We will build trust by doing what we say we’re going to do.
Throughout the press conference, Capellas went to great pains to stress that the new Compaq was all about simplification and communication. We will take questions on anything, he said, adding that Compaq wasn’t faulting anyone for not knowing what its strategy was. We’re faulting ourselves, he said. To help him push through his strategy, Capellas said that Compaq now has a good strong management team that is marching together.
One analyst we spoke to said he found it refreshing to hear a Compaq CEO talk so openly and honestly about the company’s past mistakes and its plans for the future. He’s not like Pfeiffer, he’s not afraid of coming out, he said, it’s also good to hear they admit their PR was so appalling. They’ve never got across what Compaq does, they’re just seen as a box maker. He added: But if the intention is to start shouting about it, that’s good news. Let’s just hope it’s not too late.
