Digital's fate hangs in the balance

Digital's fate hangs in the balance

The anti-climax that was the signing of the Digital/Compaq merger was penned over the weekend. Now it's a waiting game for Compaq and Digital to see exactly what's going to happen in Australia.

The appointment of a local managing director is expected within the next two weeks. In the meantime, staff at both companies are working overtime to start the integration of the two cultures. The threat of up to 15,000 worldwide job losses at Digital and 2000 could well be Compaq's biggest challenge for the immediate future.

And what about channel rationalisation?

While there's been no product rationalisation yet, it's almost certain there will be in the future. The question that must be asked then, is where that leaves Compaq and Digital's distributors?

With at least seven distributors between them, it's almost certain heads will roll in the channel. Greg Healy, director of Compaq's commercial division, said: "That type of decision is some way off." Healy said the channel is "very fundamental to everything we do", but couldn't name a time a decision would be made.

At a press conference in the US on last Friday night, Compaq's president and CEO, Eckhard Pfeiffer, said Digital's PC brands would eventually be subsumed into Compaq's PC line. However, he pledged to continue to support Digital's Unix and OpenVMS operating systems, Alpha processor, StorageWorks and the AltaVista search engine - the latter of which he characterised as "a major complement to our consumer strategy."

In a media release issued on Saturday, Compaq Australia said: "The new organisation is already focusing on bringing life to the vision to lay the cornerstone for the new world of computing."

It's basically a quiet time for both organisations, but what the company will say is that Compaq will continue to expand its presence with Digital Unix and Alpha-based systems.

"Compaq will leverage Alpha as a strategic platform for power-hungry applications," the statement said.

Compaq will capitalise on Digital's global services unit, which many industry observers have long said was one of Digital's greatest assets, and later this month, according to executives, Compaq will announce Active Answers, an online library of tools and information for multivendor solutions targeted at US resellers.

* Rebecca Sykes contributed to this article.

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