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January 30, 1998


Fat and mean

Compaq's eaten Digital. How will the predator roam Indian jungles?

Email this story to a friend. For us it is business as usual," was Digital India chief Som Mittal's reaction to the announcement that Compaq's acquired Digital in the biggest-ever deal of the computer industry.

Few people would, however, agree. Some industry people say that a lot would depend on what Compaq decides to do with Digital's products.
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Others point out that the deal could also defocus Compaq, which is known for its extremely strong presence in the PC market.

Said a senior executive of Tata IBM: "Compaq's acquisition means one less competitor for us. While Compaq gets UNIX boxes and networking solutions that it did not have, Digital benefits from the low-end servers from Compaq's stable. But everything depends on how they decide to combine the product range."

"We will have to wait and watch whether Compaq will make sure that Digital's Alpha business grows. Compaq will have to make a lot of investment to keep the Alpha products alive since they have reached a dead end. With Compaq not yet being able to absorb the Tandem products, it may have too much on its hands," he added.

Compaq India's Abhishek Mukherjee says it is too early to comment and that the entire merger process is likely to take at least two to three months. Compaq has to seek legal sanctions from the US authorities as well as shareholders. Only after that will we be in a position to initiate the merger process in India.

Both the US companies have a major presence in India. Compaq India is a wholly owned subsidiary of the over $ 24 billion Compaq Computer. And 51 per cent of Digital Equipment India Limited is held by its US parent.

Mukherjee claims: "This (the merger) would complement Compaq's already strong presence in the home market and its growing presence in the small and medium enterprise segment."

Digital is strong in account management, professional and consumer services and systems integration. All these are products in a way in addition to the Alpha stations. With Tandem's non-stop solutions and Compaq's leadership in consumer, portable and small and medium sector, it would complete the whole range.

Mukherjee has refused to comment on the possible effect of the merger on the employees of Digital India and Compaq India.

He, however, said that the way "our businesses are expected to grow, we will probably need more people".

Digital has an extremely good team of technical support staff and its professional service organisation is likely to be a boon for Compaq to service the enterprise market.

However, a section of the sales force at Digital may not find it easy to survive, industry people claim. The professional service support personnel may move in with Compaq.

Stacy Plemmons, vice-president (computer systems) Hewlett-Packard India says: "I think it is wonderful from HP's perspective. In India, one has to consider the possible merger from two angles. One what it would mean to a Digital customer, now that his platform is owned by an unfriendly camp which does not have the energy or the capability to run two diverse businesses.

"Secondly, from Compaq's standpoint it has an even bigger task on hand trying to absorb Digital's business into its own. In a sense it only affirms a strategy that HP has been following steadily. And that is of supporting the operating system of choice to the customer on Windows NT or UNIX."

Compaq, which has always been a PC company, is not sure how to move into the enterprise space. It has been unable to absorb Tandem, which it acquired last year for its UNIX variety, into its family of products.

Now with Digital in its stable, it will have to support Ultrix and also the third version of UNIX that Digital announced it would support.

- Compiled from the Indian media

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