The Rise and Fall of Compaq: From PC King to HP Acquisition
In 1982, three former Texas Instruments engineers founded Compaq in Houston. Rod Canion, Jim Harris, and Bill Murto created a fully IBM-PC-compatible portable computer without infringing IBM's copyrighted BIOS. This achievement helped Compaq become the largest PC vendor by units shipped.
The company's reputation for quality and reliability allowed it to charge a premium until its board forced out founding CEO Rod Canion in 1990, replacing him with Eckhard Pfeiffer. Pfeiffer pushed Compaq into low-margin, high-volume consumer PCs, which led to unit volumes exploding but also diluted the brand's value.
In 1998, Compaq acquired Digital Equipment Corporation for $9.6 billion, its largest acquisition in history at the time. However, the integration was a mess, and Compaq struggled to digest this giant. The company was trying to work out what it actually was: a PC maker or an enterprise services outfit.
In 2001, Hewlett-Packard acquired Compaq in an all-stock deal worth $25 billion. The merger was approved despite opposition from Walter Hewlett and the Hewlett and Packard family foundations. The combined company's stock underperformed for years, leading to Carly Fiorina's removal as CEO in 2005.