Compaq's kitchen-sink strategy

Building on his vision of a "New World of Computing," Pfeiffer outlined new areas of opportunity for the company during his Comdex keynote address today, particularly in the areas of forging better relationships with customers and using the Web as a tool to do this. These are both areas which Dell has excelled in.

"We have transformed the company during the last two years. We're no longer just a PC company," he said. Pfeiffer discussed how Compaq has reinvented itself, particularly since the acquisitions and integration of Digital and Tandem.

Later in the day, Compaq executives offered a vision of a network of home PCs and appliances that was one the most compelling visions Compaq has proposed since it got into the home PC market in earnest about two years ago.

Compaq is planning living room devices, such as TV set-top boxes, and specific appliances for the kitchen, said Rod Schrock, senior vice president in charge of Compaq's consumer products division. Generally, price points for gadgets like this would range from about $200 to below $1,000, he said.

Schrock alluded to a specialized device in the kitchen that could "handle personal finances, home shopping, and home video and voice mail. The kitchen is the first place people go," Schrock said. "The living room isn't the only thing," he added referring to a focus by some consumer PC manufacturers and TV set-top box suppliers solely on the living room.

Pfeiffer also spoke to the growing importance of the consumer portion of Compaq's business, announcing new computers based on the AMD K6-2 processor, and a new three-pronged initiative to bring high-speed Internet access to consumers.

New Compaq Internet PCs ordered through the company's build-to-order program will offer a "triple-play" network card as an option that enables DSL, satellite, and cable modem access.

The new options, which will eventually be available in the retail channel as well, indicate the growing importance of the Internet in the consumer space symbolized by Apple's iMac computer. Pfeiffer emphasized this point, noting that 7 out of 10 home PCs were purchased for Internet access.

Pfeiffer also demonstrated Compaq's strengths in high-end graphics rendering with two short animated videos created using Alpha workstations.

He also emphasized its head start on the next generation of computing: "I want to reiterate Compaq's commitment to 64-bit computing with Alpha and Merced." Alpha is currently a 64-bit chip and, in this respect, has a clear advantage over Intel's technology which is still 32-bit--and will be until 2001.

He asserted that Compaq intends to become a company offering Web-enabled solutions to any company, of any size, on a global scale.

In an interview later in the day, Schrock explained the company's home device strategy. "You're going to see a whole lot of experimentation," Schrock said. One of the problems right now is getting an accurate bead on the market as PC prices continue to plummet, making them competitive with appliance prices.

"The appliance space is getting squeezed because PC prices keep coming down," Schrock said.

He said Compaq's next product launch would be a home network. But Compaq's idea is to make this much easier than has been proposed to date, which have generally been cumbersome solutions for a market that has little grass roots interest to begin with.

Schrock said users could simply plug their computers or appliances into home phone lines and then relatively effortlessly create a home network which connects a variety of home computers and appliances.

Compaq is also planning to come out soon with a novel consumer PC product, Schrock said, based around a liquid crystal display. Last year, Compaq brought out an all-in-one computer with and LCD built in. He said it may be similar to this but more advanced.