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Compaq wishes on an e-commerce star

The PC giant aims to hitch much of its products and services business to e-commerce, introducing its "NonStop e-business" initiative.

Like its competitors, Compaq is hitching much of its products and services business to the e-commerce star, announcing a "NonStop e-business" initiative today that takes its name and select technology from the firm's high-end server line.

Compaq chief executive Eckhard Pfeiffer announced the initiative today at the company's trade show, although spirits were dampened by a lowered profit estimate Compaq issued Friday.

Compaq's stock has been trading in the mid-20s, near its 52-week low, yet Pfeiffer opened his keynote address with assurances that the revenue shortfall "will not slow us down."

The e-business strategy could provide some much-needed income in more profitable areas than the cutthroat desktop computer market where Compaq has been hurting.

The NonStop plan is to make Compaq the preferred company for firms which are bringing their core business to the Web--work like connecting to customers, managing personnel, obtaining supplies, and fulfilling orders, said Enrico Pesatori, senior vice president for corporate marketing at Compaq.

Central to the initiative is Compaq's trademark technique of trying to profit by bringing high-end features into the realm of "industry standard" equipment, where shipment volumes are higher, profit margins are thinner, and products are general-purpose instead of specialized.

A key feature of that industry standard push is the ongoing effort to make Microsoft Windows more robust by adding elements of Compaq's NonStop operating system, according to Pesatori.

Compaq is also working with SAP, Baan, Oracle, and others to make sure their software can take advantage of high-availability computer system features. Some NonStop features include clustering, which allows one computer take over the workload of another that may have failed.

Compaq, of course, is only the latest company to treat "e-commerce" as the magic word in a marketing strategy. IBM began a similar push last year, Sun unveiled its "dot-com" marketing campaign this year, and Hewlett-Packard has begun its own "e-services" push tied in with high-powered hardware.

"One of the weaknesses here is they're a little late to the game," said Lindy Lesperance, an analyst with Technology Business Research.

"It is clear that the Internet will become the dominant means of doing business worldwide," Pfeiffer said as he unveiled the NonStop program at the company's Innovate 99 trade show.

He said a quarter of stock trades now take place online and that International Data Corporation projections show the 1998 e-commerce market of $50 billion will increase to $1.3 trillion by 2003. That future means that companies will rely on computer systems that almost never crash and that can handle high workloads.

For the time being, that high-availability requirement places Compaq's emphasis on its higher-end operating systems, such as Tru64 Unix, OpenVMS, NSK, and NonStop, Pesatori said. In the future, though, NT will play a larger role.

Indeed, "industry standard" products aren't robust enough to run high-availability services, Lesperance said. "Across the board, I don't think they can have an industry standard e-business solution," she said.

The e-business strategy ties together the variegated servers, operating systems, and services under Compaq's umbrella. Compaq got its start with industry standard Intel servers and desktop computers, but vaulted to a more ambitious level with the acquisition of Tandem in 1997 and Digital in 1998.

"It'll be a true test of whether this company is integrated," Lesperance said.

Compaq's strategy is to spread the cachet of the NonStop name across more of its product line. Compaq's NonStop Himalaya servers run 106 of the world's 112 stock exchanges, Pfeiffer said.

"Leveraging the Tandem NonStop technologies and brand name should help them a lot," Lesperance said.

One way Compaq's e-business push will differ from competitors' efforts is that Compaq is working with companies that provide the software needed for the e-commerce infrastructure.

Compaq also is adding to its services offerings so companies can pay it for its expertise in designing and running e-business systems, Pesatori said.

"Our strategy focuses on how to allow our customers...to take full advantage of what the Internet is bringing to business and individuals," Pesatori said. Once the year 2000 bug issue is over and done with, "This is going to be the major deployment of solutions that customers will want to undertake," he said.