Storming the Federal Enterprise Market

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From the Editor's Desk Trish Williams

Storming the Federal Enterprise Market

Compaq Computer Corp.'s ballyhooed acquisition of Digital Equipment Corp., with its deep bench of Windows-certified engineers and vaunted government contracts, promises to make waves in the commercial and federal markets in the days ahead.

Top Compaq officials served notice on their industry rivals that the behemoth wrought by the $8.4 billion deal, which was sealed June 11, is not to be taken lightly.

"All of those doing business with the federal government really need to examine themselves, because Compaq is going to be moving pretty strongly into every market area," said Don Weatherson, vice president of Compaq's government business.

Analysts say the acquisition thrusts Compaq, the world's largest supplier of personal computers, into the league of IBM Corp. and Hewlett-Packard, which offer products and services across the whole IT spectrum.

As Washington Technology staff writer Nick Wakeman reports in his front-page story, the marriage between Compaq and Digital should allow the new Compaq to emerge a bigger, faster and mightier warrior in the $23 billion annual federal information technology market.

The new company has sales of nearly $38 billion, based on 1997 combined results. That rivals H-P's No. 2 ranking in the industry but trails IBM's 1997 revenues of more than $78.5 billion.

Weatherson predicted both the PC business and the higher-end server market will be strong drivers of growth for Compaq in the government market.

What we and everyone else will be watching is how quickly the two companies are able to integrate their products and services, and whether Compaq can bring the cost structure of its PC business, with its quick time to market and inventory controls, to Digital's enterprise business.

Copyright 1998 Post-Newsweek Business Information, Inc. All rights reserved


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