As Compaq Computer Corp. wrestles with declining revenues, a moribund PC market and fierce competition, cost cutting has become the biggest strategic imperative at the Houston company. Last week, it mapped out plans to fold its Alpha and Himalaya microprocessor lines into Intel Corp.s Itanium. eWeek Editor at Large and ZCast.tv Editor in Chief John Dodge interviewed Chairman and CEO Michael Capellas in New York last week.
eWeek: When did you decide to fold Alphas and Himalayas architectures into [Intels]?
Capellas: It really started as a series of engineering reviews, and I cant really say there was one point in time where we went, “Aha.” It was sort of a transitional thing as we thought through and understood Intels strategy and as they understood our strategy and as we really listened to what the customers wanted—and so this one was one of those that percolated through time.
eWeek: What were the key customer concerns?
Capellas: What customers want today is simplicity. The more you can give them standard building blocks that allow them flexibility but also the ability to hit higher scale, all on one common architecture, thats exactly what they want. Fewer moving parts, more stable, but also more scalable. I think its pretty clear, and, at the end of the day, lower cost and lower total cost of ownership is always a beautiful thing.
eWeek: Any sadness or regrets, given that the Alpha has had sort of a long and tortured haul trying to compete with Intel, and Compaq did say several times when they bought Digital [Equipment Corp.] that Alpha would continue, it would evolve and be independent?
Capellas: You are sort of viewing this as the death of Alpha, and I sort of think that this is a great technology story. We are going to take the design teams—the engineering, the critical skills—and they will go over and work with Intel. It allows us to be able to take some of our high-performance capabilities—our knowledge of 64-bit, not only the technology but how it works with the applications—and its going to give the customers a very clear road map. There are performance enhancements to our next generation of Alpha, there is improved performance to our next generation of Himalaya, and, after that, we have a common, consistent road map.
eWeek: Is this purely an economic decision?
Capellas: Absolutely not. This makes sense for the customers. The customers now have a very clear road map that says, “This is where Im going, and ultimately I get to a common architecture.” This is what is best for the customers and what is going to be responsive to the market. Were actually in an interesting time. There is so much energy being put on the very short term that I think the companies that are starting to make strategic decisions at this time are the ones that its going to pay off for in the long term.