1
Ben rosen: We never,
ever, had any idea
That this would
be as explosively
Successful as it was.
Mike swavely: Fastest
to fortune 500
And fastest to over a billion?
I would've just said
you're blowing smoke.
: Compaq is the story
of how david takes on goliath,
And it's not easy,
but when you do it,
It fundamentally
changes society.
Rod canion: We hope you, too,
come to believe that the compaq
Is an important landmark
in the short history
Of the personal computer field.
Thank you.
John markoff:
Compaq was basically
Prying open a lock box.
Ben rosen: It's
analogous to somebody
Saying we're going to put
google out of business.
Chris cantwell: Are
you a mac or a pc?
The reason they don't say mac
or an ibm is because of compaq.
Alec berg: You cannot
get to the iphone without
The original compaq portable.
man, if
you're looking for action,
Man, houston's the town.
Here's the action town.
Rod canion: One of
the first things
I bought when I got
a real job, which
Was a sacker at a grocery
store making $0.45 an hour,
Was a '53 ford for $350.
We'd take our cars
way out to north
Houston where it
was deserted roads
And maybe run a few races.
And I ain't jivin'.
Rod canion: Street drag racing--
like you see in the movies
Where you're going
around dead man's curve.
Man, houston's the town.
Rod canion: There
weren't any video games.
That car was my computer.
I loved working on it.
I'd change spark plugs, and set
the points on the distributor,
And adjust the timing, and
that natural inclination
To try to understand
how it worked
And to not be afraid of taking
it apart and working on it.
I got a lot of
enjoyment out of it.
Announcer: And spell, a
revolutionary learning
Aid from texas instruments.
It almost thinks.
Rod canion: We were
very lucky to have
A high tech company, like
texas instruments, in houston.
Announcer: The learning
can go on with the texas
Instruments ti-30.
Specially designed for
high school students
To help them find the wonder
of numbers never ends.
Rod canion: That's
where I wanted to go,
And I got the job and
that really got me started
In high tech electronics.
The bosses asked me to
take a small team of people
To develop an
intelligent terminal.
It was a predecessor to the pc.
Bill murto: He called
me up and said, bill,
Would you come work for
me and be my business
Development manager?
Jim harris: I came
out of texas a&m,
Electrical engineering degree.
Rod canion: Bill was
the marketing guy,
And he was a good one.
Jim was the engineering guy, and
even though I was an engineer
By background, I
was really, sort of,
The business guy-- the
general manager type.
Jim harris: While ti was a great
place, as the fun became less
And less over time, rod and bill
and I would quip to each other,
Like, let's go do something.
We were seeing what was
going on in silicon valley.
Roger mcnamee: You
wandered around,
There was still a
lot of fruit trees.
It was a lot of empty space.
There was no silicon valley
as we think of it today.
: It
started out as purely
Hobbyist, not commercial.
You had to solder
your own connections
And build your kits.
Chris garcia: You had the
microprocessor become available
In the very early
1970's, and you
Saw a lot of hobbyists coming
up with new ways to use it.
Jim harris: When
we were out there
It was just exhilarating
to be around these guys
And to see their enthusiasm.
Bill murto: The vp of
engineering of a small company
Would pull up in his
ferrari, which at ti you're
Never going to have a ferrari.
Maybe you can rent one once.
What are we doing?
It was like, oh
my goodness, this
Is what I would like to do.
Seeded this sense of we ought
to go do something together.
Let's just go do something.
Wasn't about getting rich.
It wasn't about
building a computer.
It was really about
starting a company that
Would be a good place to work.
Jim harris: Bill said,
why don't we come over
To my house Thursday at 7:30.
And we said, let's do that.
We can at least have a beer.
We bought a thing called
entrepreneur's manual.
Because surely that'll
tell us how to put
Together a successful company.
We sit at a table, we each
have our piece of paper
With us and a pen, and
we're going to start
Taking notes about what we say.
Jim harris: It's like,
ok, what do we do now?
Rod canion: Let's talk
about all the possibilities.
One of the things
we did, sort of,
Traditionally, was we would
go out and eat mexican food.
Announcer: Pepe's
tacos restaurants.
Treat yourself to
the wonderful world
Of mexican food and
authentic mexican atmosphere.
Jim harris: Bill
and I always wanted
To do a mexican food restaurant,
so we brought that up.
Bill murto: Maybe a
mexican food restaurant.
Jim harris: We didn't
really want to do
A mexican food restaurant.
Bill murto: What a stupid
idea that would've been.
Announcer: Pepe's
tacos restaurants
Are the family fun place to be.
Rod canion: We finally decided,
as you would hope, I guess,
That we ought to stick
with what we knew.
And we toasted the beginning
of starting a company.
Announcer: You're
probably on your way
Up to the top of the ladder.
Texas instruments,
a terrific company.
And you did a silly thing
like quit to try to start
Your own computer company.
People must have
thought you were nuts.
Jim harris: We went
to the credit unions
And took out loans.
Bill murto: I knew that
I could last 6 months
After I sold my wife's car.
Rod canion: I had three
small children, and a wife,
And mortgage.
Jim harris: I'd actually,
recently married rhonda.
I was meeting a lot of
her extended family,
And it would be
like, what do you do?
Well, I've actually left my job,
and I want to start a company.
Oh, that's great.
What is that going to be?
Well, we hadn't decided yet.
And you quit your job?
Yes.
And you could tell they
were thinking, poor rhonda.
Bill aulet: The
success of ibm had
Come about through
mainframe computers.
Ben rosen: Ibm was
making big computers
To sell to big companies.
Howard anderson: Computers
were treated as a priesthood,
And only the priests
could touch them,
And everyone else looked
through a glass wall.
Eventually, the
users wanted to get
Hold of that computing power.
Chris garcia: Ibm wanted
to maintain control
Over the computing
industry as they
Had during the 60's and 70's.
Let's build something
for the masses
That they can buy and
become a commodity.
Roger mcnamee: Everyone
else was struggling
To get a permanent foothold.
First pcs, apple ii,
commodore, radioshack--
It was still a tiny market.
The game changer was when ibm
entered the market in '81.
Announcer: Ibm, international
business machines,
Has entered the small computer
market for the first time.
It's expected to
have a major impact
On what is now the
fastest growing sector
Of the computer business.
Chris cantwell: Ibm
said, we're going
To go from selling
million dollar computers
To a few thousand people,
to $1000 computers
To a few million people.
Announcer: Ibm's
personal computer
Is designed for office,
school, or home use.
It's aimed at exactly the same
market as its competitors.
It's expected to be
sold very aggressively.
Rod canion: And the race was on.
This was going to cause
that market to explode.
Tom brokaw: Sales of
personal computers
Are so hot this christmas,
santa claus may have to replace
His reindeer with microchips.
Announcer: 850,000 people
bought home computers
In the United States last year.
The industry expects, this
year, more than 3 million will.
Announcer: We're no
longer on the verge
Of the personal
computer revolution,
We're right in the midst of
it with more and more people
Jumping aboard every day.
Jim harris: Osborne was
being very successful
With an extraordinarily
ugly portable.
And rod had
purchased the ibm pc,
So he could write
business plans on it,
And it became obvious
to him that that pc,
If it was portable, that
would be a good product.
What popped in
my head was, well,
If we could take this
idea for a portable,
And we could make it
run the software that
Was written for the ibm
pc, ooh, that's when
The chill went down my spine.
It's like, oh, man,
would that sell.
Welcome to the
computer chronicles.
I'm stewart cheifet and
this is gary kildall.
And, gary, our subject today
is ibm and the dominant role
They play in the
computer world in general
And the pc world in particular.
Matter of fact, they've
taken over the phrase pc.
It doesn't mean personal
computer anymore,
It means an ibm
personal computer.
Ibm has always had
this mentality that it
Is the king of the world.
What do you think would be
the biggest threat to ibm's
Position in this situation?
Well, I don't think
that anything is really
A threat to the
ibm position, and I
Don't anticipate that they
will begin to decline.
Ibm didn't care.
If you weren't xerox, if you
didn't have that massive, new
York, type presence that
loomed over the entire country,
You didn't matter.
Rod canion: We weren't really
good at writing business plans,
But we knew that the
way a product looked
Was important to people.
Jim harris: Ted papa john
was an industrial designer,
And we got him, and we drove
over to the house of pies
For two things.
One, a piece of
pie, and the other
Was to convey to ted
our ideals for what
The unit may look like.
Rod canion: We walked in,
looked around, picked a booth
That was kind of by itself.
Unfortunately, we hadn't thought
to bring anything with us,
So we turned over the
placemat and borrowed a pencil
From the waitress, and proceeded
to describe to ted papa john
How we wanted it to look.
Jim harris: What he
drew was something that
Was very professional looking.
We knew where the monitor
would go, what the size was,
How the keyboard would go in.
Rod canion: Laid out
somewhat like an osborne
But with much smoother
lines, plastic molded case,
Keyboard just like an ibm pc.
As I saw that sketch coming
together on the paper,
There was an excitement.
We're going to make this work.
I didn't know how yet, but
it was headed that way.
This is something we
can get funding for.
Alec berg: Post mark
zuckerberg inventing facebook
In high school, there is
this different path which
Is oh, if I study this
stuff and I learn computers,
I can move to palo alto
when I graduate college,
And there's just money
raining from the sky.
Announcer: Uber growth at uber.
Reuters has learned that
the ride sharing service see
Its global bookings more
than tripling this year
To nearly $11 billion dollars.
Announcer: A picture is
worth a thousand words,
And for instagram,
a billion dollars.
Announcer: Snapchat, the
barely three-year-old company,
Raised almost half a billion
dollars in investment funding.
Roger mcnamee: There's just
so much venture capital.
Back then, there
wasn't that much.
Alec berg: If you wanted to
start a computer company,
There was literally nobody.
You had to go get a bank loan,
you had to have collateral.
Chris cantwell: If you
weren't walking in,
In a suit-- a nice
suit, and a tie,
And you had this education,
and you had this background,
And this many decades
of experience,
Nobody wanted to
even listen to you.
Ben rosen: We received
an introduction to meet
Rod, bill, and jim in houston.
Their business plan had a
sketch of the portable computer
On the back of a placemat
from the house of pies.
And they showed for first
year sales of $30 million.
Now, that was absurd.
You're taking a chance on
somebody from a big company
Starting a new company.
It's whether it's a gut
feeling or something
About the discussion
you have with them
That you feel is going
to help differentiate
Them from other people.
Roger mcnamee: Rod
obviously had some skills,
But he had clear weaknesses.
He wasn't a public speaker.
He didn't have the brash,
over-the-top demeanor
That we now associate
with tech entrepreneurs.
He was modest, he was
extremely clean cut,
He was thoughtful-- almost
like a boy scout, right.
Pretty much everybody who
met him was drawn to him.
Karen walker: We were basically
in this class b office space,
And it was right next
to a field full of cows.
: We
had no furniture.
Rod canion: There
was one phone line.
Gary stimac: I brought
my card table and chairs.
Rod canion: So we put
a very long cord on it.
It didn't matter who did what.
I don't even know
who reported to who.
I ain't
jivin' when I say houston,
Here's the action town.
Karen walker: The people
that I wanted to work with
Were the people that were
coming to this company
That was making a product,
and I didn't know what it was.
Bill murto: I couldn't tell
them what the product was.
It was secret.
Charles lee: I assumed it
was in the electronics.
I didn't know if it
was a toy, I don't
Know if it was a computer.
Kim frandois: Was
it a sewing machine?
Or a pc?
It really didn't matter.
Once I signed a nondisclosure,
and I walked the halls,
They showed me what the
product looked like.
Steven ullrich: They
showed us the picture
Of the compaq computer
that we were gonna build
And that did it.
Steve flannigan:
It was exciting.
It was like, ok, we can do this.
This is a cool thing.
I would like to own that thing.
I would love to have that,
that's better than anything
I've seen on the market.
man,
houston's the town.
Here's the action town.
Roger mcnamee: Get your iphone,
you look at the half million
Apps that each of
us has on there,
And you look at
all of the products
Designed for other platforms
that miraculously seem to work.
And we now take
that for granted.
Before compaq, nobody took
compatibility seriously.
Gary, the subject
today is the ibm clones,
And the question I get asked
more than anything else
By people who are about
to buy computers is,
Should I buy an ibm, or should
I buy one of the ibm lookalikes?
I think I'm told there's
about 50 ibm clones
Out there on the market now.
What's the difference,
do you think,
Between a clone that makes
it and a clone that fails?
Steve flannigan: We
didn't want to do
A better machine than
ibm, we didn't want
To technically be superior.
We wanted the software
to run the same.
Gary stimac: The
keystrokes were identical,
You didn't have to look
at a different manual,
There was no training required.
You just sat in front of
it, and it worked the same.
Rod canion: It wasn't
some vague definition
Of what does compatibility
mean-- it was very clear.
We have to run all the
software, and use all
The peripherals that ibm does.
Do you have any idea how
expensive this thing was?
Let's turn this
thing inside out.
Chris cantwell:
"halt & catch fire"
Is a show about the
reverse engineering
Process of the ibm pc.
The thing that really drew us to
texas was the story of compaq.
You've got characters that,
for all intents and purposes,
Feel like outlaws, and they're
coming in to take on ibm.
And they basically do
it by robbing a bank.
Nobody ever got fired
for buying an ibm, right?
You can be more.
This is your chance.
What we knew was
that ibm had come
Out with a product that was made
with off the shelf components.
A personal computer,
like any other computer,
Is just a nothing box full
of electronic switches
And hardware.
Rod canion: They hadn't
designed a new disk
Drive or a new processor.
Anyone can buy all this
stuff off the shelf right now.
Rod canion: This was stuff
that everybody in the industry
Was using some form or another.
Except the chip.
Except what's on the chip.
Steve flannigan: Without
ibm code it wouldn't run.
It is the program,
it is the magic.
Rod canion: We sent gary stimac
to dallas to buy some manuals.
Gary stimac: I purchased
an ibm reference manual,
And it had all the listings
of the ibm code in it.
Rod canion: He says, whoa,
this isn't hard at all.
Bad news is they copyrighted
it, and they own how it works.
Gary stimac: I circled
the word copyright,
Brought it to the my
lawyer, and he said, hmm.
Jim harris: What many of
the companies were doing was
They were copying ibm's code.
Guess what, ibm sued them--
out of business they were.
Good news is there's a
way around that, sort of.
We needed to make
sure that we did
Not shoot ourselves in the
foot from a legal standpoint.
I said, gary, you can
no longer write the code
Because you've looked at it.
In fact, you can't answer
questions about the code.
You're going to have to find a
different job here at compaq.
Steve flannigan: You can never
look, you just can never look.
If you look, and it
influences your work,
Then you can be open to a
lawsuit and you've copied it.
Gary stimac: No one
in the entire office
Could ever buy a
tech reference manual
Without me removing the
pages and me destroying them.
Charles lee: We had to basically
create a functional device that
Would do what the ibm
pc did without knowing
How the ibm pc did it.
Would be similar to playing
baseball blindfolded.
Very difficult, not
impossible, but very difficult.
So you might strike
out a couple times,
And you might fall
down a couple times,
But eventually you're going
to start to get a feel for it,
And you start getting a hit.
How many of these addresses
do we need to transcribe?
65,536.
Charles lee: We
went out and got all
The ibm software we could find.
Everything we could find--
games, or lotus 1-2-3,
Or unimportant, really
important, all of it.
We got every bit we could find.
Steve flannigan: We would
go through and run them
Until something broke, and
then we'd figure out well, what
Broke, and why did it break.
Steve flannigan:
We liked the idea
Of what compaq was trying
to do a lot because
Of the pc compatibility.
We thought it was
the right idea.
We were rooting for it,
but nobody really knew
How it was going to come out.
Announcer: We're ibm, and we've
seen some very skeptical people
Become very enthusiastic.
And that makes us
proud because we
Have more computers helping more
small businesses than anybody.
Bill aulet: So at
ibm there was always
This arrogance, this
confidence, that no one
Could recreate what we did.
And if they did,
we could just we
Could just tweak
something because we
Controlled the marketplace.
Announcer: Ibm entered the
personal computer market
Two years ago and went
all out unleashing
Its power as the sixth
largest industrial corporation
In the us.
Already, the computer
giant has won
25% of the personal
computer market,
And its share is growing.
Compaq-- they were
prying open a lock box,
And they were letting the
genie out of the bottle.
Rod canion: I was extremely
excited and scared to death
Because I was the
one that had to stand
Up and make this speech,
which I had never done before.
Ben rosen: Rod was not
experienced in dealing
With the public and the press.
Rod canion:
Ben had made sure
Everybody that
mattered was there.
Tv cameras were there.
We're in this beautiful
old room called the library
At the helmsley palace.
Good morning and welcome.
My name is rod canion,
and I am the president
Of compaq computer
corporation of houston.
The mysterious company
you've been invited
To come and hear about today.
Rod canion : I spent
most of the night practicing,
Changing, practicing, changing.
This is an
important day for us.
The public introduction of a new
personal computer that has been
In development for nine months.
Rod canion:
It was the big city
And we were the kids
from the plains of texas.
There's a three piece
suit, and my thick glasses,
And we looked out of place.
This is the compaq
portable computer.
The unit is laid over smoothly
using its carrying handle,
And the keyboard is removed
by sliding two latches
And lifting it out.
That's how easy it is to
get it ready for operation.
It was a portable
and that was something
Ibm had no entrant in at
all, and it was 27 pounds.
Portability-- people need
to be able to take it anyway.
It's going to have a handle.
Chris cantwell: It
was simultaneously
An incredibly revolutionary
idea but sounds so
Mundane to today's audiences.
A handle, wow.
It is the only
personal computer,
Portable or otherwise, that is
truly compatible with the ibm
Personal computer.
I begin to really
realize, this is it.
The flag was going down, and
the race was going to begin.
I repeat, compaq is the only
personal computer that is truly
Compatible with the ibm pc.
Bill aulet: This was just
a blip on the screen.
Who cares about a luggable?
It just doesn't
matter, it's a toy.
It's a curiosity--
it's nothing more.
Announcer: While some software
computer firms are battling
To succeed, one
personal computer
Company is more
concerned with taking
Its hardware success forward.
Kim frandois: Our company
is real all of a sudden.
We have a name,
we're on the radio.
Steve flannigan:
We're getting calls
From presidents, and ceos,
and engineers saying,
This is a cool machine.
What I brought today is a
compaq portable computer.
It's a full functioning computer
in a portable enclosure.
John markoff: People were
walking with portable computers
Down the aisles of
airplanes, and the computer
Was hitting people in the head.
Gary stimac: We didn't hardly
have a chance to breathe--
People loved the product.
We couldn't build
them fast enough.
John markoff: Trying to use
portable computers, which
Were not laptops at that point.
They were sewing machines on
the meal tray of airplanes.
The company's first product was
a 28 pound portable computer.
The salesman used to
demonstrate how rugged it is
By taking it and dropping it.
Howard anderson:
What compaq did,
Because they built
things so damn well,
Is they quickly went up to be an
acceptable alternative to ibm.
Announcer: Its founders
decided early on
To build machines
compatible with those built
By ibm but with new features.
Market research showed
customers want it.
Steve flannigan:
Sometimes people
Wanted to go home
over the weekend
And finish their
work before Monday.
They grabbed a portable.
That really turned
out to be important.
Bill murto: Product was
just flying off the shelves,
And the dealers loved it.
Announcer: Salespeople
already familiar with ibm
Products didn't
need much training
To sell compaq computers.
Bill murto: We meet a computer
land dealer in a little motel,
And there's no wall receptacle.
How am I gonna plug this in?
, well, the bathroom has one.
Ok, so we put the computer
on the toilet seat,
And we plug it in, and it ran.
And they went, wow!
Ben rosen: The challenge
was building computers
Fast enough to meet the demand.
We had no idea that it was
going to be as big as it was.
We're cutting back on
advertising-- we can't cut back
On advertising, and rod
said, well, let me make this
Really clear-- we're sold out.
Announcer: Compaq
computer corporation
Delivered its first
portable personal computer
In January of 1983.
By the end of the year, the
firm had sold $111 million
Worth of the machines.
A figure that company
executives say
Exceeded the first
year sales of any firm
In american business history.
Bill aulet: That was
the first time where
There was a ripple at ibm.
That being said, we had seen
other people come in-- amdahl,
Hitachi-- and they
come and they rise,
And then they go back down.
And we will defeat
them in the end.
There was kind of a feeling
that something was going on
Out there with respect
to the pc world
And somehow or other
ibm wasn't getting
The share that it wanted.
Now, I know ibm was
getting a big share,
But they wanted more.
And so people started paying
a little bit of attention.
With a clone that is actually
offering more portability,
For example, becomes a
successful notion like that,
Then isn't it the case that ibm
would or even has gone in there
And taken that market
to some extent?
That's the danger of playing
the ibm compatible game.
There was complete conviction
among the wall street
Public and the press public.
Well, enjoy it while
you can because ibm
Is going to have a portable
and then it's sayonara.
Wall street hit a
record high again today.
One of the better performers was
ibm, up more than five points
This week alone.
One of the reasons
is ibm's huge success
In the tough home computer
market, and the rumor
That there is more to come.
What was ibm going
to do, and when
Was it going to actually happen,
and how successful would it be?
: We were
always concerned about ibm.
: I think anyone
else in the computer business
Ought to be very frightened,
and I think everyone else is.
Jim harris: Ibm was arrogant.
Some manager got po'd at us and
said, kind of like a hitman,
Go design a portable and take
those guys out-- tired of them.
Announcer: The compaq
personal computer's
Main selling point is its high
compatibility with the ibm pc.
Yet ibm is now bringing its own
portable pc to the marketplace.
Announcer: It's
called the fud factor.
F-u-d for the fear,
uncertainty, and doubt created
Among its rivals by ibm.
Will there be life for
other home computers
After giant ibm's
product appeared?
What nobody outside
the company knew
Is that we had no
orders coming in,
So this wasn't really a
future hypothetical problem,
This was an immediate
problem that
Ross cooley: Compaq's
stock went down
Because they were
concerned that ibm would
Put compaq out of business.
Bill aulet: Compaq was the
first one in with the luggable.
Ibm put two products,
essentialy, in there,
And it doesn't do
nearly as well.
Rod canion: They didn't
really try to make it better
And try to meet
compaq's advances
In technology and performance.
Their product would not
run all the software--
Their ibm software,
even their ibm software
People did to run
in their computers
Would not necessarily
run in their portable.
But you could take
that same thing,
And put it in our
portable, and it would run.
How could that be?
Of course ibm at the time
did the only obvious thing,
And they blamed the user.
You're not doing it
correctly, and the user said,
I may be dumb, but
I'm not stupid.
Why don't you come back to me
when you've got it figured.
I had heard from friends
of friends inside ibm
That there was a lot of
discussion and turmoil
Within their pc ranks.
Why is this happening?
Why is this little
company out-marketing us?
Announcer: They've done a
little growing since they
Began in February of '82.
They had 6 employees then.
They have 950 now.
Two years ago, they
occupied the space
On one floor of this building.
By spring, it'll look like
this in one of their locations.
Well, production is up 1600%.
The worry now is they
won't get enough workers
To keep up the pace.
If you'd like to
apply to compaq,
You can call this number.
Compaq is looking to add 500
people by the end of the year.
Ben rosen: The culture that
rod created within compaq
Was 20 years ahead of its time.
Alec berg: Tech companies today
are very progressive, and cool,
And they create a
fun environment.
Where people aren't
working they're
Come play in our sandbox.
If I work at facebook,
they'll do my laundry,
They'll pick me up and drop
me off, there's a misuse,
And there's a full time chef
who is trained on cordon bleu.
They basically have built
a place that is so great
That you never want to leave.
At a time when other computer
makers are being squeezed,
Why is compaq still growing?
The answer may lie beyond
technology and marketing,
In a corporate culture that
gives employees free cokes
And puts trees in
the.
We started out providing
coffee and soft drinks
For everybody when there were
10 people in the company.
Jim harris and I would
stop by the grocery store
And pick up some more
soft drinks for the day
If we needed it.
It was a very egalitarian
kind of culture,
And it really owes it to rod.
You sense that the
employees appreciate
The fact that you don't
have a marked parking place?
How often do you
get to work early
To get your job
done and you walk
By an empty reserved
parking place?
Just seemed to make sense that
the people who got there first
Deserved to park
closest to the door.
You'd see rod canion
walking down the hall,
And it was certainly more than
permissible-- it was hoped--
That you would stop and
talk with him if you
Had something to talk about.
Announcer: The corporate
culture at compaq computer
Means involving
employees in decision
Making at almost every level.
What I think, or what I say,
can change things where you
Work-- that makes a difference.
Steven ullrich: We were all
very proud of what we did.
The camaraderie,
and the teamwork,
And the ability to get things
done without the red tape
And without all the
hassel that comes
With big company bureaucracies.
Roger mcnamee: Ibm was
the very definition
Of what a large american
corporation was.
Announcer: They don't call
it big blue for nothing.
It's a company with more
than 387,000 employees,
834,000 shareholders, and 590
million shares of common stock.
Bill aulet: When you looked at
the organization chart of ibm,
It was a very
hierarchical organization.
Here's the person up here
and you're down here.
What came down from on top is,
you better not lose and that
Was just in ibm's blood.
So it was a very, very
competitive environment
That you had to go through.
The greatest asset
the ibm corporation
Has happen to be its people.
If you can give an individual
a given set of objectives,
Measure them, and
then reward them,
Then almost any target
can be achieved.
Howard anderson: Ibm was a
financially driven company.
Make your numbers, make your
numbers, make your numbers.
Announcer: If you run a small
business profits can get
Squeezed when inventory doesn't
match up with production.
What can help is a visit to an
ibm personal computer dealer.
Bill aulet: We thought
a breakthrough,
Kind of out-of-the-box
thinking for marketing
Was having charlie
chaplin sell our products.
Announcer: The ibm
personal computer--
Not only can it help you plan
ahead, it'll balance your books
And give you more
time to make dough.
Bill aulet: Charlie chaplin
being innovative marketing?
It was for ibm, but it wasn't
for the rest of the world.
Why buy just a video game
from atari or on television.
Invest in the wonder computer
of the 1980's for under $300.
Chris garcia: Everyone
was pitching computers.
You had william
shatner for commodore.
With the commodore
vic-20, the whole family
Can learn computing at home.
Chris garcia: My personal
favorite, king kong bundy,
Was selling computers.
Announcer: Bundy has never
used a computer before.
He's sitting down.
Wait a minute, the on
screen instructions
Are so simple he doesn't have
to wrestle with a manual.
Compaq had john cleese.
Hello, I'm going to
tell you about compaq's
New portable ii computer.
It's such a marvelous machine
that it would be quite
Unfair to compare it
with another computer,
So we've decided to
compare it with this fish.
Chris garcia: A surrealistic
comedian from England
Who was more identifiable
to the geeks in the audience
Than to the general population.
The compaq portable
ii, however,
Can run all ibm's most
popular software 30%
Faster than ibm can.
Ha, ha, ha.
Tv ads with john cleese were
a runaway best selling hit.
Announcer: Inside compaq is
capacity equal to 30 diskettes.
I need a vacation.
This decision was sound.
Wrong, but sound.
Announcer: Kind of makes
you want to cry, huh?
I am crying.
Ben rosen: The same year
that we did the john cleese
Commercials, apple
announced the macintosh
With its 1984 commercial.
And we will bury them
with their own confusion.
Ah!
We shall prevail.
Announcer: Apple
computer officially
Unveiled its new macintosh.
The new apple that
costs less than $2,500
Is supposed to be one of the
easiest computers to use.
What the mac has really
brought us is really affordable,
High resolution
graphics and that
Leads us to a whole new
generation of software
Where pictures and text
are both important.
What corporations had
to do, because so many
Of their creative
types wanted apple,
Is they had to
have a subheading.
Ok, the creative types
can have their apple,
But apple was not really
compatible with the rest
Of the world.
And apple really
didn't want that world.
Mike swavely: Apple was
not a concern to compaq
Because they seemed perfectly
happy with their 4% or 5%
Market share, and
people that bought
Apples weren't usually
people that were
Going to buy compaqs anyway.
Announcer: Meet the lady.
Her name is lisa, and she
is the most exciting thing
To happen in computers today.
John markoff: Steve
jobs created the lisa,
An attempt to do what compaq
ultimately did successfully.
It was an attempt to enter the
business market for computers
And it failed miserably.
Announcer: Unlimited
power-- lisa, from apple.
John markoff: Despite
steve jobs welcoming compaq
To this industry, that they
had thought that they had
Pioneered, steve jobs
was gone from his company
Within the space of three years.
Compaq basically shook silicon
valley to its very foundations.
Chris garcia: What
compaq did give to apple
Was that it proved
that you could
Compete against the
monster and succeed.
Well, computer
stocks haven't exactly
Been the darlings of
wall street of late,
But as steve young
now reports, that
Didn't stop compaq from
promoting its latest
Product in gala fashion.
I wear my
sunglasses at night.
I wear my sunglasses at night.
Announcer: Ladies and
gentlemen, david copperfield.
Mike swavely: Ken
price basically
Came up with the concept of an
event to introduce a product.
There were no limits.
Announcer: Ladies and gentlemen,
compaq computer corporation
Proudly presents, live,
the pointer sisters.
I'm so excited,
and I just can't hide it.
Roger mcnamee: I went to
some of those early compaq
Product introductions,
and I'm going,
Wow, that's like show biz.
Rod canion: I was doing things
that I had never done before.
Announcer: Ladies and
gentlemen, rod canion.
Rod baby canion as we say
in hollywood, rod baby.
Ben rosen: All tech ceos
need communications training.
Ken price: He went from wal-mart
polyester suits and shirts
To really nice woolen
designer jackets.
Ben rosen: All of us could use
a little improvement, right.
Bill murto: He got
some dental work done.
: He went
to speech school.
I never dreamed that
it could come this far.
We went out and got contacts.
Rod was more than receptive.
Rod canion: We knew a lot
about designing products
And knew nothing
about the press,
And ben took me under
his wing and was a very
Important influence on me.
Ladies and gentlemen,
miss irene cara.
what a feeling.
Even believing.
Rod canion: Today, we
would like to introduce
A major addition to the compaq
family, the compaq plus.
Announcer: Compaq plus stores
30 times more than yours.
Does it have a handle?
Announcer: Yes.
Oh, drat.
Introducing the
compaq portable ii.
Announcer: Compaq's sales
jumped 54% for the first three
Months of the year.
Apparently, I should
never have mentioned
Compaq's portable computer.
I should have been telling
you about compaq's deskpro
Computer.
Rod canion: Today, we're
announcing the deskpro
286, and the portable 286.
Congratulations for
another terrific year,
People of compaq computers.
We got to enjoy
the day and then
We'll get back to work well,
maybe tomorrow, I guess.
Jan, this is what
the fuss is all about.
The 8386 microprocessor
from intel.
Now, no real operating system,
no real software, yet people
Are waiting in line to buy
computers with 386 in it.
More talk about it than probably
anything since the ibm pc
Came out.
Is this a lot of hype, or is
this really a major development
Of personal computers?
Oh, this is not
just hype, stewart,
This is a quantum leap
in personal computers.
Right now, people
are standing in line
To get these systems just for
the raw speed that it offers.
Announcer: The 386
chips, which give pcs
The power and stunning clarity
of so-called workstations,
Are expected to become
commonplace in a year or two.
Ibm always had first access
to the intel computer chip,
So everybody else was followers.
So ibm was always at the tip
of the spear so to speak.
Ibm for maybe 70 years, I don't
know-- however long it existed,
Expected exclusives.
: Intel
took the attitude,
We're not going to
work with just you,
We're working with everybody.
The significance of them
being willing to release
A microprocessor to
someone who wasn't ibm,
Was at a minimum, a modestly
hostile act towards ibm.
Compaq computer
will announce two
New personal computers
today, including
The world's fastest model.
A development that could make
big blue, ibm, green with envy.
come on, come on,
come on, come on, come on,
Come on, come on, come on.
Rod canion: Today, compaq
computer corporation
Is stepping to the forefront of
the personal computer industry.
The compaq deskpro 386 is
by far the most advanced
High performance personal
computer available in the world
Today.
The 386 era is here.
Everyone at intel is very
enthused about compaq's
Announcement today.
Announcer: The system
has a maximum ram
Capacity of 14 megabytes.
This provides more
than enough memory
For not only today's
applications,
But for tomorrow's as well.
Of course, compaq was
first out of the gate
With a 386 computer, but this
time ibm is not in the picture.
Rod canion: We spent a lot
of time trying to prove,
Absolutely beyond a
shadow of a doubt,
That this thing
was going to work
And it was going to
succeed, so how better
Than having bill
gates himself standing
Up and saying how great it was.
The original vision of
microsoft-- that there would
Eventually be a machine on
most desktops for office work,
Will be fulfilled by the
power of this type of machine.
It's gutsy, and the
industry was like, whoa.
I'm sure ibm went, they what?
We did not see it coming.
They couldn't have been happy.
And we couldn't
have been happier.
Compaq insists that I tell you
about their new 386 computer,
Which they say is the most
advanced desktop ever made.
But they're still sticking
to this cock and bull story
About it being made from 386
chips and 32 bits of a bus.
Frankly, this is not credible.
It's an insult to
your intelligence.
If I were you, I wouldn't
watch this commercial.
In fact, I'll
switch over for you.
That was the first time that
we came out so far ahead of them
That people started asking
what happened to ibm.
I mean, you just follow
what ibm does, right?
That was the
beginning of somebody
Putting real chips behind ibm is
vulnerable and intel did that.
The funny thing is that certain
other companies are still
Trying to make one of these.
So if you work for
mm, mm, mm, ha!
Remember, all you need are 386
chips and 32 bits of a bus.
We still dominated
the corporate computing
Marketplace, and if they got
too big, then we would move in.
Is it fair to characterize
you, as a competitor of ibm,
Do you really take
them on, head on?
Well, we certainly
compete directly with ibm.
Our intent is not so
much to compete with ibm,
As to compete for customers
who have an alternative
Of buying ibm products.
It has been a star performer.
It has grown faster than almost
any other company in history
In so short a period of
time, but this business
Is fraught with.
Danger
Do you think they can
continue this pace?
It's doubtful.
Announcer: Compaq released
sales predictions Wednesday
Saying the company will
report first quarter sales
Of more than $200 million.
Announcer: The company's
two latest machines,
A desktop and a portable,
are pound for pound the most
Powerful computers ever made.
Announcer: Compaq more than
doubled it's sales last year
And almost tripled its earnings.
It took compaq computer
just three years
To leap into the fortune
500 list of the nation's
Largest industrial companies.
Kim frandois: The press enjoyed
writing about the wild texans
That came from nowhere
and made a stake
In the high tech industry.
Announcer: The
northwest eastern storm
Is being discussed
around the country
As one of the fastest growing
companies in recent history.
Jim harris: We were having
the time of our life.
Kim frandois: We never stopped.
We worked hard, we played hard.
Announcer: Compaq plans
to announce what amounts
To the lamborghini of pcs.
Roger mcnamee: As
time went on you
See neater and cooler cars
show up in the parking lot.
Mike swavely: I bought
a 1982 porshe 928.
Ken price: He showed up
at my house one morning,
About 10 o'clock with a pitcher
of bloody mary's, and he
Said, c'mon, let's
go buy a couple cars.
Charles lee: I had
my wife, my kids,
And we went to the
corvette dealer to get me
A red and white
corvette convertible.
I drove a four cylinder tempest
with a cracked windshield,
So that was more or less
the kind of cars that were
In the parking lot before then.
Ken price: Those of us who
were used to eating mcdonald's
And drinking
budweiser beer, were
Suddenly eating smoked salmon
and drinking don perignon.
Charles lee: I was looking
out the window one day
And a helicopter landed.
And this girl I worked
with left the building,
Walked, out got
in the helicopter,
And then a little
while later came back.
And I said, what were you doing?
She said, went to lunch.
Every once in a while we
slow down enough to step back
And look at it, and it's
been tremendously rewarding,
And it does seem like
a dream at times.
Announcer: Sales at the
halfway stage this year
Were just under half
a billion dollars.
Announcer:Only one
company in history
Has exceeded $1 billion in
sales in his first five years.
It happened just last
year, and the company was
Compaq computer corporation.
One wall street analyst says
sales could tap a billion
And a half dollars next year.
Holy shit, what the hell's
going on here, right?
I mean, I go and ask the people
who've been the investment
Business a long
time, have you ever
Seen anything like this before?
And of course nobody had.
my name's
rod and I'm proud of us.
Setting records
fast and furious.
Jim harris: Put some
cable here, a shock
Mount there, put it in a
box that ain't quite square.
We are compaq's computer
crew, shufflin' on down,
Doing it for you.
We're so phat, we
know we're good.
Selling the
like we knew we would.
Bill murto: The success of
the company was tremendous,
But on a personal level
there were some, I'd say,
Difficulties.
Ken price: There
was a definitive gap
Between yourself, your
spouse, sometimes your family,
Which caused a lot of problems.
A lot of challenges and
a lot of ill feeling.
Rod canion: Now
there were certainly
Some things I did
miss, but I worked
As hard as I could to do both.
Coaching little league and
spending time at school.
I think it's always sad
when families split up.
There's nothing I can do about
anybody else's, in my own case
There were a lot of factors
that lead to a point
Where ended up
getting a divorce.
Bill murto: And I remember
coming home one day,
And my wife said,
chris, who's my son,
Mistook the gentleman working
on the ice machine as you.
Wait, ok, that's a problem.
This isn't working.
Rod canion: And he
said, I want to retire.
And that was a shock.
Bill murto: It's always been
am I enjoying what I'm doing?
And the moment I'm
not, change it.
Jim harris: This is what
happens to all big companies.
There are none, I
don't believe, that
Ever can keep what they
had in the beginning
Throughout their growth.
It's impossible.
Rod canion: That happened during
one of the toughest times--
Toughest periods of my
leadership of the company.
While many of the ibm
compatible companies
Have already gone
under, literally, compaq
Has yet to really falter.
Compaq computer has
tried to outsmart ibm.
Announcer: First, compaq
took on the big boys,
Then became one of them,
and now must fight to stay.
Bill fargo: I knew what
ibm was capable of,
And I knew that they would
come sooner or later.
I can't help but be
reminded about that joke,
How do you dance
with an elephant?
Very carefully, right, exactly.
: There was these
industry rumors that ibm
Was going to sue compaq.
Bob jackson: Let
me just say compaq
Was practicing a large number
of ibm's patents, large number.
Rod canion: They were beginning
to sense that they weren't
Going to be able to
control the pc industry
And make the kind of
profits they were used to,
So they were looking to make
money off of their patents.
Bob jackson showed
up at our door
And asked to see the
ceo of the company.
Ibm is here.
Bill fargo: When ibm came they
brought an army of people.
I don't really
know who they were.
Chris cantwell: Ibm would
do this thing called
Filling the skies with lawyers.
Bill fargo: I got very
concerned, very concerned.
Holy shit.
Chris cantwell: The idea was
that lawyers would descend on
You in such a huge number it
felt like the airborne was
Parachuting into your office.
These guys could shut us down.
I mean, if they really
want to go to the mat
That's a distinct possibility.
Bob jackson: I said,
ibm has 9,000 patents.
Ok, maybe half of them
don't apply to you,
But we've shown you 20.
There are hundreds more, and
you can invalidate some of them,
But you can't
invalidate them all.
David cabello: They wanted a
percentage of our sales price
For all of our sales.
Bill fargo: They
were at $2 billion,
And we were at $2 million.
It could end a company,
stop a company in its tracks.
Bob jackson: If they
misbehaved-- loosely used term,
But if they misbehaved we
had the howitzers lined up.
Bill fargo: I went in to rod
and told him we had to get
Serious about the negotiations.
They weren't going to settle
for a few million dollars.
Rod canion: He was very
serious that if we didn't take
This offer, then they were
going to come after us,
And they weren't
going to back off.
We went up to about $130
million and that closed it.
Rod canion: The sword
hanging over our head,
Which was what's ibm going
to do to shut you down,
Seemed like it had left
until April the second.
Hey, everybody, the
new computers are here.
New computers?
Who may I ask authorized
new computers?
Yeah, who?
You did.
Who did?
I did?
Ibm-- of course I did.
The new ibm personal system
ii, the next generation
Of personal computing.
Announcer: It was the biggest
ibm product announcement
Since the original pc.
Announcer: Ibm's personal
system ii computer
With the so-called
microchannel, an entirely
New computer system
that offers lots
Of extra speed and capacity.
We built an excellent product.
The micro channel is,
by technical specs,
Superior to the alternative.
Announcer: Permitting
computer users
To perform several
functions at the same time,
Like writing and printing.
Functions that on many computers
can only be done in succession.
Another new feature is that
it has a port where we can
Plug this mouse,
this pointing device,
Directly into the system.
My first reaction when I saw
the announcement of the psii,
Was oh, shit.
Announcer: Ibm is introducing a
new line of personal computers
That will be compatible
with its own software
But difficult for
competitors to duplicate.
Hugh barnes: Microchannel
was their way
Of breaking the whole
compatibility thing
And putting it
behind them forever.
Ibm, it's just,
it's nobody else.
This is our operating system,
it only runs on this machine.
You can't have it, you can't
have it, you can't have it.
You have to buy this
machine in order to run
Our software, end of story.
There was no doubt
they were just
Absolutely trying
to kill everybody
Else-- kill all the clones.
Ibm has come out, and in
response to the market,
Is lean and mean.
It's the next revolution and
evolution of microcomputers,
And logically enough,
it comes from, still,
The market leader in pcs.
United was the
first corporate buyer
Of the personal system
ii computers with
An order for 40,000 model 50's.
It was the death
star of our era.
Something designed
to destroy all
The competition on the planet.
Ibm has developed in the shape
that will set the standard
For the next five
years that the others
Will have to play against.
Mike swavely: We had our
first psii inside compaq
Within three hours
of the announcement
And started tearing
those suckers apart.
We were very confused
about this microchannel.
Announcer: The drawback is
that, for the most part,
The new microchannel
system is not
Compatible with
the existing system
Most personal computer companies
now use that ibm developed.
Announcer: It was faster than
the computer it replaced,
But it made useless $12
billion worth of software
Already bought by business.
Will it hurt the consumer?
Well, it is a problem for
a company who has a lot
Of existing pcs installed.
Announcer: Like
metropolitan life
Insurance company,
where they have more
Than 8,000 personal computers.
More than half of them ibm, but
while metropolitan continues
To buy pcs, none of them has the
new ibm microchannel standard.
Bill aulet: The
cat's out of the bag.
The customers now realize
you can buy something that's
Not ibm, and not get fired.
And in fact, it works
better sometimes.
The ground underneath us
is starting to come apart,
But we're making that
last ditch effort.
It's kind of like the two minute
drive at the end of the game
To try to get this back under
control, but it's not working.
: The psii was the
biggest mistake they made.
Roger mcnamee: They handed
us the keys to the pc city
And we took them.
Announcer: Now, the
question is, did ibm make
A mistake that's irreversible?
One that may lead
to even more erosion
In its share of the
personal computer market.
Ibm just screwed
all new customers.
They walked away
from compatibility,
And you're going
to pay the price.
If we could take that
message and isolate ibm,
Then it became a much
stronger message.
There is a revolt of
the clones this morning.
The nine personal
computer companies
Whose business has always
followed ibm's design lead.
It's a case of ibm versus the
rest of the personal computer
Industry.
Announcer: Let's call them
the gang of nine, a who's who
Of heavyweights in
the computer industry.
Gunning for the increasingly
disputed champion, ibm.
The little guys got together
and said, that's enough.
The first one we
went to was microsoft.
Bill thought it was a great
idea, but he also feared ibm.
Mike swavely: Ibm was
still his largest customer,
And he just invested a
whole bunch with ibm.
Chris garcia: Microsoft knows
it has a market with ibm,
But they recognized,
relatively early on,
That all of their capabilities
were going to be providing
To the largest number of users.
Rod canion: He was
looking for opportunities.
He would have jumped
at any opportunity
To do something
for microsoft that
Would build their business.
If I was bill gates, I would
see the compatible market
As the reason why
I am eventually
Going to be a multi-billionaire,
and one of the most successful
People on the planet.
Roger mcnamee: The way you were
supposed to deal with ibm was
That a smile and a
hand shake in one hand,
And a knife to stab them in
the back with the other hand.
Bill murto: Bill said,
yep, I'll contact
All the other
manufacturers and give
You a inroad to their ceos.
Announcer: Compaq,
tandy, hewlett-packard,
Olivetti, and nec.
Announcer: It reads
like a who's who
Of the high tech world with
the notable exception of ibm.
Now it's not only
compact, but you've
Got a whole group of people
that they've got with them, too.
You're thinking,
wow, maybe this thing
Is bigger than we thought.
Roger mcnamee: Can you
get all the little guys
Together and beat goliath?
That wasn't like a sure thing,
it was not a sure thing.
Rod got a call from lowe the
day before we announced it.
Rod canion: There was no way
I wasn't going to go forward,
And there wasn't any way
I was going to indicate
Any weakness to him.
And he said, I
think you're making
A big mistake by doing this.
I said, well, we'll see.
Led by compaq
computer, ibm rivals
Will unveil the new
machines at a major news
Conference in new york.
Announcer: They decided to
develop their own computer
Standards, called extended
industry standard architecture.
Announcer: Or eisa for short.
Announcer: Challenging
the very standard
Ibm is pushing with
its highly touted
Personal system ii computers.
They're not afraid of ibm.
They are taking on ibm, and the
tide is starting to turn now.
And the microchannel
has a real threat to it.
Announcer: All of the companies
that gathered at the industry
Forum endorsed eisa because
it maintains capability
With the almost 20
million computers
That exist in the world today.
Therefore, it protects the
investment of today's millions
Of pc users worldwide.
Announcer: While offering
just as much speed and memory
As microchannel, and armed
with a host of heavy support.
It is important that
we provide system
Software products which fully
support eisa based machines.
This event exemplifies the
industry's determination
To create and to
expand standards.
The industry together stood
up against ibm and prevailed.
Announcer: Letting the world
know that big blue isn't
Calling the shots anymore.
Their ability to change
the market in directions
That don't make
to a lot of people
Is just simply
not there anymore.
Announcer: Some analysts think
it was a day that left big
Blue looking black and blue.
Roger mcnamee: The genius
of intel and microsoft
Was that they both decided
to take a chance on compaq.
Because essentially,
compaq became
The canary in the coal
mine for the strategy
Of divorcing from ibm.
And their willingness
to place their future
In the hands of this
group from houston
Was pretty brave, and in
retrospect, brilliant.
One final question, and
kind of a personal one,
Are there some mountains out
there still for rod canion
To climb?
I think my biggest challenge
for the foreseeable future
Is to keep compaq together.
Keep the culture,
keep it rolling,
And reach whatever
potential's there.
Nobody really knows how fast and
how far a computer company can
Go, and I'd like to see that.
Compaq computer is one
of the fastest growing
Personal computer makers.
There's a company whose sales
have grown from $111 million
In 1983 to more than
$2 billion last year.
So what's to worry about?
It was a very
different company.
How do you manage 17,000
people in the same way
That you manage a hundred--
it's not possible.
Jim harris: Every time you
hire you end up, potentially,
Starting to dilute,
and then over time you
End up with an
organization that isn't
The same as the organization
you started with.
Has the fun gone out
of it now that you've
Built this successful company?
Will you stay with it?
What are your plans?
Oh, no, the fun is still there.
The challenge is different,
that's all I can say.
There's nothing quite
like starting a company
And having it grow rapidly.
As we moved to a
fortune 500 status
And then approaching the
billion dollar level,
The problems are different.
Rod canion: We knew
we needed a leader
To build a team in europe,
and through a recommendation,
We contacted eckhard
pfeiffer and very
Quickly he joined
the company and began
To build our european team.
We decided that we would
go into the major markets
Right from the start, which were
germany, the uk, and France.
And from then on
expand gradually
Into all the other countries.
He was more accustomed to
high volume manufacturing,
Get the cost out,
kinds of situations
And that's exactly what compaq
needed with the new lower
Cost product line.
In our ceo forum this
week, we take a look
At the art of competing on
the international scene.
American companies
versus the japanese.
Do you worry about
the competition that's
Coming from the far
east and from europe,
Particularly in the
computer industry?
The japanese certainly
have a lot of strengths.
The japanese company has major
competitors in the long term.
Foreign manufacturers
got to be pretty good.
Quality improved, and
essentially, for someone
Like compaq, they no
longer could get that price
Advantage that they once had.
You wouldn't want to buy these
things for $3,000 anymore.
Could you buy them for $1,000?
Do I hear $950?
Announcer: The new notebooks
like toshiba's t-1000,
Tandy's 1,100-fd and
zenus mini sport are
In the $1,000 to $2,000 range.
At the high end, about
$4,000, compaq lte 286.
We had companies like
dell computer actually
Begin to build better
and better products,
And they were selling
them at a lower price.
Announcer: Compaq,
the houston giant,
Has been facing an advertising
assault from the much
Smaller dell computer.
The industry can't recall
anything like these biting ads
Comparing features and price.
The dell ad calls dell
appealing and compaq appalling.
Dell, top of the mark.
Compaq, top of the mark-ups.
Compaq is not amused.
You can't survive, I believe,
for very long at least,
Just by selling the same
products at a lower price.
Bill fargo: And
there were people
Who said we need to get a low
cost product out there now
And take on these people.
That was primarily
led by pfeiffer.
I think it has been
a little bit more
Difficult for them to
keep up with the changing
In technology.
Announcer: Compaq, a
darling of wall street
That could do little
wrong in the past,
Found itself on the
market's bad side last week,
Compaq's stock plunged.
Announcer: On paper, combined
losses to all shareholders
Of more than $740 million.
It certainly is a stumble in
the eyes of the stockholders.
We didn't want to disappoint
relative to expectations,
But I think you've got
to differentiate that
From the actual
health of the company.
Ben, with some
prodding from pfeiffer,
Was becoming paranoid that we
would not be able to recognize,
And switch, and move, from as
high a quality provider as we
Were to low cost computers.
Ben rosen: We certainly
started seeing changes
In marketing strategies,
changes in the competitor base,
Changes in the
importance of pricing.
The essential view
was that rod could not
Adapt to what the company
needed going forward.
Ben had other
concerns about it.
He was more concerned
about me losing
Commitment to the company.
Rod was working on
a low cost concept,
But I don't think he was pushing
it enough to satisfy the board.
The chairman of your company
is a guy named ben rosen.
What's the chemistry
between the two of you?
I'd say ben and I
are very good friends.
Ben joined compaq at a time
when we were just forming,
And I think he's played
a key role in helping
Guide us along the way.
We have a lot of mutual
respect, and we bring
Different things to the party.
Roger mcnamee: You have to
give ben credit for two things.
One, he saw that the
vision was a real vision.
He got it right away because
they did finance the plan,
And then at each
stage thereafter
He encouraged and supported.
Without ben rosen compaq
computer corporation
Would not be where it is today.
Bill fargo: The
board did not want
To take any action against
rod, but they got to the point
Where they felt like
we had to do something.
Jim harris: Ben decided
that he might want
To create a situation
where there's
Kind of two bosses,
pfeiffer and rod,
Because of a loss
of confidence in us.
Roger mcnamee: There are
some management changes
That you make because an
opportunity is created
By bringing that new person
in, and even at the time,
There was no evidence
of that at compaq.
Hugh barnes: I don't
question the motives of it.
I think ben was
genuinely concerned,
I mean there's just
no doubt about it.
Jim harris: Rod
wouldn't compromise
And take the dual leadership.
We were getting ready to have a
board meeting and rod told me.
He said, you know, jim,
they're going to vote
Today on whether to remove me.
My attitude when we
started compaq was I
Would be ready to move aside
if that ever was necessary,
And I thank the other
founders of compaq
Had the same attitude.
That night of
the board meeting,
It was 10:30, 11:00
o'clock at night.
I got a call from jim.
Kim walker: I can
only say there was
Open weeping in the hallways.
Bill fargo: Going on without
him was almost unimaginable.
Charles lee: I had
quit compaq that day.
Kim walker: It was
like the heart and soul
Of the company being torn out.
Jim harris: I went ahead and
turned my resignation in.
Rod canion: I cannot even
think of being tired of what
I'm doing and the
opportunity that I
See at compaq in
the same fault--
They are two different things.
I see so much
challenge out there,
A challenge that, I
believe, we're capable of,
And yet I really want
to see it through.
Roger mcnamee: Ben
convinced himself that this
Was the right thing to make.
Bill fargo: He lost it.
He said several tears
over the decision.
Hugh barnes: It was inevitable
that there'd be a change.
Rod canion: It was
a very sad time.
It sunk in, what had really
happened and what it meant.
It took a very
long time before it
Finally began to feel normal
not to be there every day.
It was tough, it was tough
on-- it was hard on me.
Roger mcnamee: Compaq's
focus on portability
Was the beginning of
mobility and mattering
To the technology industry,
and everything that we do today
Is really driven by
the ethic that if you
Can't do it while you're moving
around, it's not very valuable.
And we can thank
compaq for all of that.
My dad would always look at
some of these cell phones,
Or some of the newer
computers, and say,
Are you responsible
for all of this stuff?
Well, yeah, it's a good thing.
I use iphones, I
use ipads, and I
Do know that if compaq
developed those products-- now,
I'm not taking anything
away from those guys.
Those guys did magnificent
job, and they can sell them
To dead people, but if we
did them they'd work better,
I know that.
If anybody had tried to
tell me how successful
Compaq would become,
I would've just said,
You're blowing smoke.
That's not possible.
We never, ever had
any idea that this
Would be as explosively
successful as it was, never.
I don't think we were
ever trying to take
Down the biggest company, ever.
We were trying to survive.
Here was a product and
an idea for a start up
That should have been in
silicon valley, if anywhere.
But houston?
Give me a break.
I had no idea we
were going to be doing
A billion dollar
company-- I mean,
The billion dollar baby was ibm.
How can I even conceive,
or think, that we
Would be an ibm in that sense?
No way, not the slightest.
I would still like to
have a mexican restaurant.