Free Encyclopedia of Ecommerce » Free Encyclopedia of Ecommerce » Digital Equipment Corp - Early History, Attempt At Restructuring, Takeover By Compaq Computer Corp.

Digital Equipment Corp - Takeover By Compaq Computer Corp.

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Although Compaq had first considered buying Digital in 1995, it wasn't until three years later that the personal computer manufacturer and marketer made an offer. Some analysts believed it was Digital's 1997 decision to refocus on Internet technology and services, after making two major divestitures, that caught Compaq's eye in 1998. Others attributed Compaq's renewed interest to the extensive service division Digital had amassed over the years while developing new technology for corporate buyers. Digital's wide range of products and services—including its Alpha architecture, Digital Unix operating system, and 23,000 service employees—would allow Compaq to compete with the likes of IBM Corp.

In June 1998, Compaq finally acquired Digital, completing the largest merger to date in the computer industry. Compaq discontinued Digital's personal computer line and sought to move beyond making and selling personal computers by offering increased computer services to clients. By 2001, service made up more than 20 percent of Compaq's total revenues. In large part, this was due to the 23,000 service employees the firm had inherited from Digital. That year, Compaq announced its intent to stop making the Alpha chip in favor of Intel's Itanium chip, and the intellectual property rights of Alpha were transferred to Intel.


Barker, Robert. "Missed the Boat on DEC? So Did Fidelity—Big Time." BusinessWeek Online. February 6, 1998. Available from

Bilodeau, Anne. "Digital is Weaned from Direct Sales, and Finds it Likes the Freedom." Marketing Computers. April 1997.

Emigh, Jacqueline. "Digital Crashes 1 Gigahertz Speed Barrier." Computing Canada. February 23, 1998.

Pendery, David. "Internet Business Key to Digital's Future." InfoWorld. November 10, 1997.

Popovich, Ken. "Compaq Turns on New Services Initiative." eWeek. July 16, 2001.

Ristelhueber, Robert. "A Slimmer, More Attractive Digital." Electronic Business. February 1998.

Sykes, Rebecca. "Digital Makes Peace with Intel." InfoWorld. November 3, 1997.

Williams, Molly, and Gary McWilliams. "Compaq Will Switch to Intel Processors." The Wall Street Journal. June 26, 2001.

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