Compaq plans .Net services group

Compaq is planning to launch a dedicated practice within its professional services organization that will focus on Microsoft’s .Net strategy.

Compaq will follow up its commitment on the hardware side with specific appliances that will run on the platform, according to the company’s president, Michael Capellas, who visited Toronto on Wednesday to meet with customers and resellers.

Capellas said Microsoft’s .Net strategy is in “lock-step” with Compaq’s own plans and that the vendor will play a big role in promoting the strategy. Microsoft’s .Net refers to a forthcoming software platform specifically designed for developers creating Internet applications. The company is promising that .Net will allow code written in many different programming languages (including XML) to be used in high-performance environments safely.

“It probably hasn’t been explained very well,” he admitted. “I think it may have been intentional, to a certain extent, to make sure they (Microsoft) have their execution strategy really solid before they start passing out the .Net coffee cops and T-shirts.”

The .Net practice is a small part of Compaq Corp.’s worldwide plan to beef up its professional services arm to become more competitive with IBM’s highly profitable Global Services unit. Capellas said he wanted services to make up at least 30 per cent of the company’s revenues, as opposed to the 21 per cent it achieved in Compaq’s most recent quarter.

Getting there will involve the creation of bundled offering in its financial services unit, Capellas said, along with a focus on markets beyond its strength in finance in verticals like government, retail and health care.

It will also likely involve acquisitions. “We will be looking for strong, service-oriented companies that have a proven focus and commitment to those verticals,” he said, adding that internal development of its services unit is also possible. “If I had said a year ago that we were going to try and grow services organically, people would have looked at me like I was crazy, but now there is the depth of talent out there to do it.”

Compaq, of course, inherited a services organization when it acquired Digital Equipment Corp. (DEC) in 1998, the same year Capellas joined the organization as CIO. He has since succeeded Eckhard Pfieffer as president, and Ben Rosen as chairman.

In the meantime, he has presided over a company deep in the transition from PC heavyweight to a more diversified entity that is increasing its focus on storage and servers. This year, Dell knocked Compaq off of its perch as the leader in worldwide PC shipments, and last week Gateway upped the ante by announcing a promotion that promised to undercut the prices of its rivals.

Capellas said he was taking the price war in stride. “In the PC world, supply and demand metrics don’t work,” he said. “There’s an oversupply situation, and so we’ll be as competitive as we have to be. But we’re doing more than that. We’re consolidating some of our manufacturing resources, we’re consolidating our inventory, and we’re reducing some of our operating cost.”

The company also recently restructured its operations among a new division, the Access Business Group, which is primarily responsible for the sales and marketing activities surrounding the Evo line of products.

“We were starting to see situations where product that’s being sold into the small and medium business market through retail. We were also establishing relationship with component suppliers to common product lines. After a certain point, it just doesn’t make any sense to set up artificial boundaries around these products.”

The restructuring around the Access Business Group is largely complete, Capellas said, with the exception of the company’s engineering division.

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