Eckhard Pfeiffer succeeds founder, Joseph R. Canion, as chief executive

COMPAQ'S NEW MAN

December 02, 1991|By Tom Steinert-Threlkeld | Tom Steinert-Threlkeld,Dallas Morning News

HOUSTON -- Eckhard Pfeiffer spent his first full week as chief executive officer huddled in lengthy strategy and organizational sessions with his top lieutenants at Compaq Computer Corp.

And the next week, he gave the first glimpse at the once infallible personal computer firm's revamped approach to the market that made it a $4 billion player in less than a decade. Mr. Pfeiffer was making his first presentation to Wall Street analysts since the abrupt ouster of founder Joseph R. "Rod" Canion.

Until then, both Mr. Pfeiffer and the new strategy were enigmas to those seeking clues about the future direction of one of the industry's top three firms.

Take Mr. Pfeiffer. He rose to prominence in Europe, joining Texas Instruments Deutschland in 1964 as a controller. He later headed marketing operations for its microchip business there and its entire European consumer electronics business.

A decade ago, he had transferred to the United States, where he became head of TI's worldwide marketing. When three engineers left TI and founded Compaq Computer Corp., he was soon to follow.

But he was off to Europe again, where he replicated the company's U.S. strategy. As at home, Compaq became one of the top brands in Europe. Overseas sales have become as big a part of the company's business as those in the United States.

Yet, how Mr. Pfeiffer differs from Mr. Canion still is largely a matter of conjecture. He was not talking much, preferring to attend to getting Compaq's business back on track. Industry followers who are talking regard him as a riddle unfolding.

"The impression is that somehow Eckhard Pfeiffer will be better at making low-cost computers than Rod Canion could have been," said Stewart Alsop, the editor-in-chief of InfoWorld, a trade publication.

But Mr. Pfeiffer was successful in Europe for sticking basically to the formula that worked in the United States. "Eckhard Pfeiffer did it not by defining a new strategy, but importing a strategy from the U.S.," Mr. Alsop said. "It doesn't demonstrate that Eckhard has a new approach."

Indeed, Mr. Pfeiffer "fit perfectly" in the mold of Compaq's U.S. managers, former TI engineering types such as Mr. Canion and his second-in-command, Michael S. Swavely. He was "very similar" and tried to stay that way.

"It was very hard to get a sense of him," said Mr. Alsop after meeting Mr. Pfeiffer in Europe. "He was very good at sticking to the party line, so it's hard to say where Compaq stopped and Eckhard Pfeiffer started."

With Mr. Pfeiffer's TI background, he is likely to "know how to manufacture cost-effectively," said Esther Dyson, publisher of Release 1.0, an industry newsletter that grew out of an electronics newsletter published by Compaq Chairman Benjamin M. Rosen.

But Mr. Pfeiffer succeeded in Europe by "concentrating on the high end" of the personal computer business, Ms. Dyson said. That is similar to what Mr. Canion seemed to prefer to do, Mr. Alsop noted.

Compaq recently introduced a portable computer with a color screen. It was heavy. It cost $10,000. But it had the kind of top performance that Compaq is known for. The machine "is sort of an icon of the kind of machine Rod Canion likes to see," Mr. Alsop said.

But in an industry where most remaining players are concentrating on notebook computers that weigh less than seven pounds and cost a few thousand dollars, the challenge to Compaq is still to compete on the low end and keep competitors from stealing sales.

"Maybe we did take our eye off the ball in terms of keeping those costs down," Mr. Rosen said last week. "There's not a lot of pressure when you've had eight great years in a row."

What Mr. Pfeiffer brings to the table in those attempts is unclear. In a way, that may be Mr. Pfeiffer's strength in coming to Houston and effecting change in what has long been essentially a Texas-run operation.

"It's difficult to say he's better or worse than Rod Canion," Mr. Alsop said. "It's easier to say he carries less baggage."

But his unfamiliarity also may work to his disadvantage. With the industry's top two companies, Apple Computer Inc. and International Business Machines Corp., now in a long-term alliance with each other, Compaq's role may well be to be a leader for the rest of the industry, Mr. Alsop said.

That is a large part of what Mr. Canion was trying to do, noted Mr. Swavely, who departed Compaq earlier this year. Three years ago, Mr. Canion organized a "Gang of Nine" in revolt against new industry standards that appeared to favor IBM exclusively. The group developed a different set of standards that extended previous computer architecture, and found widespread acceptance.

More recently, Mr. Canion helped organize an initiative backing an Advanced Computing Environment, that would help personal computer companies compete effectively with makers of speedier, more dazzling workstations.

With Mr. Canion gone, "it leaves a significant industry leadership gap," said Mr. Swavely, who doubts Mr. Pfeiffer can easily fill it.

"In many cases, Eckhard hasn't even met the key people" at the companies involved in those efforts, Mr. Swavely said. Indeed, he is not that well-known even among many key parts of Compaq itself. "Eckhard has not been involved in the product side of the company at all," he said.

He also scoffs at Mr. Pfeiffer's credentials at TI, which is not known as an expert at marketing consumer electronics products and is having trouble making any money at microchips of late. "These are not exactly what I would consider recommendations," Mr. Swavely said.

The differences between Mr. Pfeiffer and Mr. Canion were even hard for Compaq's board to weigh, judging by its six-hour executive session on Oct. 24 that ended with Mr. Pfeiffer's promotion.

"If it was black and white, we could have done it in five minutes," Mr. Rosen said.

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