What happened to Compaq?

Compaq was an American information technology company founded by Rod Canion, Jim Harris, and Bill Murto with just $3000 in 1982. Compaq rose to prominence in the 1990s as the largest supplier of PC systems after becoming the first company to clone an IBM PC legally and successfully. The company was acquired by Hewlett Packard in 2002 for $24.2 billion. Compaq products were rebranded as part of a new range of lower-end HP computers and the Compaq brand was discontinued in 2013.

Founding and Early SuccessCompaq Computer Corporation was founded in 1982 by three former Texas Instruments executives: Rod Canion, Jim Harris, and Bill Murto. The company’s goal was to produce a portable PC that was 100% IBM-compatible. In 1983, Compaq released its first product, the Compaq Portable, which became a success due to its compatibility with IBM’s PC software and expansion capabilities. This success set the stage for Compaq’s rapid growth and its reputation as a leader in the PC industry.
Market Dominance and InnovationCompaq’s ability to produce IBM-compatible PCs allowed it to capture a significant share of the PC market. The company was known for its innovative engineering and quick development cycles. It introduced several groundbreaking products, including the Compaq Deskpro 386, which was the first PC to use Intel’s 80386 microprocessor. Compaq also played a role in popularizing the laptop computer with its Compaq LTE series. The company’s market dominance and reputation for innovation made it a force to be reckoned with in the PC industry.
Challenges and CompetitionDespite its early success, Compaq faced growing competition in the PC market. Rivals like Dell and Gateway challenged Compaq’s market share by adopting direct sales models and cutting costs. Compaq’s growth also led to increased complexity, and it faced challenges related to supply chain management. In the late 1990s, the company’s profitability declined, and it had to restructure its operations. Compaq also faced competition in the server and enterprise computing sectors.
Merger with Hewlett-Packard (HP)In 2002, Compaq announced its merger with Hewlett-Packard (HP) in a deal valued at approximately $25 billion. The merger was aimed at creating a stronger competitor in the PC and enterprise computing markets to better compete with IBM. The merger, however, was met with skepticism and resistance from some shareholders and analysts who questioned its potential benefits. The merger was completed later that year, creating a new entity known as HP.
Legacy and ImpactCompaq’s legacy is twofold. First, it was a pioneer in the PC industry, helping to establish the standard for IBM-compatible computers. Its early success demonstrated that compatibility with IBM’s software was critical for PC manufacturers. Second, while Compaq as a brand no longer exists, the merger with HP resulted in the formation of one of the world’s largest technology companies. HP continued to produce a wide range of products, including PCs, printers, and servers. The Compaq brand name was eventually phased out, but its influence on the PC industry remains.


Compaq was an American information technology company founded by Rod Canion, Jim Harris, and Bill Murto with just $3000 in 1982.

The company began as a developer and seller of computers and related products and services, with the founders having the vision to produce personal computers that were portable and had the power to compete with IBM machines. 

Compaq rose to prominence in the 1990s as the largest supplier of PC systems after becoming the first company to clone an IBM PC legally and successfully. In the process, it became the youngest ever Fortune 500 company after just four years in operation. 

Less than 20 years after the Compaq story began, the company was acquired by Hewlett Packard in 2002 for $24.2 billion. Compaq products were rebranded as part of a new range of lower-end HP computers and the Compaq brand was discontinued in 2013.

There are several reasons for the rise and very swift fall of Compaq. Let’s take a look at them below.

DEC merger

Compaq acquired the Digital Equipment Corporation (DEC) for $9.6 billion in 1998 – at the time the largest merger ever seen in the computer industry.

In theory, the arrangement would allow Compaq to leverage the corporate and enterprise market. But the most profitable elements of DEC were those Compaq had no interest in pursuing. These included silicon chip manufacturing, minicomputers, and enterprise consulting. Chip manufacturing in particular was not a good fit for Compaq because the chips were not compatible with its computers.

The DEC acquisition marked the beginning of the end for Compaq. Differences between the two companies resulted in a clash of workplace culture, leading to redundancies and a drop in morale. A lack of efficiency lead to missed deadlines and products which could not be sold. Retailers with a glut of Compaq stock were forced to sell at ridiculously low prices, which angered partners such as Microsoft.

Increased competition

With company executives managing the fallout from the DEC acquisition, several competitors took market share away from Compaq in the late 1990s.

Companies such as Dell, Gateway, HP, and IBM took advantage of an increase in computer sales as consumers became fearful of the Y2K bug. Compaq failed to capitalize on this trend, preoccupied with a need to establish a direct-order business to compete with Dell in particular.

Two years later, Dell surpassed Compaq for total PC sales.

Dot-com bust

Further adding to the surplus of Compaq stock on the market was the bursting of the dot-com bubble. 

The company lost a lot of business from dot-com organizations who were traditionally its biggest customers. When many of these organizations were liquidated, a glut of used and unused products resulted. Compaq had to compete with its own products until the market recovered and absorbed the surplus.


Intel was the final nail in the coffin for Compaq, with the former creating a marketing campaign arguing that the CPU was the most important part of a computer.

This argument caught on, so Intel began manufacturing chipsets and motherboards for businesses such as Dell to use in their own systems. This meant computers from Compaq’s competitors were cheaper with essentially the same componentry, and Intel was large enough to beat the company on economies of scale.

With very little differentiating a Compaq computer from another brand, the company lost market share and became an attractive takeover target for HP.

Key takeaways:

  • Compaq was an American developer and producer of computer products and services. After strong initial success, the company was acquired by HP in 2002 with the Compaq brand retired in 2013.
  • Compaq’s short-sighted acquisition of DEC provided the catalyst for its decline. While the company was dealing with the ramifications of the acquisition, competitors such as Dell and Gateway increased their market share.
  • Compaq also experienced a loss in revenue after the dot-com bubble burst. This was exacerbated by the standardization of chipsets and motherboards by Intel.

Quick Timeline

  • Compaq was founded in 1982 as an American information technology company with the vision to produce portable personal computers that could compete with IBM machines.
  • Compaq became the largest supplier of PC systems in the 1990s after legally and successfully cloning an IBM PC, making it the youngest Fortune 500 company at that time.
  • In 1998, Compaq acquired Digital Equipment Corporation (DEC) for $9.6 billion, but the merger led to clashes of workplace culture and inefficiencies, marking the beginning of Compaq’s downfall.
  • Increased competition from companies like Dell, Gateway, HP, and IBM eroded Compaq’s market share in the late 1990s.
  • The bursting of the dot-com bubble resulted in a surplus of Compaq stock in the market as many dot-com organizations went out of business.
  • Intel’s marketing campaign emphasizing the importance of the CPU and its decision to manufacture chipsets and motherboards for competitors like Dell further hurt Compaq’s market share.
  • In 2002, Compaq was acquired by Hewlett Packard (HP) for $24.2 billion, and the Compaq brand was eventually discontinued in 2013.

Other Failure Stories

What Happened to WeWork

WeWork is a commercial real estate company providing shared workspaces for tech start-ups and other enterprise services. It was founded by Adam Neumann and Miguel McKelvey in 2010. WeWork’s business model was built on complex arrangements between the company and its landlords. There were also several conflicts of interest between Neumann and WeWork, which provided the impetus for the failed IPO and significant devaluation that would follow.

What Happened to Netscape

Netscape – or Netscape Communications Corporation – was a computer services company best known for its web browser. The company was founded in 1994 by Marc Andreessen and James H. Clark as one of the internet’s first and most important start-ups. The Netscape Navigator web browser was released in 1995 and became the browser of choice for the users of the time. By November 1998, it had been acquired by AOL, which tried unsuccessfully to revive the popularity of the web browser. Ten years later, Netscape was shut down entirely.

What Happened to Musical.ly

Musically, or Musical.ly as it is officially known, was a Chinese social media platform headquartered in Shanghai. After passing 200 million users in May 2017, the platform was shut down by tech company ByteDance in November. After its acquisition, ByteDance suggested Musical.ly would continue to operate as a standalone platform. Company representatives noted that it would be able to leverage ByteDance’s AI technology and enormous reach in the Chinese market. Musically was ultimately absorbed into TikTok in June 2018, with the app no longer available in August of the same year. Existing users were offered technical support and several new features as a sweetener.

What Happened to Vine

Vine was an American video social networking platform with a focus on looping video clips of six seconds in length, founded by Dom Hofmann, Rus Yusupov, and Colin Kroll in 2012 to help people capture casual moments in their lives and share them with their friends. Vine went on to become a massively popular platform. Yet by 2016, Twitter discontinued the mobile app, allowing users to view or download content on the Vine website. It then announced a reconfigured app allowing creators to share content to a connected Twitter account only. This marked the end of Vine.

What Happened to CNN Plus

CNN Plus was a video streaming service and offshoot of CNN’s cable TV news network that was launched on March 29, 2022. The service was ultimately shut down just one month after it was launched. Trouble began for the platform when parent company WarnerMedia merged with Discovery. The latter was unimpressed with paltry viewer data and, with $55 billion in debt to clear, was not interested in funding CNN+ moving forward. Other contributing factors to CNN Plus’s demise include a lack of compelling content and streaming service market saturation.

What Happened to Clubhouse

Clubhouse is a social app that allows thousands of people to communicate with each other in audio chat rooms. At one point, the company was worth $4 billion and boasted users such as Mark Zuckerberg and Elon Musk. Clubhouse declined because it rode the wave of pandemic lockdowns and suffered when people resumed their normal routines. The decision to remove the invite-only feature also caused a rapid influx of new members and removed any exclusivity. Clubhouse management also failed to define a business model and was unaware of the components of a successful social media site.

What Happened to Facebook


What Happened To Carvana

Carvana is an American online used car retailer headquartered in Tempe, Arizona. The company – which sells cars in unique vending machines – was the fastest-growing used vehicle retailer in the United States, with revenue of $3.94 billion in 2019. Yet by 2022, on $12.8 billion in revenue, the company reported almost $2.9 billion in net losses.

What Happened To Houseparty

Houseparty was an app-based group video chat platform for mobile and desktop. Released in February 2016, the platform rapidly grew to hundreds of millions of users and was the #1 social app in 82 countries by May 2020. Less than 18 months later, however, owner Epic Games announced that it would be shutting down the app in October 2021. Let’s explain the reasons for Houseparty’s demise below.

What Happened To ChaCha

ChaCha was a human-guided search engine founded in 2006. The platform provided a valuable service at a time when traditional search engine algorithms were unreliable and less developed. When algorithms did become sufficiently developed, they provided answers to questions for free and much more rapidly than ChaCha could. The ChaCha business model was also unscalable, with employees overworked as the company tried to stay ahead of innovation. ChaCha’s demise was also compounded by the smartphone, which provided another avenue for consumers to find information. A belated attempt to restructure and cut costs followed, but the company could not service its debt past 2016.

What Happened To RadioShack

RadioShack is an American electronics retailer founded by brothers Milton and Theodore Deutschmann in 1921. The company enjoyed market dominance in the 70s and 80s but faded fast after a slew of missed opportunities. RadioShack operated over four thousand stores in the USA, but many were placed too close together which caused sales cannibalization. These stores were also often small and had a confusing inventory mix. RadioShack sold the first mass-produced personal computer with much success. However, the company saw no future in personal computers because of the high cost of hardware. It then instructed sales managers to intentionally keep PC sales under a certain threshold.

What Happened To Compaq

Compaq was an American developer and producer of computer products and services. After strong initial success, the company was acquired by HP in 2002 with the Compaq brand retired in 2013. Compaq’s short-sighted acquisition of DEC provided the catalyst for its decline. While the company was dealing with the ramifications of the acquisition, competitors such as Dell and Gateway increased their market share. Compaq also experienced a loss in revenue after the dot-com bubble burst. This was exacerbated by the standardization of chipsets and motherboards by Intel.

What Happened To Kodak

Kodak is an American photography product and service company founded in 1892 by George Eastman and Henry A. Strong. After dominating the photographic film industry for decades, the company filed for bankruptcy in 2012. Kodak was not ignorant of digital camera technology. But it did fail at various stages to commit to digital products entirely despite overwhelming evidence that the technology would prove profitable. Kodak was also the victim of the changing retail landscape and consumer sentiment toward foreign products in the United States. Blind in its devotion to printing, it also missed an opportunity to create a Facebook-style photo-sharing website three years before Facebook itself was conceived.

What Happened To Friendster

Friendster was a social networking site that then transitioned to a gaming platform. Ultimately, Friendster failed to capitalize on its early success as one of the first social media platforms to experience mass uptake. When Friendster became a gaming platform, it failed to notify its user base. This set in motion the migration of users to Facebook which would continue for some years. Friendster’s decision to raise funds via venture capital funding populated its board with investors who were not interested in technology or innovation. The company was acquired by MOL Global in 2009 who then sold its patents to Facebook soon after.

What Happened To StumbleUpon

xStumbleUpon was an early social network founded by Garrett Camp, Geoff Smith, Justin LaFrance, and Eric Boyd. At one point, the platform was responsible for half of all social media traffic in the United States. StumbleUpon suffered intense competition from the likes of Pinterest, Digg, and Reddit – both in terms of site functionality and monetization strategy. After a failed partnership with eBay, Camp bought back the company and instituted a major redesign to limited success. The StumbleUpon user experience became outdated as consumers preferred to waste time scrolling through news feeds. Upon this realization, Camp shut down the service in 2018 to focus on a more modern iteration called Mix.com

What Happened To Altavista

Altavista was a pioneering search engine developed by a group of Digital Equipment (DEC) researchers. It was originally created to showcase the power of a then-revolutionary DEC supercomputer. After an ominous partnership with Yahoo in 1996, AltaVista underwent a series of acquisitions and format charges as several companies tried to make it profitable. In the process, the search engine lost market share to up-and-comer Google. Yahoo acquired AltaVista in 2003 and absorbed the technology behind the search engine into its own platform. AltaVista was formally put to rest ten years later.

What Happened To Blockbuster

Blockbuster was an American movie and video game rental chain. The company went from industry leader to filing for bankruptcy with $1 billion in debt in less than a decade. Blockbuster relied on late fees to drive a high proportion of revenue. This strategy proved uncompetitive after Netflix offered fee-free movie rentals by mail. Blockbuster lost significant market share to Netflix in the ensuing years and experienced a decline in profit after abolishing late fees in an attempt to remain competitive. Blockbuster’s demise is mostly due to an inability to innovate. Although passing on the offer to purchase Netflix is noteworthy, the company failed because of a myopic focus on its outdated rental franchise model.

What Happened To Napster

Napster was a peer-to-peer music-sharing software application. It was the first such platform to provide free access to the full history of recorded music online. Napster quickly attracted the attention of music artists, with Metallica instigating court proceedings against the company for copyright infringement and the distribution of unreleased music. Napster was forced to shut down after the Recording Industry Association of America won a court injunction. Mounting legal fees and compensation costs led to the company filing for bankruptcy in 2002.

What Happened To BlackBerry

BlackBerry is an iconic smartphone brand owned by Canadian company BlackBerry Limited. The company enjoyed first-mover status in the smartphone industry, but ultimately squandered its advantage. BlackBerry was ignorant and in some ways disrespectful of competitors in the industry. It was more concerned with protecting its proprietary technology than innovating to stay relevant. Though profitable to some extent, BlackBerry’s focus on enterprise customers came at the expense of the far more lucrative consumer market. Government opposition to censoring information also eroded one of the core strengths of the company’s smartphone.

Why Nokia Failed

Nokia is a Finnish telecommunications, consumer technology, and information technology company founded in 1865. It enjoyed 51% of the global market share for mobile phones in 1998. Nokia’s device-based hardware system was cumbersome and outdated, but the company persisted with it while competitors developed the software-based iOS and Android operating systems. By the time Nokia phones offered Android, the company had been left behind. Corporate mismanagement within Nokia was rife and culture suffered as a result. Internally and externally, the company failed to acknowledge its diminishing relevance and market share.

What Happened To Xerox

Xerox is an American corporation selling print and digital document products and services worldwide. The company failed to capitalize on revolutionary research performed at its PARC R&D center. Xerox was visited by Steve Jobs in 1979 who gained access to PARC in exchange for Xerox receiving shares in Apple. He then purchased the rights to a Xerox GUI and used it to produce the Apple Macintosh. Xerox released the Xerox Star personal computer in 1981 in a rare example of the company selling an innovative product commercially. However, the Star was prohibitively expensive, targeted the wrong market, and was a decade ahead of its time.

What Happened To Quibi

Quibi was an American short-form streaming service for smartphones. Unfortunate timing with the onset of the COVID-19 pandemic is at least partly responsible for the failure of the platform. Despite billions being invested in securing high-end talent and production studios, Quibi content was generally poor quality. In any case, there was no way for consumers to share or engage with the content they did enjoy. Quibi was not helped by its pricing strategy and the presence of established competitors offering more for less. It was also improperly and inadequately marketed.

About The Author

Scroll to Top