All language subtitles for Silicon.Cowboys.2016.DOCU.720p.WEB-DL.DD5.1.H264-FGT

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.

Announcer: 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 jiving.

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.

Announcer: 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 1970s,
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,
okay, 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 six 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 60s and 70s.

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, Radio Shack--

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 three 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 moulded 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

os 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: Über 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 demeanour

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.

Commentator:
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 jiving
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 going to build

and that did it.

Steve Flannigan:
It was exciting.

It was like,
okay, 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 look-alikes?

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

o 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 sceptical 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

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 going to plug this in?
Well, the bathroom has one.

Okay, 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
oing 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 rumour

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?

Narrator: We were
always concerned about IBM.

Narrator: 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 POed 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,
essentially, 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 six 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.

When people aren't working

they 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 masseuse,

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 plants.

We started out providing
coffee and soft drinks

for everybody when there were
ten people in the company.

Jim Harris and I
would stop by the grocery store

and pick up some more
soft drinks for the day

uf 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 hassle
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 1980s 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
favourite, King Kong Bundy,

was selling computers.

Announcer: Bundy has never
used a computer before.

He's sitting down.

Wait a minute,
the onscreen 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 marvellous 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.

Okay, 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
woollen designer jackets.

Ben Rosen: All of us could use
a little improvement, right.

Bill Murto: He got
some dental work done.

Commentator:
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 386 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.

Commentator:
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 its 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
aaround 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 Porsche 928.

Ken Price: He showed up
at my house one morning,

about 10 o'clock
with a pitcher of bloody marys,

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 Dom 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 its 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,
shuffling on down,

doing it for you.

We're so phat,
we know we're good.

Selling a billion
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 I 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, okay, 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.

Commentator: There was these
industry rumours 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.

Okay, 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 PS/2,

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 50s.

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
PS/2 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 businesses.

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.

Commentator: The PS/2 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 becames
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 Compaq,
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 sense
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 1100-FD
and Zenith's 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 think
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 shed 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
aany 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.