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Pfeiffer, Eckhard - Overview, Personal Life, Career Details, Chronology: Eckhard Pfeiffer, Social and Economic Impact

compaq company computer business

(1941-)
Compaq Computer Corp.

Overview

As chief executive of Compaq, Eckhard Pfeiffer has established the computer company as the world leader in the hotly contested personal computer market. He hopes to take the company even further by expanding its product line and services to become the largest enterprise computing company.

Personal Life

Eckhard Pfeiffer was born on August 20, 1941 just west of Dresden in the small town of Lauben, Germany (now part of Poland) during the first days of World War II. He earned his BA at the Kaufmaennissche Berufsschule in Nuremberg, Germany in 1963 and an MBA at Southern Methodist University in 1983. Pfeiffer is single and lives in a Houston high-rise. He dresses in elegantly custom tailored suits and speaks with a heavy German accent that reminds those who meet him of Henry Kissinger. He has often been seen socializing with Houston Rockets basketball star Hakeem Olajuwon and Texas governor George W. Bush and owns a collection of high-powered classic automobiles.

Career Details

Pfeiffer started his career as a financial controller for Texas Instruments in Munich following his graduation from Kaufmaennissche Berufsschule in Nuremberg, Germany, in 1963. Pfeiffer later switched to the sales department of Texas Instruments and subsequently was head of the company’s European marketing division. In 1983, Compaq Computer Corp. invited him to head their European operations after he graduated from Southern Methodist University. He proved to be remarkably successful in this role and came to the United States to become chief operating officer in 1991. Before the end of the year, Pfeiffer replaced the man who promoted him, Compaq CEO and co-founder, Rod Canion. The board rejected Canion for his having allowed competitors to beat Compaq’s prices. In October of that year, the price of Compaq stock dropped by two-thirds in response to poor sales and profits reports. It was now Pfeiffer’s job to change the company’s reputation for high-quality but high-cost computers.

Pfeiffer proceeded to make dramatic changes and to set seemingly radical goals at Compaq. He reduced the company’s employee count from 12,000 to 10,000 and enlisted 3,000 new dealers. He also beefed up telephone ordering and customer service and he opened up marketing to include PC sales for homes, education and small business. Moreover, Pfeiffer announced that Compaq would be the top PC producer by 1997. This incredible and seemingly arrogant claim came true far ahead of schedule. In January 1995, Compaq had succeeded by shipping 4.8 million PCs in a year with the industry giant International Business Machines Corporation (IBM) lagging behind at 4 million.

Pfeiffer is a highly respected corporate leader. His value to Compaq is reflected by the size of his paycheck. In 1996, Pfeiffer’s cash compensation jumped 17 percent, from $3.6 million to $4.2 million. These figures account for Pfeiffer’s salary and annual bonus. Also in 1996, he exercised options on 370,000 shares of Compaq stock for another $23.5 million in revenue.

Some of Pfeiffer’s critics complained that he made over Compaq in his own image. David Kirkpatrick commented in Fortune, “While it sounds peculiar to say that Pfeiffer is the personification of Compaq, it’s true. Pfeiffer is a highly competent, relentless, somewhat bland workaholic.” On the one hand, the CEO is known to work at lightning speed. But perhaps more importantly, he is careful and even meticulous about shaping corporate policy. Generally, Pfeiffer is serious, carefully spoken and reserved, even as Kirkpatrick noted, “a dull interview.” On occasion, however, he surprises observers. He has a love for dancing at corporate functions and even appeared at one corporate function in lederhosen and was hoisted off stage by a 70-foot cable.

There isn’t much of a chance that Pfeiffer will become complacent with all of his achievements. He has remade Compaq’s corporate culture to make change ongoing and accepted by employees. Pfeiffer champions what he calls “creative destruction” as the means to continuously improving the business. He wrote in Euromoney magazine, “Nothing is harder than casting aside the thinking, strategies and biases that propelled a business to its current success. Companies need to learn how to unlearn, to slough off yesterday’s wisdom.”

Pfeiffer has big plans for Compaq. He wants the company to be one of the top three computer companies by the year 2000. When he set this goal, four companies were larger than Compaq: IBM, Fujitsu, Hewlett-Packard, and NEC. In this attempt, Pfeiffer is remaking the company from a PC specialist into an all-purpose computer company. Compaq now encompasses four business divisions. Servers and high powered workstations, portable and desktop computers, PCs for home use and networking products including software all have their own divisions within Compaq. Compaq is even making computerized toys that are marketed with Fisher Price under the brand name Wonder Tools.

Such major changes are necessarily risky, as Pfeiffer faces stiff competition on all sides. The New York Times warned that “If Mr. Pfeiffer has charted the wrong course, or even if he is right but the company cannot move nimbly enough, then Compaq could stumble as badly as it did under his predecessor.”

Some analysts see another price war in the making as Pfeiffer seeks to cut costs again. To do this Pfeiffer has overhauled both production and personnel structures. He has instituted a new production system that will reduce dealer inventories by only building machines when they are ordered. Compaq hopes that this strategy will save the company $1 billion per year. The computer company must also hire possibly thousands of new support personnel to work with customers. This is something that corporate clients demand and is critical with products such as large servers that cost ten times more than a PC. Another new element that must prove its strength is a largely new management team. Pfeiffer summed up the significance of these developments in a New York Times article, saying “We’ve recognized a significant change very much in time and taken action and not waited until something went sour and then tried to come out of a hole.”

Chronology: Eckhard Pfeiffer

1941: Born in Lauben, Germany.

1963: Graduated from Kaufmaennissche Berufsschule, a German professional school.

1963: Took first job at Texas Instruments.

1983: Graduated from Southern Methodist University.

1983: Became head of Compaq’s European operations.

1991: Promoted to chief executive officer at Compaq.

1995: Led Compaq to become the world’s largest PC producer.

Social and Economic Impact

Under Pfeiffer’s guidance, Compaq went from being the fifth-largest PC maker in 1991 to the industry leader in 1995. He began this climb by sparking a price war that drove some smaller PC makers out of business. In 1992, Pfeiffer’s first full year as CEO saw Compaq beat up its competition by doubling its sales and quadrupling its profits.

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