COMPAQ COMPUTER (THAILAND): Mergers on a global scale will help the country's PC vendor broaden its client base and promote IT development

"The country's number one personal computer vendor remains bullish on Thailand, despite the sharp drop in the purchasing power in the local market.
‘There is still a need for every company in the country to upgrade its system on a periodic basis, but with situations such as today’s, some kind of state help is needed, in terms of encouragement or financial help by compensating for interest expenses on loans companies must take to upgrade their systems’
M.L. CHAIVAT CHAYANGKOOL
Managing director

"Despite the sharp drop in the number of clients, we feel that Thailand has all the capabilities for a bright future. There is a strong local market that demands our products as part f the added assurance of a growing computer literate society," said M.L. Chaivat Chayangkool, managing director of Compaq Computer (Thailand).

Since setting up operations in February 1994, Compaq has achieved market leadership in its sector. Among its biggest clients are Bangkok Bank, the Government Savings Bank, Krung Thai Bank, Philips Electronics and Total Access communications.

The computer industry has been hit hard during the regional crisis. With many financial institutions faltering or closing, one of the industry's biggest client bases has shrunk dramatically. But Compaq still feels there are many markets for information technology (IT) in Thailand.

"Production and productivity both are very dependent on information technology, and computers help with both," M.L. Chaivat said.

"Therefore despite the drop in number of companies in Thailand, the remaining ones will have to keep on upgrading themselves in order to stay competitive in this new environment."

The entry of foreign banks, for example, will raise the standards for banking transactions, and
this is one area Compaq hopes to exploit by aggressively expanding its market share.

The company's parent, Compaq Computer Corp, now operates in more than 1 00 countries,and has achieved market leadership in just 16 years. It attributes its success to execution of strategic plans, but will not rest on its laurels.

"Most technology companies would be satisfied being participants in the greatest growth industry in history. At Compaq, we expect more," M.L. Chaivat said.

"Business history, in technology and elsewhere, is littered with the remains of companies whose achievements were undermined by complacency. We won't be one of them," Compaq CEO Eckhard Pfeiffer wrote in the company's annual report for 1997.

The company has gone on an acquisition spree in the past two years. In April 1997, it acquired Microcom for $280 million. Two months later it absorbed Tandem Computers for $4.1 billion,
and this July saw a huge deal for Digital Equipment Corp, worth $8.73 billion.

With the acquisition of Tandem and Digital, Compag now has the largest worldwide share of the desktop, server and networked terminal markets.

The expansion is expected to help the company realise much greater potential in Thailand, as Compaq can now offer all types of services not previously provided, allowing it to operate on the scale of rival IBM.

Digital was good in customer and maintenance services, and network and operational systems, while Compaq was good at products. Therefore, customers will now have a wider choice from Compaq, said M.L. Chaivat.

Compaq has a PC assembly plant in Singapore and its servers are built in the United States. It has no current plans to move any plants to Thailand.

The IT market had more than 40 competitors ,during the boom years, but only the strongest have been able to withstand the pressure of the recession, and they will emerge even stronger in t e future, he said.

"We study the market. We are very strong in banking, telecoms and manufacturing of semiconductors, and we want to be the leader in other industries as well."

Given the economic climate and the need for IT in Thailand, M.L. Chaivat believes the government can play a role.

"There is still a need for every company in the country to upgrade its system on a periodic basis, but with situations such as today's, some kind of state help is needed, in terms of encouragement or financial help by compensating for interest expenses on loans companies must take to upgrade their systems."

Working closely with companies during bad times is the best strategy for service industries, he added. This means ensuring that companies get a high return on their IT investments when they make the big commitment to upgrade systems.

M.L. Chaivat also does not believe that corporate clients will shift to local suppliers just because of a downturn,

"We have a strong corporate client base, and we want to maintain these clients. We provide the best services and that is the way to keep them for a long time," he said.

"As for retail clients, there are some who go for the service and quality but there are the others who would go and buy at Panthip Plaza (the local computer bazaar) no matter if it's a boom time or a recession."

Compaq Computer (Thailand) Ltd
Established: February 1994
Major shareholder: Compaq Computer Corp
Main businesses activities: Import/Export, installation, maintenance service, sales, marketing of all Compaq products and solutions

Worldwide
Compaq Computer Corp
Headquarters: Houston, Texas
Number of countries: More than 100
Number of employees: 82,000 (Compaq and Digital)
1997 gross revenue: US$24.58 billion (Compaq only)
1997 net profit: $2,107 million