Has GE ever considered buying Compaq?  If not, perhaps it should look into 
the matter.  In this note I'll attempt to explain why this might be a good
investment for GE. 

General Electric is a highly diversified and extremely well managed company. 
It is a leader in many industries but currently has no significant presence
as a producer of computer equipment or software.   Compaq makes only computers
and the quality of its management is, I believe, abysmal.  Since its
purchase of the nearly defunct Digital Equipment Corporation several years
ago and the purchase of Tandem shortly before that, Compaq has been in a
continuous state of turmoil and inner conflict. To this outside observer
there seems to be no synergy whatsoever between the PC side of the company
and the "enterprise" side which it acquired with these purchases.  
Instead, the interaction appears to be largely deleterious to the
enterprise side of the company, with the PC side apparently dictating that
products which do or could compete in the "PC space" be terminated.  While
the DEC and Tandem brand names were associated with quality products and
service the same cannot be said for the Compaq brand.  That is, by stamping
their name on these products Compaq to some extent devalued them.
Furthermore, Compaq's handling of OpenVMS in particular, which accounts
directly and indirectly for 4 billion dollars/year in revenue, has reduced
that product's growth potential and outraged and disconcerted the affected
customers.

It is clearly the enterprise side of the company, revolving around the
Alpha CPU and the Linux, Himalaya, Tru64, and OpenVMS operating systems
that GE should be interested in.  In Compaq's latest quarterly results one
can see that this side of the company accounted for the lion's share of
its profits.   These products are high margin, high quality,
"industrial strength" computer products that would fit in well with GE's
image and other product lines.  If GE were to enter the computer field, it
seems to me that these are probably the sorts of products it should sell
and which would become "GE computer systems". Not only are these products
already profitable, they should be even more so once they are finally
blessed with competent management, which GE could supply. 

Here is a brief overview of the products which I believe GE should acquire.
OpenVMS and Himalaya are ultra-reliable operating systems.  The former has
a long history in factory and industrial control situations, which seems a
good fit for GE.  Both are well represented in financial data processing.
Tru64 is currently the operating system of choice for many high technology
applications such as bioinformatics or nuclear weapons design - also
a good fit with other areas of GE expertise.  The Alpha processor that 
these run on (or in the case of Himalaya, will soon run on) is the outright
speed champion for computational work at the moment, and with adequate
future support, should be able to hold that title for years to come.  
Because of its PC-centric world view Compaq has choked off all possible
mass market growth opportunities for these products, apparently because it
would involve displacing PCs, but substantial market growth is possible for
all of these products, both by expanding their shares of current markets (
by displacing Sun, HP, and IBM) or by displacing PCs at the lower end of 
the market using systems running either Linux or less expensive 
releases of OpenVMS and/or Tru64.  The market niche for Himalaya is more 
constrained, but that niche is growing.  Realistically, an additional
investment in software development to pay for the porting of key pieces of
software to these platforms would be required to fuel such growth. 

Conversely, the PC side of Compaq should not be purchased, and if that
is unavoidable, it should not be retained.  PCs are a highly competitive,
low margin, commodity business.  Moreover, it would be advantageous to the
further development and growth of the products mentioned above if GE stayed
completely out of the PC business.  That would allow GE, like Sun, to
market and develop these non-PC products without fear of retribution by
Microsoft - an effect which has been all to evident at DEC and now at
Compaq. 

Disclosure:  I do not currently own either GE or Compaq stock.  I am
familiar with the situation at Compaq from my twenty years in academic
computing, during which I have have used many of the products mentioned
above.  I do not seek any remuneration or other compensation for the ideas
and analysis presented here.  If GE were to acquire these products and
so relieve me of the need to continue dealing with Compaq that would be
compensation enough!

Regards,

David Mathog
1215 Greenfield Ave.
Arcadia, CA 91006
Phone (home): 626/294-0135
Email:        mathog@caltech.edu