CRN

In December 1981, three engineers fresh from Texas Instruments and hell-bent on getting a foothold in the infant PC market, tossed ideas around during a meal at a local House of Pies restaurant. Rod Canion and Bill Murto met with industrial designer Ted Papajohn, who sketched out the design for the Compaq Portable on a napkin.

"I actually asked Rod Canion once why he wanted to leave TI and make this kind of investment," said Tim Bajarian, president of Creative Strategies, San Jose, Calif. "He said that during his time there he observed that anything IBM [Corp.] did became a standard. When he and those guys were sitting down in that coffee shop sketching, the fundamental decision was that if IBM goes into the PC business, they're going to be the standard."

Recognizing this, Canion used his napkin, turned it into a business plan and got funding for the project and what would become Compaq Computer Corp. Ben Rosen of Sevin-Rosen Partners and who today is Compaq's chairman of the board, was one of the venture capitalists backing the start-up.

Compaq founders Canion, Bill Harris and Murto were not the first to develop the idea of a portable nor were they first to market. Osborne Computer Corp., for example, had one running CP/M. But Canion and company were the first to recognize the impact of IBM's launching the personal computer and chose to capitalize on that.

They also decided to go a step further. Canion's team recognized that IBM was working with many off-the-shelf components and there was a unique opportunity to make a computer that could truly be compatible with others and would run a wide range of software applications.

"This was the first time there was an industry-standard machine that ran software that was designed by somebody else," said Steve Flannigan, Compaq's vice president of corporate strategic relations. "It defined the concept of industry standards. And that was driven by the desire to make a portable version of the IBM PC. The fact that we did a portable forced us to tackle the tough problem of making it truly compatible."

Flannigan, affectionately known as employee No. 10 at Compaq today, is one of just a couple of engineers left at the company from the original design team.

Flannigan got the difficult task of writing the ROM BIOS for the portable because he had not seen the inside of an IBM PC and therefore could not be liable for violating IBM's copyrights or patents.

Canion realized that compatibility with the IBM PC would not ensure success. He needed a killer application for the Compaq Portable and a means of getting it to market quickly. The decision to work with Lotus 1-2-3 creator Mitch Kapor and with Sears Business Centers as a distributor established the basis for partnerships that would later become Compaq's reseller channel.

Lotus Development Corp. and Sears share an interesting intertwined history that could have set back fledgling Compaq. IBM PC users switched between two display modes, one for text, the other for graphics, depending on the application.

Compaq engineers did not have that luxury and were forced to develop a solution that would scan at two different frequencies. On a portable, they would need to display both modes simultaneously and maintain compatibility.

Engineers Ken Roberts, Gary Stimac and Flannigan developed the solution, which in theory would work with any application but was untested with Lotus 1-2-3. In late spring 1982, Rosen, who also had invested in Lotus, brought the two companies together to make a presentation to Sears. If successful, Sears would distribute both products.

"We had this deal that Mitch would get out here, I would go in the lab and we would run his software together before we went in front of Sears," Flannigan said. But Kapor got lost and arrived minutes before the presentation, forcing him to load the software untested on the prototype.

Not only did the software run correctly, but Kapor stopped midway through the presentation after displaying a graphic. "Up came this pie chart and Mitch went on for two or three sentences and then flat out stopped," Flannigan said. "He got out of his sales mode and started explaining to these Sears guys how he had never seen anything like this--text and graphics displaying on the same screen," he said.

The design team faced other challenges as they shrunk the PC concept into a different form factor while maintaining compatibility with IBM's product. Harris, the outdoorsman, tackled the problem of getting rid of the keyboard cord by using a design reminiscent of a collapsible fishing pole. He also used his experience building hard drives at TI to triple-mount the device against excessive shock.

Because many members of the design team had their core experience in military computers, they built the Compaq Portable as tough as a tank, Flannigan said.

"There's all kinds of stories of cars running over it and the data was still there," he said.

Average experience for the design team of about 20 engineers was 15 years. This made for unusually fast development when the project started in December 1981. It took less than a year to get from napkin to finished goods rolling off the manufacturing line.

Compaq unveiled the 28-pound portable based on the Intel Corp. 8088 processor in November 1982 and started shipping it after the turn of the year for $2,995. One engineer described it as a luggable that would fit under an airline seat provided no one too heavy was sitting there.

No one denies the product's success launched Compaq and set the stage for the Houston company to ship the first 386-based machine in 1986. Compaq, which shipped 53,000 portable PCs in 1983, solid 1.6 million portables last year, according to Dataquest, San Jose, Calif., which is now a fraction of the company's product line.

Compaq, whose name has its origins in compatibility and quality, established a new genre in computing by initially cloning other companies' concepts and leveraging the reseller channel.

"It wasn't that different from Osborne's machine," Bajarian said. "But the big gamble at the time, which in hindsight now doesn't seem that much of a gamble, was to do the clone." The rest, he said, is history.

CHANNEL SERVICES >>