The
Loss of Compaq Computers to Standard Forecasting
Unit 6
- IP
Marshall
Copeland
Colorado
Technical University
Futuring
and Innovation (CS875)
Professor
Cynthia Calongne
Feb 26,
2023
Compaq computers are the market leader and
losses from standard forecasting
In 1991, Microsoft increased support for their Disk
Operating System (DOS) 5.0, AT&T Computer Systems and NCR Corporation
announced mergers, and Tandy Corporation announced plans to open superstores to
sell Compaq computers (InfoWorld, 1991). The new stores would be called
Computer City SuperCenters to carry products from Tandy, Compaq, IBM, and Apple
computers incorporated. Less than a decade later, in 1998, Tandy Corporation sold
its retail market to CompuUSA, which forecasted future growth on name-brand computer
systems, some private label computers, and business software. In 2022, Tandy,
which began as a leather goods store, now manufactures products for RadioShack,
another casualty of standard forecasting. CompuUSA can only be found on the
internet with Computer City stores empty, and Compaq is no longer a brand name
(Mooallem, 2010).
The continued use of standard forecasting began to show the
failure of the old traditional forecasting model. In 1987, Compaq Corporation introduced
a leading product in the desktop computer market that featured an Intel 20-Megahertz
386 microprocessor with built-in cache random access memory (RAM). Two short
years later, the personal computer buyer guide listed nine manufacturers that
copied Compaq and innovated additional features that pushed Compaq Corporation
far out of the number one listing (Honan, 1989). Compaq’s innovation needed to
be more to distance the business from the competition that was quick to copy
and then leapfrog the market leader.
The leading industry was the goliath of computer
manufacturing, founded in 1982 and five years later as a Fortune 500 company
with 1 billion in revenue. Risk-based acquisitions that included ownership of
debt and tried-and-true sales using traditional forecasting models focused only
on growth through acquisitions, mergers based on company historical data, and failure
to adapt to computer manufacturing best practices. There is a noted difference
between the business leader and a company that invested in R&D with
continuous innovation. The traditional forecasting of company history did not
allow Compaq to transition to innovation to adapt to changing markets using more
brilliant data points and leverage demand forecasting relied on increasing scenarios
that incorporated a far more comprehensive set of data to information in the
future business strategies (Ramakrishnan, 2008).
Scenario Planning allows the view of a finished product or
investment back into a process, like Compaq computers, based on different
forces as the planning is reviewed with changes to the forces. Quality
computers were the cornerstone of the Compaq PC legacy until IBM PC clones
focused more on pricing to the consumer and not on the corporate enterprise. Gateway
computer, later changed to Compaq, was a startup driven by three defectors of
Texas Instruments. The first Compaq computers sold for $2,995 and sold 53,000
units the first year to generate $111 million in revenue. The early innovation
included the first use of a 16-bit Intel microprocessor that ran IBM software
and the latter use of an unknown operating system from a young company,
Microsoft (Wagner, 2001).
As Compaq began to grow through traditional forecasting with
mergers like Digital Equipment Corporation (DEC), with a strong focus on manufacturing
computer chips for the UNIX operating system, Compaq computers were Intel-based,
supporting IBM and Microsoft. The company executives should have noticed a new
competitor, Dell computers, that was seen as very successful in the lower-end
personal computer market, like Compaq. In 1985, PC’s Limited changed its name
to Dell Computer Corporation, and Dell quickly adopted a highly competitive
market structure. The Analytics of Dell measured the company's strength based
on the company's strategic resources for growth and expansion (Tapscott, 1999).
This new business model included a build-to-order production system by passing
on changes in the component cost faster than the competition (Tapscott, 1999). Austin-based
Dell computers took the number 1 spot from the Houston-based Compaq computers with
12.8 percent of the worldwide market share.
The adoption of real-time controls, the forces of a PC
manufacturing process, for Dell allowed retailers to build affordable products
that would adapt based on the changes to chip makers and other costs to produce
a personal computer. Scenario planning was increasingly applied to Dell with
traditional theory for implementation. Planning professions would think of method
and theory as equivalent planning programs. In some research, it may be entitled
the theoretical foundation of scenario-driven planning (Chrystal, 2017). Dell used the examination of
different approaches to the scenario planning process.
Companies
that continue to use historical data to drive their forecasting future should
reconsider and adopt more real-time controls to better adapt to customer
demand. The correlation of historical data around transactional sources needs a
more intelligent demand for discovering levers that can pull to produce
features and product offerings that provide customer demands ahead of their
competition (Ramakrishnan, 2008). One such model can be viewed in Figure 1, a
simulation model using real-time controls.
Figure 1 Online
Simulation Model for Real-Time Controls (Ramakrishnan, 2008)
Scenario Planning
for Future Innovation
Data science models are far more efficient and reliable for
critical questions for business scale and critical success factors. Companies
today are adopting cloud technology, which lowers the cost of setting up a
traditional data center. The budget constraints of purchasing hundreds of computer
servers in a newly renovated building, secured by technology and people, with invisible
costs such as data center insurance, are a few drivers to adopting cloud
technology (Shurrab, 2022). The
innovative effort for cloud computing allows startup companies to plan for and
build scenarios that most often fail fast. The term fails fast without the cost
of traditional business constraints is part of the scenario planning model (Seevaratnam, 2019).
Cloud
computing is service-based, just like lighting and water for homes or
brick-and-mortar businesses, but without the expense. In addition, the use of
cloud computing companies allows the new scenario-based planning to align with
the efforts of the cloud providers to be climate aware and limit their
ecological impact.
References
Chrystal, M. K. J.
(2017). Linking Consumer Satisfaction to Consumer Behavior and Retailer
Revenues: An Empirical Analysis of e-Commerce Performance Influencers
(Order No. 27786878). Available from ProQuest Dissertations & Theses
Global. (2340174426). https://coloradotech.idm.oclc.org/login?url=https://www.proquest.com/dissertations-theses/linking-consumer-satisfaction-behavior-retailer/docview/2340174426/se-2
Honan, P., Lockwood, R.,
Pepper, J., & Lee, C. (1989, 03). Buyer's Guide 20 MHz 386-Based PCs.
Personal Computing, 13, 113. https://coloradotech.idm.oclc.org/login?url=https://www.proquest.com/magazines/buyers-guide-20-mhz-386-based-pcs/docview/199385464/se-2
InfoWorld, (1991) Tandy
to Open Superstore, will Sell Compaq, Apple Lines. (1991). InfoWorld,
13(24), 108. https://coloradotech.idm.oclc.org/login?url=https://www.proquest.com/trade-journals/tandy-open-superstore-will-sell-compaq-apple/docview/194251929/se-2
Mooallem, J. (2010, 05).
The Lost Tribes Of Radioshack. Wired, 18, 64-n/a. https://coloradotech.idm.oclc.org/login?url=https://www.proquest.com/magazines/lost-tribes-radioshack/docview/274388113/se-2
Ramakrishnan, S. (2008).
A simulation-based framework for integrating operational models with
business process models in a global business environment (Order No.
3320118). Available from ProQuest Dissertations & Theses Global.
(304324535). https://coloradotech.idm.oclc.org/login?url=https://www.proquest.com/dissertations-theses/simulation-based-framework-integrating/docview/304324535/se-2
Seevaratnam, N. (2019). Forecasting
Optimality in Resource Utilization for Cloud Computing Systems to Maximize
Quality of Service (Order No. 10979483). Available from ProQuest
Dissertations & Theses Global. (2158375276). https://coloradotech.idm.oclc.org/login?url=https://www.proquest.com/dissertations-theses/forecasting-optimality-resource-utilization-cloud/docview/2158375276/se-2
Shurrab, H. (2022). Balancing
Demand and Supply in Complex Manufacturing Operations: Tactical-Level Planning
Processes (Order No. 29101152). Available from ProQuest Dissertations &
Theses Global. (2665128754). https://coloradotech.idm.oclc.org/login?url=https://www.proquest.com/dissertations-theses/b-balancing-demand-supply-complex-manufacturing/docview/2665128754/se-2
Tapscott, D. (1999, Jun
14). Dell pioneers a new business model: [National Edition]. National
Post https://coloradotech.idm.oclc.org/login?url=https://www.proquest.com/newspapers/dell-pioneers-new-business-model/docview/329491183/se-2
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