Editing Digital Equipment Corporation (section)

=== Acquisition by Compaq (1998) ===
Through 1997, DEC began discussions with [[Compaq]] on a possible merger. Several years earlier, Compaq had considered a bid for DEC but became seriously interested only after DEC's major divestments and refocusing on the Internet in 1997. At that time, Compaq was making strong moves into the enterprise market, and DEC's multivendor global services organization and customer support centers offered a real opportunity to expand their support and sales worldwide. Compaq was not interested in a number of DEC's product lines, which led to the series of sell-offs. Notable among these was DEC's [[Hudson Fab]], which made most of their custom chips, a market that made little sense to Compaq's "industry standard" marketing. DEC had previously sold its semiconductor plant in [[South Queensferry]] to Motorola in 1995, with an understanding that Motorola would continue to produce Alpha processors at the facility, along with continuing a two-year foundry agreement with AMD to continue producing the Am486 processor.<ref name="electronicnews19950109_motorola">{{ cite magazine | url=https://archive.org/details/sim_electronic-news_1995-01-09_41_2047/mode/1up | title=Motorola To Take Over Digital's Scottish Plant | magazine=Electronic News | volume=41 | issue=2047 | date=January 9, 1995 | access-date=June 10, 2022 | last1=DeTar | first1=Jim | pages=1, 4 | issn=1061-6624}}</ref>

This led to an interesting solution to the problem of selling off the division for a reasonable profit. In May 1997, DEC sued [[Intel]] for allegedly infringing on its Alpha patents in designing the [[Original Intel Pentium (P5 microarchitecture)|original Pentium]], [[Pentium Pro]], and [[Pentium II]] chips.<ref>{{cite magazine|title=DEC, Cyrix sue Intel|first1=Gale|last1=Bradley|first2=Jim|last2=DeTar|magazine=Electronic News|volume=43|issue=2168|pages=1, 60|date=May 19, 1997|issn=1061-6624|url=https://archive.org/details/sim_electronic-news_1997-05-19_43_2168/mode/1up}}</ref> As part of a settlement, much of DEC's chip design and fabrication business was sold to Intel. This included DEC's [[StrongARM]] implementation of the [[ARM architecture|ARM computer architecture]], which Intel marketed as the [[Intel XScale|XScale]] processors commonly used in [[Pocket PC]]s. The core of Digital Semiconductor, the Alpha microprocessor group, remained with DEC, while the associated office buildings went to Intel as part of the Hudson fab.<ref>{{cite interview |first=Allan |last=Baum |interviewer= David Brock |title=Oral History of Allen Baum |date=July 18, 2018 |url=https://archive.computerhistory.org/resources/access/text/2018/06/102717165-05-01-acc.pdf |archive-url=https://web.archive.org/web/20210207063355/https://archive.computerhistory.org/resources/access/text/2018/06/102717165-05-01-acc.pdf |archive-date=2021-02-07 |url-status=live |page=60}}</ref>

On January 26, 1998, what remained of the company was sold to Compaq in what was the largest merger up to that time in the computer industry. At the time of Compaq's acquisition announcement, DEC had a total of 53,500 employees, down from a peak of 130,000 in the 1980s, but it still employed about 65% more people than Compaq to produce about half the volume of sales revenues. After the merger closed, Compaq moved aggressively to reduce DEC's high selling, general, and administrative (SG&A) costs (equal to 24% of total 1997 revenues) and bring them more in line with Compaq's SG&A expense ratio of 12% of revenues.<ref name="mhhe.com">{{cite web|url=http://www.mhhe.com/business/management/updates/thompson12e/case/dell10.html|work=Dell Computer Corporation Online Case|title=Profiles of Selected Competitors in the PC Industry|publisher=[[McGraw Hill Education]]|access-date=April 12, 2014|archive-url=https://web.archive.org/web/20190331022052/http://www.mhhe.com/business/management/updates/thompson12e/case/dell10.html|archive-date=March 31, 2019|url-status=dead}}</ref>

Compaq used the acquisition to move into enterprise services and compete with IBM, and by 2001 services made up over 20% of Compaq's revenues, largely due to the DEC employees inherited from the merger.<ref>{{cite encyclopedia|url=https://www.encyclopedia.com/economics/encyclopedias-almanacs-transcripts-and-maps/digital-equipment-corp|title=Digital Equipment Corp|at=Takeover By Compaq Computer Corp.|encyclopedia=Encyclopedia.com|access-date=September 7, 2022}}</ref> DEC's own PC manufacturing was discontinued after the merger closed. As Compaq did not wish to compete with one of its key partner suppliers, the remainder of Digital Semiconductor (the Alpha microprocessor group) was sold to Intel, which placed those employees back in their Hudson (Massachusetts) office, which they had vacated when the site was sold to Intel in 1997.

Compaq struggled as a result of the merger with DEC,<ref name="mhhe.com"/> and was acquired by [[Hewlett-Packard]] in 2002. Compaq, and later HP, continued to sell many of the former DEC products but re-branded with their own logos. For example, HP now sells what were formerly DEC's StorageWorks disk/tape products,<ref>{{cite web|url=http://h18006.www1.hp.com/storage/|title=HP StorageWorks&nbsp;– Data and Network Storage Products and Solutions|access-date=March 8, 2006|archive-date=March 2, 2006|archive-url=https://web.archive.org/web/20060302053928/http://h18006.www1.hp.com/storage/|url-status=dead}}</ref> as a result of the Compaq acquisition.

The Digital logo was used up until 2004, even after the company ceased to exist, as the logo of Digital GlobalSoft, an IT services company in India (which was a 51% subsidiary of Compaq). Digital GlobalSoft was later renamed "HP GlobalSoft" (also known as the "HP Global Delivery India Center" or HP GDIC), and no longer uses the Digital logo.

Compaq transferred the DEC company archives to the [[Computer History Museum]] in 2004.<ref name=chm_archives_post>{{cite web |last=Lott |first=Sara |date=13 June 2017 |title=What the DEC?!? Records of Minicomputer Giant Digital Equipment Corporation Open for Research at CHM |url=https://computerhistory.org/blog/what-the-dec-records-of-minicomputer-giant-digital-equipment-corporation-open-for-research-at-chm/ |website=[[Computer History Museum]] |location=Mountain View, CA |publisher=Computer History Museum |access-date=26 October 2025}}</ref>