Editing Compaq (section)

===Late 1990s–2000s===
In 1998, Compaq signed new sales and equipment alliance with [[NaviSite]]. Under the pact, Compaq agreed to promote and sell NaviSite Web hosting services. In return, NaviSite took Compaq as a preferred provider for its storage and [[Intel]]-based servers.

During November 1999, Compaq began to work with [[Microsoft]] to create the first in a line of small-scale, web-based computer systems called [[MSN Companion]]s.<ref>{{cite web |title = MSN Web Companion |url = http://www.wince.ne.jp/review/okamon/20000107.htm |access-date = 2007-03-04 |archive-date = 2012-02-06 |archive-url = https://web.archive.org/web/20120206221311/http://www.wince.ne.jp/review/okamon/20000107.htm |url-status = dead }}</ref>

====Struggles====
[[File:H3950.jpg|thumb|[[iPAQ|iPAQ H3950]]]]
Capellas was able to restore some of the luster lost in the latter part of the Pfeiffer era and he repaired the relationship with [[Microsoft]] which had deteriorated under his predecessor's tenure.<ref>{{cite web |url=https://www.cnet.com/news/compaq-reports-drop-in-revenue/ |title = Compaq reports drop in revenue |publisher = CNET |access-date = 2020-06-11 }}</ref>

However Compaq still struggled against lower-cost competitors with direct sales channels such as [[Dell]] who took over the top spot of PC manufacturer from Compaq in 2001.<ref>{{cite news |url = https://www.nytimes.com/2001/04/24/business/technology-compaq-s-results-fall-short-of-estimates.html?src=pm |work = The New York Times |first = Chris |last = Gaither |title = TECHNOLOGY; Compaq's Results Fall Short of Estimates |date = April 24, 2001 |url-access=limited}}</ref> Compaq relied significantly on reseller channels, so their criticism caused Compaq to retreat from its proposed direct sales plan, although Capellas maintained that he would use the middlemen to provide value-added services.<ref name="autogenerated1999"/> Despite falling to No. 2 among PC manufacturers, Capellas proclaimed "We are No. 2 in the traditional PC market, but we're focused on industry leadership in the next generation of Internet access devices and wireless mobility. That's where the growth and the profitability will be." The company's longer-term strategy involved extending its services to servers and storage products, as well as handheld computers such as the [[IPAQ|iPAQ PocketPC]] which accounted for 11 percent of total unit volume.<ref>{{cite web |url =http://edition.cnn.com/2001/BUSINESS/04/23/earns.compaq/ |title =Compaq falls short, lowers guidance |date =2001-04-23 |access-date =2020-06-11 |archive-date =June 11, 2020 |archive-url =https://web.archive.org/web/20200611154720/http://edition.cnn.com/2001/BUSINESS/04/23/earns.compaq/ |url-status =dead }}</ref>

Compaq struggled as a result of the collapse of the [[dot-com bubble]], which hurt sales of their high-end systems in 2001 and 2002, and they managed only a small profit in a few quarters during these years. They also accumulated $1.7 billion in short-term debt around this time.<ref name="theinquirer1">{{cite web |url = http://www.theinquirer.net/inquirer/news/1019181/when-hp-bought-compaq-crock |archive-url = https://web.archive.org/web/20121203224508/http://www.theinquirer.net/inquirer/news/1019181/when-hp-bought-compaq-crock |url-status = unfit |archive-date = December 3, 2012 |title = When HP bought Compaq, did it buy a crock? |publisher = The Inquirer |date = 2003-08-10 |access-date = 2012-08-26 }}</ref> The stock price of Compaq, which was around $25 when Capellas became CEO, was trading at half that by 2002.<ref name="nytimes2001">{{cite news |url = https://www.nytimes.com/2001/09/04/business/hewlett-packard-in-deal-to-buy-compaq-for-25-billion-in-stock.html |work = The New York Times |title = Hewlett-Packard in Deal to Buy Compaq for $25 Billion in Stock |date = September 4, 2001 | last1 = Sorkin |first1 = Andrew Ross | last2 = Norris |first2 = Floyd |language = en-US |issn = 0362-4331| url-access=limited}}</ref>