At Compaq, A Desktop Crystal Ball

On Mar. 3, Michael Parides sat in his office nervously scanning the spreadsheet running on his personal computer. Hewlett-Packard Co. had just slashed prices 22%--stepping up a campaign to grab more of the corporate PC market. Months earlier, Parides had persuaded his bosses at Compaq Computer Corp. to back a radical plan: Use complex simulation software to manage product introductions for the world's biggest PC maker. Parides' program was designed to model trends in customer demand, pricing, and even dealer inventories. As the screen filled, he relaxed. The program had anticipated HP's pricing to within a few dollars. "It all proved out," Parides quickly relayed to his boss.

For Parides, director of business operations at Compaq's Desktop Div., it was one more hurdle met and cleared. After eight grueling months battling skeptical colleagues and fatigue, his team and its software are playing a critical role in managing the nanosecond pace of new-product introductions--arguably the company's biggest challenge. A miscue can mean disaster. A model that's late, lacks the right features, or has the wrong price quickly turns into piles of unusable components or slow-moving finished goods. Just ask IBM, which misjudged the market last year and saw a 6% plunge in PC sales--and a $1 billion loss. Analysts say Compaq passed up $50 million in sales by underrating demand for home PCs last fall.