Conference 7.286::digital

1117.0. "Usenet news on DEC and VAX 9000" by TARKIN::HAYS (Is this the end or the beginning? ... Phil BXB02-2/G06 293-5852) Thu May 31 1990 13:57

Path: shlump.nac.dec.com!decwrl!apple!lll-winken!looking!clarinews
From: clarinews@clarinet.com (BARRY FLYNN, UPI Business Writer)
Newsgroups: clari.tw.computers,clari.biz.finance,clari.biz.products
Subject: Digital's Olsen, nearing 65, shuns retirement
Keywords: computers, manufacturing, corporate management, corporate finance,
	corporate products & services
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Date: 31 May 90 03:26:54 GMT
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	BOSTON (UPI) -- Kenneth H. Olsen, the 64-year-old president and
founder of Digital Equipment Corp., said Wednesday he has no heir
apparent at the company and brushed off questions about possible
retirment.
	Olsen said the recently promoted John F. Smith is not in line to
succeed him. ``Blessing people early is the kiss of death,'' Olsen said.
	Smith, recently named vice president of operations, took over many
of the duties previously held by John J. Shields.
	Shields, once widely regarded as the likeliest successor to Olsen,
left the company last fall. His departure and Smith's assumption of many
of Shields'  duties has fueled speculation that Smith might now be in
line to take over the company when Olsen retires.
	However, Olsen, who will be 65 in February, said he has not given a
thought to quitting. ``I'm still too young for that,'' he said.
	Asked when he thought an appropriate time to consider retiring
might arise, he said: ``Whenever you feel like it; whenever you get
bored. I haven't the slightest idea what I'd do if I retired.''
	Securities analysts have expressed concern about continuity at the
nation's No. 2 computer maker should Olsen retire or become
incapacitated.
	Meanwhile, Olsen acknowledged Digital is behind in the current
quarter in shipping the company's important new VAX 9000 line of main
frame computers,targeted at a market dominated by International Business
Machines Corp.
	However, he said, the company had not expected to ship significant
numbers of the new line until next quarter. In any case, a slight delay
in one quarter is not significant in the product's life cycle, he said.
	Olsen talked to reporters during a meeting held to introduce
software and services designed to allow the electronic flow of documents
from computer to computer within a company and from one business to
another.
	In remarking that no new hardware was being introduced, Olsen said
Digital is becoming ``more and more a software company and less and less
a hardware company.''
	Henry Ancona, Digital's vice president for information systems and
applications, said the electronic data interchange and document
management market that Digital is targeting with the new products is
growing at the rate of about 50 percent a year. ``In the next couple of
years, it will be about a $2 billion market,'' he said.
	For example, Olsen said, General Motors Corp. ``made an edict that
all its suppliers use EDI,'' or electronic data interchange.

	re .0:

>>>	In remarking that no new hardware was being introduced, Olsen said
>>>	Digital is becoming ``more and more a software company and less and less
>>>	a hardware company.''

	It's hard for those of us who don't get to see revenue numbers
	to have a view about this. It's clearly desirable that
	Digital should become "more and more a software company". However,
	I submit that it is not happening, largely because the movers and
	shakers (SBUs) are all organized by HARDWARE CATEGORY. Even our
	vital database software (on which is layered our whole TP, and
	soon our whole CASE business) is owned by... STORAGE SYSTEMS!

	This issue was raised in the MARKETING conference, and some better
	informed people kindly enlightened us as to the state of software
	marketing in Digital. First, Digital's outgoing TP and Database
	Marketing Manager for the UK (a billion-dollar piece of the
	corporation) -

	from NODEMO::MARKETING, Note 1212.101 (Mike Hudgell):

>>>  We do not have metrics to help sell Digital software and services.
>>>  We do have metrics that are geared towards systems selling.
>>>  We do have a CMP account manager for Oracle who does all he can
>>>  to hit his budget by leveraged Oracle/VAX sales. 
>>>  
>>>  One day someone will wake up and say " Where has all the business
>>>  gone ???" ... I have decided to not wait around for that day - so
>>>  I leave Digital this week to join a software company who sells software
>>>  who measures on software - and who WINS with software. [Cognos]


	Now for some numbers from the Storage and Information Management
	Group - Michael Booth, one of Digital's leading database gurus,
	speaks -

	from NODEMO::MARKETING, Note 1212.124 (Michael Booth):

>>>   IBM gets 15%+ of their revenue from software sales. Average profit is
>>>   around 80%.
    
>>>   Digital gets about 7% of its revenue from software, and 60% of that is
>>>   operating systems and networks.
    
>>>   IBM's internal target is 30%-50% of revenue from software by the end of
>>>   fiscal 1993. What is Digital's target?
    
>>>   The worldwide software market for last year was about $25-$30 Billion,
>>>   larger than the TP market. For 1990, the figure is about $35-40 Billion.
    
>>>   From 1987 to 1988, IBM's software as a percentage of sales revenue
>>>   increased by 6%+, while Digital's corresponding number decreased by
>>>   2.75%. The only sales category that will have no downward slide in the
>>>   next few years will be software. 43% of the Unix market revenue is
>>>   software.

	Please read that last paragraph very carefully. In Digital's
	free-enterprise system, something that comprises 7% of revenue
	(and falling) is not going to get attention or favour.

	Don't tell me about the high profit margins. Don't tell me about
	the leveraged hardware and services. Don't tell me about the
	opportunities for building long-term relationships. I know.

	But some of us don't.

	/Tom