Conference 7.286::digital

Re:                 <<< Note 1684.0 by CNTROL::DGAUTHIER >>>

>    I've heard it said that the computer industry is migrating from 
>    accomodating a "Systems" market to a "Components" market.  Large
>    systems suppliers will be shifting gears by developing, building 
>    and selling  standards compatible computer "Components" (Memory boards, 
>    power supplies, mass storage devices, CPU boards) for customers to
>    buy and piece together, if you will, to build the desired system.
>    
>    Is DEC posturing to fill the role of components supplier?  Should we be?
    
Isn't this how we used to do business around 20 years ago?  Perhaps its time 
has come again...  :-)

-  David

    I believe that Digital is becoming a software supplier on the way to
    becoming a systems integrator.  Systems integration will be via
    standards and is what NAS is all about.

    
    	From a manufacturing perspective, that is largely what we do now to
    a greater and greater degree...
    	/john

What we need around here is LESS posturing and more positioning.

(I know, you *meant* positioning :-)

    	From what I've heard recently, and in the typical DEC tradition, we
    intend to do both. We will be the #1 systems/solutions supplier, sell
    our services, and sell components to a much greater degree than we have
    in the recent past. This would include licensing software and (gasp)
    new hardware architectures.
    	I think we have a reasonable chance to succeed in the systems
    business. I think our chances in the component business is about the
    same as our chances in the PC business...there are a lot of words and
    no meat to back it up.

        I think we're doing okay in the component business in mass storage.
    The really neat thing about this business is the low level of bullshit.
    If you fail to deliver what a customer wants, you don't get the
    business.  No bad feelings, no politics, everyone is very pleasant.
    Just no income!  And no income means you go out of business.

        I think this is great!

    Can/Should this mean that intetrnal DEC systems builders might buy 
    their components "outside" if outside vendors can deliver a better
    product at a lower price?  I believe their are instances where this has
    already happened.  

Woops                                     there
                                          vvvvv
>>   product at a lower price?  I believe their are instances where this has

If we do buy from outside vendors over our own internal suppliers, what
does this tell potential customers of the DEC built component(s) we opted
not to buy?

Are there pressures imposed to ensure that we buy "inside"?  Should there
be?

    Thus the NMS appears.  The idea here is that if we can buy it better,
    cheaper, faster, etc. outside, we probably ought not be in that
    business.  From a customer's perspective, it would give us little
    credibility in that we, Digital, are selecting components which best
    address the customers needs, Digital produced or not, and we will
    support them just as though they were our own.  
    
    The idea is that we will be forced, sometime against our will, to
    become a competetive supplier.  Remember, if we produce things that
    others can't produce, then we don't have a problem.  This may be where
    we eventually shine.
    
    LI

    What's NMS?
    
>>    The idea is that we will be forced, sometime against our will, to
>>    become a competetive supplier.
    
    And if a particular internal components supplier can't compete?  
    
>>    Remember, if we produce things that
>>    others can't produce, then we don't have a problem.  This may be where
>>    we eventually shine.

    What do we build that others can't?  From what I hear, even the rights
    to build the currently proprietary CPU chips will be sold.  
    
    
    
    

    	A lot of our products became noncompetitive because engineering
    groups were forced to use internal components which were not
    competitive. To compete in today's industry, we need the most bang for
    the buck. If that means going outside, then so be it. However, when we
    do so, we should also examine WHY we're doing it. If we're not using
    the DEC equivalent component and this is something we sell, should we
    be in this business? Can we fix the problem?
    	Then you ask yourself if DEC is building systems from ALL external
    components that anyone else could build, why would anyone buy it from
    DEC. Well, there's service...dealing with a single company who
    integrates all your pieces. We must also provide added value to the
    product itself, particularly if we're not the lowest priced on the
    market....better quality, BETTER AND MORE COMPREHENSIVE SOFTWARE, etc.
    	In the long run, this should make us a better company and force us
    to build better components and better systems.

    We lose to competition on disk storage at 50, 60, and even 70%
    discounts. They appear to build them bigger, faster and cheaper than we
    can. Hence account teams in the field, in the spirit of NMS, are
    starting to include 3rd party storage in their solutions. A fact of
    life.

    "Service" is not Digital's silver bullet.  It's a profitable business,
    and believe me, there's a big difference.
    
    Real innovation in services is always bottom up.  Something gets tried
    and it works, and it becomes repeatable success.
    
    Becuase new ideas are always being tried out there's plenty of failures
    as well as successes.
    
    Actually, it was in spite of Digital's processes and overhead that
    allowed services to grow naturally and profitably.  Digital's processes
    and overhead were associated with the "important" part of the business
    and service innovators were left alone.
    
    The challenge for services is have enough management/charter/structural
    stability to allow innovation to continue and moral in the field to
    rebuild.  That sort of stability is in short supply these days.

    A question to all, *not* directed specifically to ::SHAWS, re this
    quote:  "Hence account teams in the field, in the spirit of NMS, are
    starting to include 3rd party storage in their solutions.  A fact of
    life."
    
    In this spirit, why do you suppose that personal computing -- of any
    stripe, done in-house but not in PCSG, still has a noticeable stigma 
    associated with it?
    
    Our customers seem to be using personal computing a good deal more than
    we do ourselves.  Why do you suppose that is?  What price do we pay for
    this decision (which is sometimes made only tacitly)?
    
    In this connection I recall that the sales of the PATHWORKS product
    family are now #1 in the DEC pricebook...  and sales of DEC's DOS and
    OS/2 clones are doing increasingly (and already quite respectably tyvm)
    well.  And that 51% and rising of all DECnet licenses run on personal
    computers.
    
    Any "cobblers' children" got chilblains out there?
    
    OK, so the question *was* rhetorical...  But what do YOU think?  :-)

    I think the key principle in NMS, which is often looked, is that the
    ability to now source components, products, and even services outside
    of Digital will EXPOSE problems, not necessarily fix them.
    
    This doesn't mean we MUST buy outside or even that we SHOULD buy
    outside.  Rather, it means that the group responsible for that product
    will need to take whatever measures are needed to fix those problems or
    risk losing the business.
    
    It is oversimplified to believe that everytime we find something
    cheaper outside the company we should buy it instead of making it and
    that somehow this becomes a win-win situation for Digital and for our
    customers.  It is true we can't be competitive with EVERY product but
    we can certainly do a lot better than we are now.
    
    There is a lot of risk in simply buying components and then putting
    them together.  The only works for components that are truly
    commodities or for components whose technologies are so different from
    ours that it makes no sense to get into that business.  Examples of
    this would be things like memory chips (commodities) or engines for
    laser printers (specialized technologies).  
    
    When we become grossly uncompetitive in things like storage systems,
    then something is wrong.  When we lose control of our base technology,
    then we will find it difficult -- maybe impossible -- to maintain
    competitiveness with service.
    

>>    Our customers seem to be using personal computing a good deal more than
>>    we do ourselves.  Why do you suppose that is?  What price do we pay for
>>    this decision (which is sometimes made only tacitly)?

When I look at all the tools available to me as a user of the "SYSTEM",
I'd hate to have to regress to a PC environment where it's limitations 
preclude or at least hamper the use of all this variety.  Also, data
sharing (files, formal databases, data shared in memory) and interprocess
communication is hampered if not impossible.  Using CASE tools in a
multi-user environment is another thing.  Some of the software I develop
requires more memory than my station can hack! I just call my system
manager and he bumps up the working set.  what would I do with a PC?
Every night Operations backs up everything I did that day.  My desk draws
aren't cluttered with a deluge of floppys. No thanks, I'll sit here on my 
station and log into the cluster, thank you very much!

Maybe that's why we don't network PCs around here?  That and the fact that
it's relatively cheap for us to buy alternate solutions.

Although, I suppose the majority of the casual users might not need all of
what I need as a software engineer.  A PC might be OK, especially if an
office already has a lot invested in hardware and training in that area.  I
knew some PC users that swore by the IBM PC (or clones thereof)... NEVER
having even logged into ANYTHING else in their lives and expressing NO
interest in ever doing so! PERIOD!!!  It's tough to break a narrow mindset 
like that and it's really not our business to try to tell the customer what 
(s)he wants. So, we sell networking products.

Dave

    RE: buying outside what is too expensive inside
    
    I'm working on a customer project with a very tight budget to assure
    proper profitability (read: we're literally counting pennies here).
    
    We realized that, through an oversite, we did not have the full
    compliment of cables required to hook up our modems.  We needed the
    cables cheap and fast, so I called a place on the opposite coast that I've
    personally ordered from before.  In two days, I had all the cables I
    needed on my desk for under $38 (including second day FedEx charges).
    The DECdirect catalogue lists equivalent products for $310, not
    including shipping!  Even with internal discounts, there was no real
    competition.
    
    Of course, even if the prices were closer, I'd still pay serious
    attention to the place out west.  Why?  Because I ordered a few small
    parts from them a few weeks.  About a week or two after my order
    arrived, I got a phone call from them.  It seems that they discovered
    that one of the bins in their warehouse had been misfilled during the
    time my order was shipped.  _THEY_ called _ME_ to insure that I had
    received the proper part!  Now THAT'S SERVICE!  And the kicker: IT WAS
    A $1.65 PART!  By making the phone call to me they basically LOSSED ANY
    PROFIT they may have made on the sale!  But they won one satisfied
    customer!
    
    When I hear stories of US doing business like _THIS_, then I'll be
    impressed!
    
    -- Russ
    
    PS/ Giving credit where it is due: the supplier mentioned is C-Gate.

I've been using a DEC-produced personal computer for 5 years.
My PC is called a "VAXstation".  It's great, I do all my software
development on it.  No more timesharing for me.

Granted, if you're not a techoweeny, running a VMS system might
be a bit of a pain.  But that's one of the things which local-area
VAXclusters are good for.

     >               <<< Note 1684.18 by MU::PORTER "bah, humbug" >>>
     >                     -< What exactly is a "PC" anyway? >-
     
    To put it in language I hope most anyone, except perhaps software
    engineers, will understand, a PC is a small computer with an Intel
    80x86 CPU (or a good clone of same) with a barbaric memory management
    scheme, bit mapped video and enough supporting vendors to populate a
    51st state.  As it happens, those people we fondly refer to as
    customers own enough of them to build a good sized mountain.  Those of
    us who occassionally encounter them down in the trenches would be able
    to impress these customers a whole lot more if we could demonstrate a
    real understanding of how to get more useful work out of the little
    beasts.  Or at least know how to initiate a warm boot.  We send people
    to PCSA classes who don't even know that and may never have a PC on
    their desk during their entire career at DEC.  It's not a question of
    our enjoyment or even our productivity.  What is at stake is whether or
    not we can even converse intelligently with our customers.  Believe it
    or not I would trade the VAXstation I'm writing this from for a decent
    PC in a second.  I can always sethost to a VAX to sharpen my VMS
    skills.
    
    ken		/Flame_off

    Let's look at disks.  They're components.  Who are the major players in
    the disk drive industry?  IBM, STC, Seagate, Western Digital, Conner,
    Micropolis.  Only one of them is a computer systems maker, and that one
    is looking at splitting itself up into little fight-size pieces.  So
    it's not axiomatic that Digital needs to build its own disks.  HP, Sun
    and the rest of the industry buys from the component specialists.
    
    Two years ago, our internal disks were a joke.  Storage Systems was
    crippling the company.  Then they got the word.  Now, the DSP5200 and
    DSP3085 are world-class drives at fighting prices.  (RZ versions are 
    marked up for retail, based on somebody's guess as to what the market
    will bear.  But Digital's product groups can buy the component drives
    from Storage at competitive rates.) 
    
    That model can work.  We build components or we buy them.  If we build
    them, we sell them, since we stand to make more money that way. 
    
    Our old "integrated" model was modeled on the East German economy,
    which was more prosperous than its eastern neighbors.  But we had to
    change, or we'd face the same fate as that model.

    _vide_ this conference,  1076.*    (esp. 1076.29 )
           ASIMOV::MARKETING 1184.1-.L (esp. 1184.27 )
    
    /s/ Dan (-: the rabblerouser :-)

Re: the last few

This is a fascinating thread.  I think that there is a fundamentally
healthy debate taking place here about how Digital should go about
the business of making money under the aegis of 1990s capitalism. 
Let me throw this out for discussion:

When a firm develops a successful product, it typically garners a 
monopoly for some period of time.  During that monopoly, before
competing firms produce "look-alikes", the firm recoups its investments,
and presumably makes a profit.  For Digital, VAX/VMS was essentially a 
13 year monopoly (that is, VAX/VMS was so popular in its market
that its proprietary nature was secondary to customers).  Now, we
all know things have changed (for a variety of technological reasons 
that have been beaten to death here and elsewhere).

In the late-twentieth century model, the time during which a
firm can take advantage of its monopoly on a product is greatly
diminished.  Since the term "product" now encompasses almost purely 
intellectual property, the barriers to entry for competing firms is 
much lower than it was 10 years ago.  (You don't need bazillions of 
dollars to "manufacture" software; additionally, software is essentially 
a model of some real-world system.  Once the model is figured out, other 
firms can flood the market with competing intellectual property.)  
Examples of this abound: relational databases and spreadsheets are two.  
Lotus had a monopoly on its intellectual property for a much shorter 
amount of time than did DEC with VAX/VMS -- due primarily to the fact 
that there were lower barriers to entry for competing spreadsheet products.
This whole process is a natural flow.  For example, IBM enjoyed a 
mainframe monopoly for much longer than Digital enjoyed a VAX/VMS 
monopoly, but Digital enjoyed the fruits of VAX/VMS longer than Lotus 
did for 1-2-3 (TM), etc.

So now we come to services: the new holy grail.  Services (e.g., SI, 
management consulting, information systems planning, hardware service, 
helpdesk support) are even more ephemeral than software.  I submit that 
whatever monopolies are to be had in the services arena will disappear 
virtually overnight (we're already seeing it -- including the hardware
services area); the lines between competing service offerings 
will *very* quickly become blurred.

For example, the competitive advantage of <pick_your_favorite_SI_firm> 
consists of essentially two things: 1) their methodology for integrating
systems, and 2) the reputation of their consultants.  How long
can it possibly take another consulting firm to develop a competing
methodology, especially given the cross pollination of high level
consultants between the firms?  The methodology is derived from the
experience of those consultants, no?   What does this mean for the
firm in terms of recouping its investments in training and the development
of its intellectual property?

This is an important debate for Digital. Before we jump on the 
bandwagon of buying out components/systems (and as a result forgetting 
how to do quality manufacturing), and get sucked into the glitzy world of 
consulting, let's not forget that that world has its pitfalls as well.
Let me clarify that I am not suggesting we won't or can't make lots
of money in services; clearly we can.  I just don't think we should
abandon the idea of figuring out how to make components, disk drives,
and systems better and cheaper than the competition; we should not
necessarily encourage our "best and brightest" to forego careers in 
manufacturing disciplines in favor of the jazzy consulting environment.
Remember the 1980s, when the smartest kids went to Wall Street instead
of Main Street?

Discussion?

Glenn 

(who, in fact, works for Digital Services, not manufacturing) 

    re .14
    
    You now will find large PC sales by this company that have non-DEC PCs
    or pieces of PCs. You also see us selling service for Novell networks
    and I think I saw an annoucement that Novell products will soon be
    in our price book.

    re .22
    
    Your analysis has alot of merit.
    
    Which is why Digital has invested so heavily in Alpha, and why the
    industry consultants/analysts/experts are starting to say good things
    about Digital once again.
    
    -Dave

re .22

There seems to be no argument about anything up to here...

>So now we come to services: the new holy grail.  Services (e.g., SI, 
>management consulting, information systems planning, hardware service, 
>helpdesk support) are even more ephemeral than software.  I submit that 
>whatever monopolies are to be had in the services arena will disappear 
>virtually overnight (we're already seeing it -- including the hardware
>services area); the lines between competing service offerings 
>will *very* quickly become blurred.

>For example, the competitive advantage of <pick_your_favorite_SI_firm> 
>consists of essentially two things: 1) their methodology for integrating
>systems, and 2) the reputation of their consultants.  How long
>can it possibly take another consulting firm to develop a competing
>methodology, especially given the cross pollination of high level

My concern is for what you didn't say, not what you said.  Your point 2),
the reputation of the consultants, is more decisive than 1), the
methodology. (imho)

Customers do not know and do not want to know the methodology unless they
want to become competitors.  For us to be successful in the consulting
business, we have to make or buy consultants with good reputations.  As
always, its faster to buy them, but they are not tied as tightly to us as
are homegrown.  The kind of environment we can _create_, (not what we have,
necessarily), can help us grow consultants with winning reputations, but its
not going to be "business as usual".  

There is one area, of course, where the Digital Equipment Corporation name
will establish the reputation of the consultant.  That is in the area of
computer systems.  But other than that, we don't have the reputation of
world beaters in manufacturing, sales, banking, pharmaceuticals, or any of
the other spheres of business activity in which we want to be consultants.
In these areas, we need to create the reputation.  That's a job and a half.

fwiw,

Dick

    Re: .25
    
    I concede your point that reputation is more important than
    methodology for a consultant.  An important point, I think, is that 
    good practice (read: methodology) would accomplish a couple of things:
    
      1. It would help other consultants, presumably, sucessfully
         conclude engagements (at least, that's what it *should*
         do, just as a software design methodology should help
         software engineers design good systems -- in fact just
         as a medical diagnostic methodology, if followed, should 
         help a doctor diagnose an illness).
    
      2. It should help spread around the expertise of the best
         consultants (encompassing their experience) to other
         members of the team.
    
    Your point is taken, however.  Priority is obviously the people, not the
    process.  But your argument strengthens mine, I think.  It's easier
    to get the people (and, importantly, to lose them) than it is the 
    methodology (which is presumably protected by copyright or whatever).
    So the idea that there are no (or few and of short duration) monopolies in
    services significantly impacts our ability to compete.  If you
    take the argument to its logical extreme, it means that virtually
    anyone with a sales pitch and *any* track record is, ipso facto, a 
    competitor.   Which, I suppose, is why we have so many law and accounting
    firms tripping all over each other.