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Conference 7.286::digital

Title:The Digital way of working
Moderator:QUARK::LIONELON
Created:Fri Feb 14 1986
Last Modified:Fri Jun 06 1997
Last Successful Update:Fri Jun 06 1997
Number of topics:5321
Total number of notes:139771

2372.0. "Digital's inroad into the PC market" by CX3PT2::CODE3::BANKS () Tue Feb 16 1993 15:23

From the Colorado Springs Gazette Telegraph, Tuesday, February 16, 1993.

                    Digital getting over the rainbow
                    --------------------------------

                   Company gets back into PC business

Associated Press

  BOSTON -- In the annals of personal computing, few products have been bigger 
flops than the Rainbow.
  That was the ill-fated line of PCs Digital Equipment Corp. introduced a
decade ago, but then halted in 1985 when it couldn't crack the dominance of IBM
and Apple Computer Inc. 
  Digital's retreat from the PC market proved costly and embarrasing.  It left 
the nation's second-largest computer company virtually absent from the 
industry's fastest growing market.
  But in a dramatic turnaround, Digital is now emerging as a force in personal 
computers, proving that it's possible to get over the Rainbow.
  "A lot pf people in the industry have been surprised because DEC hasn't been 
known as a PC company," said Dan Ness, an analyst with Computer Intelligence, 
a market research firm in La Jolla, Calif.
  For more than a year, Digital has been aggressively selling PCs via direct-
marketing, sending catalogs to buyers around the world and slashing prices.
  Twice in 1992, Digital topped Computer Intelligence's monthly ranking for PC 
market share growth.  By the end of the year, Digital climbed into the top 10 
among U.S. personal computer makers.
  The comeback is noteworthy.  The fast-paced computer industry doesn't
normally forgive mistakes.  One example is another Massachusetts computer firm,
Wang Laboratories Inc., which also missed out on the PC revolution and landed
in bankruptcy court. 
  But the roster of players in the personal computing market has been shifting, 
with smaller companies such as Dell Computer Corp. making inroads by selling 
IBM-compatible PCs at cutthroat prices.
  "The shakeout that we are witnessing today is what gives an opportunity to a 
company like Digital," said Enrico Pesatori, hired by Digital last month to run 
the company's PC business.
  Pesatori, a PC industry veteran who worked for Italian computer maker
Olivetti & Co. then joined Zenith Data Systems Inc. as chief executive officer,
was brought on board by Digital's new president, Robert Palmer. 
  Palmer took over the Maynard, Mass.-based company last fall, succeeding
Kenneth Olsen, Digital's legendary co-founder, who resigned under a cloud when
he couldn't end a series of staggering losses. 
  Olsen had lead Digital to great heights by moving computing away from giant 
mainframes to mid-sized minicomputers.  But as this trend moved down to the 
desktop Digital was caught flat-footed, critics say.
  "I don't think Ken Olsen really believed (personal computers) would be
anything more than toys," said Terry Shannon, a longtime Digital watcher and
head of Gander Resources, a market research firm. 
  Last year the PC market was worth an estinated $75.4 billion, according to 
Santa Clara, Calif.'s InfoCorp-CI.
  One of Palmer's first tasks was to reorganize the company around specialized 
business units, giving PCs their own domain.  His goal: to make Digital one of
the top PC companies in the world. 
  The company still has far to go.  Digital commands roughly a 2 percent share
of the U.S. market for PCs, compared with the 16 percent for International 
Business Machine Corp., 14 percent for Apple and 8 percent for Compaq Computer 
Corp., according to Computer Intelligence.
T.RTitleUserPersonal
Name
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2372.1Rainbow lovers unite! :*)AIMTEC::HIBBERT_PJust Say kNOwWed Feb 17 1993 18:0213
    I LOVED the Rainbow!  Best machine ever built!  I *almost* bought one!
    
    	* Built-in terminal emulation
    	* Expanded diagnostics
    	* Today's processor with tomorrow's inside (1)
    	* Dual OS capability
    	* Over 1000 software products and growing each month
    
    (My armes are crossed over my head for the incoming mudslinging)
    
    (1) From a former television spot just seen in the movie
        "The Philadelphia Experiment"
                             
2372.2No mudslinging from here!FUNYET::ANDERSONImagine whirled peasWed Feb 17 1993 18:5912
I disagree with those who say the Rainbow was a failure.  Considering it was
introduced in the early 1980s, before anyone agreed on the standards, it was way
ahead of its time.  It has not been surpassed until recently for its graphics
and all-around wonderfulness.  If the world of software hadn't passed it by, my
Rainbow, still in working condition, would still be in use.

We learned from our mistakes and now, I believe, manufacture PCs of superior
quality that are also industry-standard.

Long live the Rainbow!

Paul
2372.3Me Too.SPECXN::BLEYWed Feb 17 1993 20:455
    
    And you only needed a pen to service it...unlike I*M's PC's that
    had over 120 screws in it.  A service engineers *nightmare*!
    
    
2372.4AXEL::FOLEYRebel without a ClueWed Feb 17 1993 21:109
RE: .3

	Major rathole, but what else is new?

	We more than made up for the amount of screws with the 
	VAXstation 2000. One always has leftovers after opening up
	one of those monsters..

						mike
2372.5Rainbow ALWAYS chosen by those who sold both!GLDOA::MORRISONDaveThu Feb 18 1993 02:098
    As tech (and primary) editor of the only book ever written on the early
    DEC pc family (Rainbow, PRO and DECmate) DEC Personal Computers
    Expansion & Software Guide, published by QUE Corp, I had several
    opportunities to talk with those who sold both IBM PC & XT and Rainbow.
    There was NEVER anyone I spoke with who felt anything other than that
    Rainbow was superior in every way to it's illustrious competitor - no
    kidding! We were just late - that's it. That is all over now & I am
    excited to see we are making such progress with a great pc! 
2372.6lessons, and unresponsivenessLGP30::FLEISCHERwithout vision the people perish (381-0899 ZKO3-2/T63)Thu Feb 18 1993 09:5127
re Note 2372.2 by FUNYET::ANDERSON:

> I disagree with those who say the Rainbow was a failure.  

        I believe that Rainbow's failure was actually the tip of the
        iceberg of Digital's failure -- it just took the better part
        of a decade for Digital to understand how unresponsive it was
        to the changes in the computer markets.

 Considering it was
> introduced in the early 1980s, before anyone agreed on the standards, it was way
> ahead of its time.  

        Actually, it implemented the de facto standard of the early
        '80 -- CP/M on the Z80.  However it came out at one of those
        relatively rare points when the standard takes a dramatic
        turn.  We did not respond quickly to that, and when we did
        respond, we responded poorly (e.g., the VAXmate).

        (There is probably a lesson in all this for the introduction
        of the Alpha-based PC.  We often talk as if we hope that the
        Alpha will set a new industry standard, turning the industry
        away from the Intel design center.  However, are we going to
        succeed as IBM/Microsoft did in the early '80s when they
        pulled off the same kind of change?)

        Bob
2372.7Conference PointersSDSVAX::SWEENEYPatrick Sweeney in New YorkThu Feb 18 1993 10:494
    Consider this a plug to add historical comments to MR4SRV::DEC_HISTORY.
    
    Discussion of the acceptance of Digital's current products in the
    market probably belongs in ASIMOV::MARKETING.
2372.8VERGA::FACHONThu Feb 18 1993 13:468
    Our success in PCs is the single most effective
    and influential bit of corporate self-promotion (one
    might even say inadvertent marketing) ever 
    done by this typically "let-the-product-sell-itself" company.
    Consumers are hearing our name.  That's goodness.
    Thanks to aggressive PC marketing -- for a change.  Just 
    wanted to "note" it for the record.  Hope they keep the
    heat on!
2372.9Sorry, I Couldn't Resist :)ALAMOS::ADAMSVisualize Whirled Peas!Thu Feb 18 1993 15:567
    re: ...only a pen needed to fix...
    
    The same was true for the VAXmate.  To fix mine (as a customer), all I
    had to do was pull out a pen, write a req. for a Dell, and write a
    salvage request for the VAXmate... :)
    
    --- Gavin
2372.10it failed, by the only standard that mattersADSERV::PW::WINALSKICareful with that AXP, EugeneFri Feb 19 1993 20:286
RE: .2

It fell drastically short of both sales and revenue expectations.  In business, 
that is the definition of a product failure.

--PSW
2372.11PROFIT !LUX01::WILMSThu Feb 25 1993 08:1030
    The Rainbow was a extremly well engineered and fantastic product.
    Pricing was adequate etc etc...
    
    What was wrong ? We didn't listen to the customer(s). The major PC
    customer at that time was the PC dealer.
    
    A relative of mine ws working at that time for Computerland
    Headquarters. He told me the following:
    
    The profit for a dealer came from:
    
    +/- 0% on the IBM CPU Box (i.e 32% discount ws passed to the end-user).
    +/- 50% on Disk & Memory which was bought in Taiwan etc.. i.e. the
            End-User was under the impression that he obtained 10 to 20%
            discount on the IBM pricelist but in fact he got 3rd party on
            which the dealer had a margin going up to 80%.
    +/- 50% on Services i.e. training, maintenance.
    
    and what did we do ?
    
    Dealers had to buy <all DEC> and on top of it we bundled 12 months
    warranty. 
    
    rgds
    
    Al
            
    
    
    
2372.12Some ramblings...ASD::DIGRAZIATue Mar 23 1993 15:3251
	Re .6:

>        Actually, it implemented the de facto standard of the early
>        '80 -- CP/M on the Z80.  However it came out at one of those
>        relatively rare points when the standard takes a dramatic
>        turn.

	Pre-PC desktops made sense mostly to the hacker, hobbyist market, a
	minuscule market with no money.

	The dramatic turn:  The IBM PC ignored that market and sold to the 
	masses, who don't care a whistle what's inside the computer.  They
	don't buy computers; they buy spreadsheet machines, database machines,
	game machines, etc.

	The PC did two things: it grabbed a new market, and it defended its
	market with hardware and operating system different from those used 
	by any attackers.  What's important is that the PC grabbed new ground,
	and held it.


>        (There is probably a lesson in all this for the introduction
>        of the Alpha-based PC.  We often talk as if we hope that the
>        Alpha will set a new industry standard, turning the industry
>        away from the Intel design center.  However, are we going to
>        succeed as IBM/Microsoft did in the early '80s when they
>        pulled off the same kind of change?)


	If we learn a lesson, we'll learn that people don't buy "industry
	standards".  People buy utility, portability, and longevity.  They
	already have these things.

	Who needs a new industry standard?  Buyers already have portability;
	why buy a different kind of tool to provide the same thing?  E.g., why
	does the buyer need Micro Channel to provide module connectivity?
	The buyer already has ISA, and it's good enough...

	I think we are not trying to pull off the same kind of change that
	IBM/Microsoft pulled off in the early 80s.  They didn't change anything;
	they created something new.  They ignored the hobbyist market, and moved
	into a new market; whereas we are trying to move into an entrenched
	market.  Buyers don't like to be isolated.  If our product tries to
	separate its buyer from the mass sources of hardware and software, we
	will fail.  If we provide a better tool that doesn't disrupt the buyer's
	life, we will succeed.

	Regards, Robert.


2372.13musingsLGP30::FLEISCHERwithout vision the people perish (381-0899 ZKO2-2/T63)Tue Mar 23 1993 17:3827
re Note 2372.12 by ASD::DIGRAZIA:

> 	Pre-PC desktops made sense mostly to the hacker, hobbyist market, a
> 	minuscule market with no money.

        Actually, CP/M on the Z80 was "big" in small business
        computing -- it was not just a hacker and hobbyist market --
        which made it all the more the logical choice for Digital to
        implement.


> 	Who needs a new industry standard?  Buyers already have portability;

        I think that there's a reasonable belief that the industry
        will soon have to move from the Intel design center towards
        the benefits of RISC technology, and that since we have the
        best RISC architecture and implementation, why shouldn't it
        be ours?  In other words, the industry must be headed towards
        another one of those dramatic turning points, and we have the
        right technology at the right time.

        Of course, it will take far more than the "right technology"
        to be the leader when this shift occurs -- and there are
        others with "pretty good technology", good enough to win with
        the right marketing, etc.

        Bob
2372.14added ramblingsASD::DIGRAZIATue Mar 23 1993 19:0533
	Re .13:

>        Actually, CP/M on the Z80 was "big" in small business
>        computing -- it was not just a hacker and hobbyist market --

	Interesting fact.  I wonder, since CP/M was keeping them happy,
	whether it could have ballooned.  If PC/MS-DOS hadn't come along,
	what would've happened?  Would the CP/M world have expanded beyond
	the small business market?  Would applications have become ubiquitous?
	Why didn't small business stick with CP/M?  Was it the IBM imprimatur?
	It's hard to see where the process wasn't circular.

	I think I err when I say the PC grabbed a new market; maybe I mean
	it grabbed the rest of the market, the "rest" being schools and homes,
	and the less sophisticated small business.

>        I think that there's a reasonable belief that the industry
>        will soon have to move from the Intel design center towards
>        the benefits of RISC technology, ...

	If that's true, this must be the core of our future market.
	Why is that belief reasonable?  Are new, demanding applications
	appearing, which will require fast machines?  Are there enough
	buyers for them?  For instance, does a multi-media program overload
	a 486, and do masses of people want multi-media?  Do they want
	Alpha?

	Am I right in thinking that users will insist on running their 
	old programs on new platforms, and does that insistence require
	Intel compatibility at a low level?

	Regards, Robert.
2372.15WMOIS::RAINVILLEWed Mar 24 1993 00:293
    The way i heard it, IBM attempted to meet with the owner of CP/M,
    and he didn't bother to show up.  So they wrote him off and pursued
    MS/DOS...mwr
2372.16inside track for GatesBOOKS::HAMILTONAll models are false; some are useful - Dr. G. BoxWed Mar 24 1993 12:076
    
    I read (sorry, forget where) that Bill Gates' mother sat on the
    executive board of the United Way in NY, along with the CEO
    of IBM; the implication being that he had an inside track.
    
    Glenn