Conference heron::euro_swas_ai

81.0. "FYI - GOOD PR FOR DEC" by HERON::ROACH (TANSTAAFL !) Mon Feb 27 1989 09:53

                  I N T E R O F F I C E   M E M O R A N D U M

                                        Date:     22-Feb-1989 10:05pm CET
                                        From:     DOUGLASS
                                                  DOUGLASS@AITG@MRGATE@STATOS@VBO
                                        Dept:      
                                        Tel No:    

TO:  ROACH@A1NSTC


Subject: FYI - GOOD PR FOR DEC

From:	AITG::LACHIUSA     "AI Marketing - DLB5-1/E2, DTN 291-8048" 20-FEB-1989 16:09:18.74
To:	@CAIM
CC:	LACHIUSA
Subj:	Nice PR about Digital


 UBS SECURITIES - Equity Research - Computers
 January 31, 1989
 by: Marc Schulman  (212) 230-4638

                   "DIGITAL EQUIPMENT CORPORATION
                Taking the lead in TRULY Open Systems"
        

   Reflecting (1) the ACHIEVEMENT OF A LEADERSHIP POSITION IN OPEN SYSTEMS
 through the introduction of DECwindows and the selection of the DECwindows
 application program interface by the Open Software Foundation for use in its
 Motif user environment, (2) a SIGNIFICANT STRENGTHENING OF THE COMPANY'S
 POSITION  THE WORKSTATION MARKET through the introduction of the DECstation
 3100 and VAXstation 3100, and (3) the implementation of COST CONTROLS THAT
 SHOULD REDUCE EXPENSES BY $1.25 PER SHARE AT AN ANNUALIZED RATE, WE HAVE
 RAISED OUR EARNINGS PER SHARE ESTIMATES and RECOMMENDED PURCHASE of the stock.

 FOREWARD:

 The theme of this report is that DEC has achieved a major strategic advantage.

   At a time when its competitors continue to focus on issues relating to
 operating systems, DEC has moved beyond operating systems. By recognizing that
 operating system transparency, not operating system portability, is the
 primary user requirement for the 1990s, DEC has simultaneously achieved the
 leadership position in open systems and guaranteed the long-term viability of
 its proprietary operating environment. It has done so by creating an
 application program interface that supports its VMS and ULTRIX operating
 systems and which was selected by the Open Software Foundation as the
 interface for its OSF/1 operating system. Application programs written for any
 one of these operating systems are executable by all of them.

 Figure 1:

            -   Picture of "DEC- An Integrated Environment"
   
             
            -   Picture of "SUN/ATT - A Narrow Environment"

                                
            -   Picture of "IBM - A Segregated Environment"



 SUMMARY AND INVESTMENT CONCLUSION

 - The OSF's adoption of the DEC API means that DEC has assumed the leadership
   position in open systems.

 - 1989-style integration, however, requires operating system transparency.

 - DEC has not abandoned its one-architecture strategy; it has updated it.
   The strategy of one operating system (VMS) has been replaced by the strategy
   of one user interface (DECwindows).
                                                                          
 - DEC's decision to create common APIs for its two operating systems is a key
   strategic move, as it ensures a continuing stream of new applications for
   VMS, thereby ensuring the survival of VMS. No other proprietary operating
   system is positioned to benefit from the rapidly-growing number of
   UNIX-based applications.

 - We believe that DEC will successfully check SUN's momentum, especially
   within the DEC account base.

 - ....neither SUN nor anyone else anticipated in late 1987 or early 1988 that
   DEC would now be selling a product having the price and performance
   characteristics of the DECstation 3100.

 - Thus, we conclude that (1) Sun cannot afford to match the DECstation's
   price/performance, (2) for the foreseeable future, SUN has lost its claim to
   price/performance leadership, (3) SUN is incapable of forcing DEC to lower
   the DECstation's price, and (4) the actual profitability of the DECstation
   will match its planned profitability.

 - With all the attention that workstations receive, it is often overlooked
   that DEC is the only computer company that has achieved market acceptance
   for proprietary operating system based workstations.