Conference 7.286::digital

    I take it we said "thanks, but no thanks"
    
    .jim.

    There was an article about this in the Boston Globe today as
    well. The article said that no one was saying if we took the
    offer or not.
    
    			Alfred

    This was _first_ entered into the MARKETING notes file, as it deals
    with Digital and competitor/presumptive technology partner.
    
    See note 370 there; I have also entered additional detail from
    Monday's Wall Street Journal article on the topic.

    I am not a moderator of this conference, but I did once start a
    conference whose intent was to collect news articles and rumors
    about DEC.  The problem was that people instantly wanted to start
    discussing, substantiating and dismissing the various factoids that
    appeared, and this was dangerous.  I would lean against such a thing
    here (this conference is really not the right place anyway) or
    elsewhere.
    
    I will point out that the Vogon News Service does print interesting
    extracts from news items about DEC.  If you find a piece you
    think worthwhile, MAIL it to Tracey Talcott (VNX::TALCOTT) and he will
    likely include it in his next "VNS Computer News" column - I do this
    on occasion.  Using VNS has the additional advantage in that it is
    transitory - news items are rarely of interest after a few days or 
    weeks have gone by, and having a conference filled with stale news is
    not really a good idea.
    				Steve

Vogon news service is available online through vtx.

    Re: 6
    
    The official news of Digital Equipment Corporation is communicated
    to the employees of Digital Equipment Corporation through a VTX
    service called LIVEWIRE where available and several publications.
    
    The MARKETING notes conference and to a less extent this conference
    are places where YOU SEE IT FIRST.  Employees are serving YOU THE
    READER on a voluntary basis.
    
    People like me are entering information about Digital that's appeared
    in other places.  I couldn't give a damn if the information was a "hard
    fact" or not.  When 100,000 people, 1 million, or 10 million people has
    read it somewhere, I, alone, make the judgment of its significance and
    whether to include it here. The moderators make the judgment whether it
    stays.  You make the judgement whether this conference is worth
    reading. 
    
    Within some pretty broad guidelines, we are free to discuss or not
    discuss anything we choose.  You can read the actual guidelines in the
    introductory notes but basically we're not supposed to speculate
    regarding the motivations of the corporation or comment on any legal
    matter in which there is pending litigation.  Common sense prevails.
    
    I think it's a fairly big presumption on your part to come along years
    after the conference has started to impose "no rumors or discussions"
    on the contributors.
    
    If you think you're entitled to a conference that has the content you
    want, start one, fund one, or write a memo to your manager, but don't
    insist on it here.  We like DIGITAL just the way it is. 
                                                            

Re .6:

If you want to read "hard facts" on DEC, then the popular press is the last
place you should turn.  And I believe that statement on a number of levels, so
don't dismiss it out of hand as cynical ravings of a media-hater.  Far more
incorrect information circulates about Digital *outside* of the company than
inside of it.

If you want access to everything on Digital from the wrong name for the next VAX
processor to the brand of car that Ken Olsen drives, then read VNS, or the trade
magazines such as Hardcopy, Digital News, Digital Review, etc.  If you (Dan)
don't have access to copies from someone at your office, send me mail and I
will send you a "Free One-Year Subscription Application", "Application for Free
Subscription" and "Complementary Subscription Application" (respectively) in the
interoffice mail.  (Other folks should find someone else to ask for that stuff;
I regret that I don't have a big supply of cards, or the time to send them to
every reader of The Way We Work at Digital).

Re .8:

Pat, if you re-read the context of .6 (.4), you will hopefully reach the
conclusion that the phrase "no rumors or discussions" refers to a single
proposed new topic in this conference, not a new set of rules for the whole
enchilada.  I happen to feel that the need for such a topic is better served
by other conferences and media within DEC, or at worst one topic per truly
significant news article.  (Face it, we've done that here for years now).

However, if we did open such a monolithic topic, I would certainly consider
endorsing a "reply in some other topic(s)" rule to keep the topic from growing
out of hand.  VAX Notes is ill-used when many simultaneous discussions on
completely unrelated issues coexist in the same topic.
				/AHM

    re .6: "no one in [your] vicinity ... knew [VNS]"
    
    VNS goes all over the world.  People get it here too. 
    
  --Simon
    

FYI, this is the latest header from the mail distribution of VNS. Note the
last line states how to subscribe.


<><><><><><><><>  T h e   V O G O N   N e w s   S e r v i c e  <><><><><><><><>

 Edition : 1539            Wednesday 30-Mar-1988            Circulation :  5768 

        VNS MAIN NEWS .....................................   86 Lines
        VNS COMPUTER NEWS .................................    4   "
        VNS Letters to the Editor
            Pat Rushton ...................................   19   "
            Bill Seaver ...................................    6   "
            Nis Schmidt ...................................   35   "

    Send subscription requests, backissue requests and letters to CASEE::VNS

    
    Well anyway, any comments on the recent article in USA Today about
    the "start up companies laying down their aces" against DEC? Do
    they, the authors, of this article know something DEC dosen't??
    An article of such seems quite damaging and a definite blow to the
    Digital ego.
    
    John
    

  Anybody notice the recent table in Business week giving European 
  Sales Volumes for DEC and a number of competitors?  We seem to 
  have been given about a thousandth of the credit we deserve.
  (Annual European sales were reported as $3.0 "MILLION" !)

                                   Atlant

    Re .14:
    		What was the publication date?

    Re .16:
    
    The date of publication of that issue was April 6th, USA Today.......

    Re .16
    
    In the issue dated April 25, 1988 they "corrected" the European 
    sales figure as follows:
    
    	....."understated DEC's European sales. DEC's European sales
    	in 1987 were $3.8 billion".
    
    (This was seen on page 21)
     
    Maybe BW reads this NOTES file?
    

    Re: .18
    
    I'm sure that someone in DEC contacted Business Week directly on
    this. 
    				Steve

    
    
    
    	Has anybody read the latest issue of BW? KO is on the cover.
    	Not what I would call an optimistic outlook for the Corp.
    	
    
    
    	What's an HP???
    
    	C.
    
    

> What's an HP???

  Answering completely out of context and with no idea as to 
  whether there's an implied smile in the question, I'd suggest 
  that "an HP" is "a Hewlett/Packard".  Being an H/P could mean
  a lot of things inclucing:

    o Building an audio oscillator in a garage and bootstrapping 
      that into a multinational instrumentation, medical electronics, 
      computer, and opto-electronics company,

    o Losing the computer race to DEC, more or less,

    o Selling a technically sophisticated product to technically 
      sophisticatd customers,

    o Being a people-oriented corporation with high ethical
      standards


  Now, how about some context? :-)

                                   Atlant

    			
    
    
    RE: .21
    
    
    	Sorry, I thought it was obvious that I was being facetious.
    	Actually I was refering to HP's new RISC technology and how
    	this is supposed to put the VAX to sleep, according to the
    	article... Naw, here in Colorado Springs, HP is the second
    	largest employer in the private sector... DEC is the largest.
    	:^)!!!
    
    
    	C.
    
    
    

1 August, 1996
GartnerFLASH
Chris Goodhue

     Financials and Possible Product-Transition Issues Put Digital's PC
     Desktops On Problem Watch

----------------------------------------------------------------------------

EVENT: Digital Equipment's executives indicate the PC business unit
continues to post losses. We believe that part of Digital's solution to this
issue will be to de-emphasize high-volume commercial client systems, cease
designing and manufacturing its own desktop PCs, and elect to source systems
through an original equipment manufacturer (OEM) arrangement (0.8
probability). Therefore, we are placing Digital's PC business on Problem
Watch for financial reasons and potential desktop-product transition issues.

ANALYSIS: In the past few years, Digital made notable progress growing its
PC business. Although growth rates were less than those posted by top
performers such as Hewlett-Packard, they nevertheless exceeded the industry
average. Quality design and engineering made Digital PCs attractive to its
customers and a significant effort was made to grow the indirect channel.
However, despite that transition, Digital did not significantly extend
business beyond its installed base. Lower volumes, corresponding
inefficiencies in scale compared to key commercial competitors, intense
pricing pressures and an overstocked channel made Digital's PC business
unprofitable.

With the desktop PC business struggling and the PC business unit focusing
most of its energies on high-growth, high-margin areas such as Windows NT,
Alpha and Intel servers, and the Internet, continued investment in and
commitment to the low-margin desktop business is tenuous. Digital is likely
to select a sourcing partner such as Acer, Intel or perhaps even Compaq
Computer for desktop PCs. Digital executives believe retaining a market
presence is important (rather than exiting the business entirely) because
numerous customers desire single-source desktop and server procurement.

RECOMMENDATION: Outsourcing and reducing the focus on low-margin desktops is
probably the right decision for Digital. Trying to gain lost ground on key
PC competitors would be a costly and protracted effort. PC desktops will no
longer be a strategic focus for Digital. Moreover, a transition to an OEM
arrangement for the sourcing of desktops could introduce discontinuities in
the product line and installed base as well as uncertainties in quality
control, support or both. The future competitiveness of Digital-branded
desktop systems also becomes questionable (i.e., will Digital provide
state-of-the-art systems or maintain parity with leading providers).
Enterprises with significant commitments to Digital PCs should seek
additional information from Digital executives about the company's
objectives and should qualify additional vendors as a safeguard. Digital's
plans are not expected to have any impact on shipping desktop products or
planned Fall releases. Non-Digital customers evaluating PC desktop hardware
vendors should consider alternatives to Digital.

SERVICE: Personal Computing

ANALYST: Chris Goodhue

17 July, 1996
GartnerFLASH
L. Berg

     Digital Announces Disappointing 4Q96 Results, Significant Layoffs

----------------------------------------------------------------------------

EVENT: On July 2, 1996, Digital Equipment CEO Robert Palmer announced the
company's earnings for the quarter ending June 30 would fall well below
analysts' expectations, due to a large degree to what financial analysts
predict will be a $200 million loss for the year in its PC division. Palmer
accepted the resignation of Enrico Pesatori, head of the computer systems
division, and revealed Digital would cut 7,000 jobs and take a related $475
million restructuring charge to improve overall profitability and
competitiveness.

ANALYSIS: These events raise the question of whether Digital's recent return
to profitability masked a company in serious financial straits. Digital's
reasonable strategy for growth has never been executed. To bolster itself,
Digital will continue shedding unprofitable business lines and excess
personnel until it has reverted to a comfortable niche (e.g., systems
integration). However, neither the job cuts nor Pesatori's departure are a
surprise. Digital would have had to downsize given the continued failure of
the systems business to achieve profitability goals and the company's
inability to execute on its growth strategies. In turn, Pesatori was open
about the market share and profitability commitments he agreed to and it was
increasingly apparent he was missing his mark. However, Palmer's management
style of eliminating ineffective managers does not appear to be enough. An
effective backup strategy is lacking. More worrisome is that Digital has
been unable to effectively implement the strategies it articulated so well
in October. Although it shifted a majority of sales to indirect channels,
those channels have failed to significantly grow Digital's base. Digital's
goal to grow through a comprehensive strategy of selling Windows NT across
the enterprise is highly dependent on a strong Intel-based server business.
Non-Intel implementations of Windows NT will remain a relatively small
niche. Yet Digital continues to overemphasize Alpha in the Window's NT
market, where it has little advantage, and it has not leveraged its
relationship with Microsoft to jump start a dual architecture strategy.

RECOMMENDATION: Digital is not in imminent danger of financial collapse.
This latest glitch is something the company's management can control over
the next two to three quarters. Current financial problems should not
significantly impact short-term purchase decisions. However, unless Digital
can effectively break out of its old, business-as-usual habits, we remain
concerned about its future growth and its ability to return to a position as
a world-class systems vendor.

SERVICE: Distributed Computing Platforms

ANALYST: Lynn Berg

  OK, an even trade,  Digital outsources the desktop PC business
  to Compaq and Compaq uses alphas for their high-end server
  business (headed by former DEC VP John Rose).

 

From:	NAME: PCBU Marketing                 <PCBU@A1@SALES@PKO>
Subj:	Response to Gartner Watch                                              1

***********************************************************************

		THIS FLASH IS FROM LUCIA LUCE QUINN
		   VP STRATEGIC MKTG/BRAND MGT

***********************************************************************
							August 12, 1996


On August 2, Gartner Group, a leading IT industry consultant sent out a 
Flash Problem Watch Report to its client base advising:  1) that Digital
had reported poor financial results and 2) that they believed that
Digital was considering alternative desktop product sourcing strategies.
 
Several discussions took place between the PCBU senior management team and
Gartner to clarify Gartner's understanding.  The result was that Gartner 
did not change their view prior to publication.

Since the report was issued, several customer inquiries have been received. 
It is important that we have a consistent message for our customers
and partners as our position on the Gartner report.

Provided for your reference are some key business messages to assist you 
in communicating with your customers:

� In our July 30, 1996, Q4 financial announcement, Bob Palmer emphasized,
"Our Intel-based PC business is an important component of Digital's
company-wide Windows NT strategy.  In talking with the press, he also
noted, "We continue to have a strategy that depends on delivering
leadership products on the desktop based on the Intel architecture
for our customers and we'll continue that strategy."

Digital, as a coporation, is committed to:

	* Windows NT, as one of the three major strategic
	growth initiatives across the company

	* Providing a full range of Intel-based clients and servers
	as a vital component of Digital's enterprise solutions 
	strategy for Windows NT

	* Designing for 64-bit Alpha, keeping our design learning
	curve ahead of other Intel system providers

	* Focus on a channels-oriented business model and
	strategic partnerships for success

In support of these commitments, we continue to make significant investments 
in our Intel product lines including both desktop and servers, our 
relationships with Microsoft and Intel, and our customer and partner 
commitments.

� Digital has a full strategic commitment to its client/server computing 
business initiative. This requires Digital to provide a full line of 
Intel based products including mobile, desktop, workstation, and servers.  
This commitment is required to achieve our growth objectives as a company 
and meet our customers' expectations.

� Digital, like any good business and competitor, is constantly 
evaluating the make-buy decision for many of our products and product 
components. We have in the past and may in the future outsource some part 
or all of the manufacturing of any given product. Product time-to-market, 
cost, quality and compliance with various industry standards are all 
important factors which influence these important business decisions.

� Many if not most of our competitors outsource much of their
desktop products, including Compaq and HP (most of their volume to SCI),
Gateway and Dell (buys from Intel), and IBM.

� One of the Digital well known competencies is engineering excellence. 
Digital has a full commitment to continuing this tradition within the 
personal computer business. Product introductions targeted for this fall 
reflect areas of continued product differentiation. Any discussions 
relative to outsourcing apply largely to the manufacturing strategy. 

� Where we have outsourced in the past (e.g. manufacturing of HiNote laptops) 
we have learned what is essential and necessary to manage an outsourced 
manufacturing process which delivers a high quality product and profitable 
business.  In fact, the HiNote has won numerous design awards.
 
If Digital does outsource some or all of the desktop products, we will bring 
the same management processes to bear that will continue to ensure quality 
products.
 
� The Gartner advisory, while somewhat negative and, occasionally
inaccurate in our view, correctly observes that outsourcing and reducing the
focus on low-margin desktops is probably the right decision for
Digital.  What they fail to point out is that:

 	* we are focusing less of our direct investment on low margin,
	low differentiation desktops;

	* we will focus on the high value desktop (especially with Windows NT),
	servers including clustered systems, and our highly differentiated
	mobile offerings. 

In sum, we are focused on selected areas of the market where we are 
differentiated, able to add unique value and gain market share consistent 
with our business objectives to return profit to the corporation at the
end of Q297.

Distribution:  This message was delivered to you utilizing the Reader's Choice 
delivery services.  You received this message because you are part of the ABU 
Sales, MCS, Components, and Internet Software organizations. If you have 
questions regarding this message, please contact the author.

> Since the report was issued, several customer inquiries have been received. 

  I'll bet!


> Digital, as a coporation, is committed to:

   o Implementing and USING a spelling checker on press releases.


  And, of course, it's wonderful that this message was delivered
  internally. How will it be propagated out to everyone who was
  touched by the Gartner Group report?

                                   Atlant

    My wife (works for Olivetti) rang me to tell me that one of her
    customers who currently buys Digital PC's, told her that we were
    getting out of the PC business altogether! Guess our competitors are
    lapping this up and spreading some FUD!

Competitor FUD?  No!  We do a better job, ourselves!

I beleive all the confusion on PC directions stems from "MANAGEMENT Q&As", 
posted in note 4690.60, qestion number 5, appended below.  With this 
statement, it is understandable that Garnter Group would conclude that we 
plan to outsource PCs.


							-Paul


5.  Q:  WHAT IS YOUR STRATEGY FOR GROWTH AND PROFITABILITY FOR THE 
        PC BUSINESS?

    A:  Intel-based business is an integral part of company-wide strategy
        to become the industry leader in providing enterprise solutions 
        built around Windows NT.

        - Includes platforms, software and services

        - Primary focus in PCs will be on Intel servers, where we already
          have a strong market position.

        - Continue to be major player in this business, providing 
          customers with access to a leadership line of Windows NT 
          systems and services across both the Intel and Alpha 
          architectures.

        - Although we will invest heavily in servers, will continue to
          provide Intel-based clients to our enterprise customers as
          part of their client/server solutions.

!!!!!!! - The way we provide clients to customers may evolve in the 
!!!!!!!   future depending on the demands of our customers and the 
!!!!!!!   need to reduce the risk to the company of the volatile, 
!!!!!!!   commodity-driven desktop business.