Conference 7.286::digital

1075.0. "How are things at Digital?" by WILKIE::COBB () Tue Apr 10 1990 08:59

    	I'd like to share this little experience with you...
    
    	Everytime I meet people and we start talking about
    	business, the question invariably comes up of "how
    	are things at DEC?"  I was at a seminar this weekend
    	and met a guy who is in the business of selling boats
    	and he asked me that question, and it caused me to
    	think.
    
    	We, and the general public, many times view the company's
    	success in terms of growth in dollar sales and if the
    	dollar sales slow down it causes some negative perceptions
    	like people don't want your product that much any more
    	and Digital isn't that exciting a place to work any
    	more, etc. etc.
    
    	Dollar sales is without a doubt an important measurement
    	to the company but it tends to obscure a lot of things.
    	For example, I started to think what if we viewed ourselves
    	in terms of unit sales (like this guy viewed the number of
    	boats he sells) or better yet, what if we viewed ourselves
    	in terms of units of computing power we sold?  You would
    	get an entirely different picture.
    
    	In terms of unit sales of computers or units of MIPS or
    	whatever other measure of computing power you want to
    	use, our sales have gone up exponentially over the past
    	few years.  The problem is that over the same period of
    	time, we and the rest of the industry, have been enormously
    	successful in reducing the cost of computer systems
    	dramatically to our customers.  The combination of those
    	two effects has caused our dollar sales growth to slow
    	down from previous growth levels.
    
    	I explained this to my friend the boat dealer and it
    	gave him a very different perception of Digital that
    	he didn't have before.  If you compare it to other
    	industries, it helps put it in perspective...  For
    	example, lets assume that the average selling price
    	of a new car is $15,000.  What if through some miracle
    	of technology, automotive companies were able to bring
    	the average cost of a new car with essentially the
    	same features down to $1500 instead of $15,000.  How
    	successful would they be in managing that change?
    
    	My friend the boat dealer counldn't imagine what would
    	happen if the price of his boats dropped by a factor
    	of ten.
    
    	Chuck
    

That's a very interesting outlook which I must admit I've never thought
about before, Chuck.

A corollary seems to be that it behooves us to create more of a market for
our products in order to continue to grow in dollar sales. (Probably a luxury
that auto and boat dealers can not enjoy to the same degree - the market for
those commodities is probably more readily saturated than is the one for
our products.)

A question: Do we do all we can (or should we be doing more) to create new
markets for our products? Should we be intensifying our efforts to better
market our products?

-Jack

    Although you have come up with a clever method of measuring business
    MIPS do not pay the bills!  In order to maintain growth and
    profitability any company must measure themselves by baic financial terms
    and We are no exception!  This is indeed our biggest challenge!
    
    
    

As an ex-boat dealer myself, you have to also factor in the "advantage" 
that most retail operations have of inflation.  During the time that 
computers were going down by a factor of 10, boats and cars have had their 
prices double.  For us, equal dollars means 10x in units, for them it can 
be done with half the units.