Conference 7.286::digital

1471.0. "State of the Company - 1991" by CVG::THOMPSON (Semper Gumby) Thu May 16 1991 12:59

Worldwide News                      LIVE WIRE

                 Ken's message from State of the Company Meeting 

     Ken Olsen, president, outlined the company's four main businesses and 
     overall strategy at the State of the Company Meeting in Merrimack, N.H., 
     today, 15-May.  The following is a brief summary of his hour-and-a-half 
     presentation:

 "We're in an industry that changes very fast.  We do today things that would 
 have seemed impossible just two years ago.  We have to always be ready for 
 change.

 "Today we are in four businesses:  commodities, VAX systems, systems 
 integration and services.  

 "Commodities includes personal computers, workstations and networking.  Low 
 price and high quality are critical factors in this business.

 "Our VAX systems are unique.  They do not meet everyone's needs -- that's why 
 we are also in the commodity business.  VAX computers may not always be the 
 lowest cost nor the fastest, but they can do things that nobody else's 
 systems can.  We have the most modern computer architecture and operating 
 system.  It is designed to last and to expand over a wide range of computing 
 capability.  

 "We need to remember that as Rose Ann Giordano has said, 'Our customers want 
 us to tell them what they need.'  We need to remember our basic historical 
 strengths and build on them.

 "We can also put together very complicated systems to do special jobs, using 
 both our VAX and our commodity products.  We have enormous assets that we can 
 use to solve the complex computing needs of our customers -- to make complex 
 computing uncomplicated through systems integration.   

 "At the same time, our services business is very well run and profitable.  
 Their people go to school for two weeks each year, and at some point in their 
 career go to school for six months.  They try things, and back down when they 
 don't work, and then correct their approach.

 "Only once in our history were we the company with the fastest equipment, and 
 that was when we opened our doors.  We changed the computer industry not by 
 having the fastest and the lowest priced products, but rather by solving 
 customer problems and taking care of every detail for the customer.  We 
 marketed by taking care of the customer.  A few years back we made the 
 mistake of over-emphasizing speed and price in our strategy, and lost sight 
 of the need to take care of the infinite number of details that the customer 
 needs.

 "Our VAX products still account for the vast majority of the company's revenue.

 "Our commodity business is exciting.  We've done some magnificent work there.
 But we still have to learn how to make money in that arena.  In that part of 
 our business, we have to watch every penny, to be the most efficient, and to 
 keep our costs and our prices as low as possible.

 "The recently announced ACE initiative is very important here, providing us 
 with exciting opportunities and difficult challenges.  In the workstation 
 business today, we face three major competitors -- Sun, IBM and Hewlett-
 Packard.  We got together with a number of other smaller workstation vendors 
 and also personal computer makers (21 initially, now more than 30) and agreed 
 on a wide set of standards -- including graphics, human interface and 
 networking.  The standards they agreed to are basically ours but were 
 developed in open deliberations.  And with these standards, UNIX and MS-DOS 
 software will be truly transportable from one vendor's systems to another and 
 also from personal computers to workstations.  This initiative basically 
 ties together the personal computer business and the workstation business, 
 including UNIX workstations.  Software that runs on personal computers will 
 also run on workstations.  

 "This is a magnificent, beautiful strategy.  But it means that two or three 
 dozen companies will be making the same two computers, based on Intel and 
 MIPS chips.  When everyone makes exactly the same machine, to be successful 
 and profitable, we need to operate with a new business model.  We have to 
 change how we do things, recognizing that price and quality are essential in 
 this commodity business.  

 "We are investing in today to sell today and to be profitable today.  We have 
 in our hands everything we need to be very successful in the commodity market.
 And with our VAX products we have everything we could ever dream of having 
 today.  We have the technology, experience and people to succeed in systems 
 integration -- especially since our VAX products can grow and expand so 
 easily, making it relatively simple to configure complex systems.

 "Basically, we've made enormous changes in the company, and, in general, the 
 changes are working very well.  We are learning to adapt to this new and 
 challenging business environment."

 Ken's State of the Company address will be telecast in full over the Digital 
 Video Network (DVN) on Thursday, 23-May, at 9 to 10:30 a.m. (EDT) and 
 repeated at 10:30 to 12 noon.

---
MS-DOS is a registered trademark of Microsoft Corporation.
UNIX is a registered trademark of UNIX System Laboratories, Inc.

    I wonder where RISC Systems & Servers went in this business model.  I
    see RISC workstations, PCs, VAX systems but no RISC systems or servers.
    I'll assume for the moment that they fall under commodities, but I find
    it interesting that they are not mentioned.
    
    Mark
    

    where is Software ? a normally profitable item as I remember...
    
    Barry