Conference 7.286::digital

    You didn't grab it and store it safely away in a KO mail folder while
    you had a chance?

    I'm on the mailing list.  This is what I received (minus LIVEWIRE
    command characters and pagination).  I haven't received any retraction.
    
    
        "Courtesy of Inside Contact, Corporate Employee Communication"

                  A Message to employees from Ken Olsen

  Digital is always cutting cost, improving efficiency and cutting out 
  unnecessary overhead and projects.  There is more motivation in hard times 
  to do this.  We have done quite a lot and have a lot more to go.  

  However, we do not plan to give up on our traditional strategy. Our strategy
  is to maintain a very strong balance sheet and a very strong financial 
  position in good times, when others are leveraging and borrowing money to 
  grow.  Then, when recessions come--and they always come--it is our plan to 
  maintain our product development investments and to continue support of our 
  customers.

  This strategy has been a key to our success.  By being careful and 
  conserving money in good times, and using it to maintain product development
  and supporting our customers in bad times, we have been able to grow faster 
  than any one else and to go from nothing to the second or third largest 
  computer company in the world.  

  We have to remember that even though we have a renewed motivation to cut 
  costs, above all we will maintain our product development and support our 
  customers.

Ahhh Gi'day...�

	      Well, *I* can see why they might have pulled it.

    Gad, if KO understands the basic economic fact that Recessions are
    cyclical, then he should also note the History of recession in the last
    100 years. Typically none have lasted more than 18 months - 2 years. I
    have this nervous feeling that Digital will still be downsizing (the
    only anti recessionary strategy that it seems to understand) long after
    the recession is over. 
    
    OF course, an equal approach for a Multibillion dollar corporation
    during a recession is to pick on the smaller companies. Well, we have
    done some acquisitions, but in most cases we have been paying
    top-dollar for top-dollar companies rather than grabbing market share,
    technology etc, from those that are suffering.
    
    q
    

Ahhh Gi'day...�

    Well, the cases I've seen, top-dollar for not-so-to dollar companies.

    Yes .3, I thought the message was VERY strange.  Same KO stuff he
    passes out at any meeting for the past 15 years.  Would have liked
    to see some evidence leadership and concern about the thousands of
    careers that are being effected.
    
    Notice that our competition does not seem to be suffering from the
    global malise and currency losses that are such a problem for us.
    
    I understand why it was pulled too.  Scary.

.2 says...

> .....  Then, when recessions come--and they always come--it is our plan to
> maintain our product development investments and to continue support of our
> customers.

  To me this says, product development and customer support will continue.
  The groups that benefit from this are engineering and field service/sales.
  The next two paragraphs restate the same message.

.3 says...

>                 -< Cut costs but keep Engineering budget? >-

  Keep engineering going on product development AND keep field service/sales
  giving customer support.

>             Well, *I* can see why they might have pulled it.

  Please elaborate.

.6 says...

>   Yes .3, I thought the message was VERY strange.  Same KO stuff he
>   passes out at any meeting for the past 15 years.  Would have liked
>   to see some evidence leadership and concern about the thousands of
>   careers that are being effected.

>   Notice that our competition does not seem to be suffering from the
>   global malise and currency losses that are such a problem for us.

  I totally agree.

>   I understand why it was pulled too.  Scary.

  Again, please elaborate because I DON'T understand.


  Don

    In bad times to need to keep up investment in your main assets, and cut
    costs in low-priority items.  If you don't, you spend yourself into the
    ground during the bad times, and _if_ you survive, you have nothing to
    sell in good times.
    
    Digital's main assets (IMHO) are:
    
    		*  its ability to solve complex problems,
    
    		*  develop quality products that from time-to-time push the
                   state-of-the-art a bit further forward, 
    
    		   and
    
    		*  a large, global customer base that is largely
                   satisfied with Digital products and services.
    
    Isn't the gist of the KO message that we should nurture and protect
    these assets, and survive by stripping still more of the lower priority
    items we accumulated in the fat and happy days ?   
    
    Those days are long gone and unlikely ever to reappear again.   We can
    guarantee that they won't appear again by cutting investment in our
    main assets.
    
    
    John

    re:.-1
    
    	i noticed that "humans" were not included as main assets....
    	in the old days (late 70's/very early 80's for me) it was
    	hammered into our heads that it was "we the people" that carried 
    	forth the values and beliefs that had made and would continue to 
    	make Digital successful. I believe that to still be the case. I 
    	believe firmly that the "humans" are still the most important 
    	asset that any successful business can have. Though times are rough
    	and people will be lost, it is critically important that Ken /
    	somebody let folks know they still hold the key to any future success 
    	that we will have and that we treat them as such through good times
    	and bad.
    	
    

    re .9 (Pasquale)
    
    Of course you are right. Digital's people are also one of the major
    assets and should have been included.
    
    However our customers and Wall Street have been telling us for the 
    last couple of years that we have too many of that particular class 
    of asset.  It is a tribute to Digital's people-sensitivity that we
    did not lay-off 40,000 people 18 months ago, but continued to struggle
    along with an organisation that is over-populated for the current levels
    of business.
    
    Massive ingenuity will be needed to be able to protect the other assets
    whilst reducing the people asset.
    
    Sad but true.
    
    John

Ahhh Gi'day...�

    Well, what if you sent a memo out like that, and then turned around and
    announced  layoffs  and  engineering  cutbacks  a few weeks later.  You
    would sound rather foolish.

	Recession? What recession? PCs are still selling like hot cakes.
	HP and Sun are still increasing revenues and profits quarter by
	quarter. Even IBM just announced a significant increase in profits
	over last year! In the UK, ICL (that antiquated maker of mainframes,
	recently taken over by Fujitsu) announced a 30% plus increase in
	revenues.

	Meanwhile, Digital results continue to plummet.

	Recession? The recession, people, is internal.

	/Tom

    I had an old article dating back to the summer of 1985 where this
    Boston newpaper interviewed KO. Basically were at approx. 8.5 billion
    dollars in revenue with 60,000 people. After closing the books last
    year we were slightly above the 13 billion dollar mark with 119,500
    people. This with increasingly declining margins. Seems that some 
    simple arithmetic would suggest that we basically doubled headcount
    and increased revenues by only approx. 60%....  i dunno but if we can't
    out revenue this peculiar problem then it essentially says that we are
    in for a wholesale layoff ... it's just that I hope we continue to do
    with it dignity and care for the affected folks.....
    
    

    Yes, and back in 85 we decided that we would be a $20 billion
    company by 1990. So we hired like crazy, empire building like
    we had never seen. Of course the dream of $20 billion never
    happened and now we have much too many people to support the
    $13.* billion that we are today. I felt there had to be a down
    turn somewhere and that we were hiring too fast. I mentioned this
    to many back in the freewheeling mid 80's. No one listened. Who
    was I to question the hiring. I hate that I've been proven correct.
    
    Jim C.
    

    Yeah, along those lines I can remember Dom LaCava commenting circa
    1988 that we needed either 65k employees or 20B in revenue.
    
    .12 -- good thought, and very true.  The problem is internal, and at
    the highest level.

    remember when a certain US VP identified the year, month & day we
    would surpass IBM in revenues?  At this rate, we might have to stretch
    that out a bit 8^]
    
    Mark
    

re .16:

Is he the guy who wrote "The Twelfth of Never"?

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Bob - Co-moderator DIGITAL

===============================================================================

    In 1984 I joined a then fledgling engineering group.  At that
    time the group consisted of about 50 people.  The group was made up of
    a great bunch of people who worked together very hard to make the
    company a player in a field dominated by Sun and ATT versions of an
    operating system and adding value of our own.  It was a great time and a 
    great experience.  To my knowledge it was a losing proposition but getting
    into the market was deemed important.  
    
    By the time I left in 1989 I think the group had hundreds of people in
    Nashua along with a bunch more in Seattle and Palo Alto.  They helped 
    spearhead the introduction of the first RISC machines and had added several
    additional flavors of our version of this operating system and some 
    layered product.  To my knowledge it was still a losing proposition.  Our
    machines were great but the software wasn't really moving and it wasn't
    really leaveraging a lot of hardware sales.
    
    At some point I was told that the company's investment in this
    alternate operating system was the same of the VMS group was getting and 
    that's many millions of $.    
    
    All the while the OSF thing was beginning which further blurred the
    perception of the company's committment to the product line.  Now the 
    group is scattered and seemingly struggling for direction.  To my 
    knowledge this group, despite its dedication and talent never returned a 
    dollar to the company's bottom line.
    
    The point?  We spent tens, if not hundreds, of millions of dollars on
    something we didn't understand and 7 or 8 years later we're still doing
    it to some degree.  The RISC machines can contribute a lot to the
    health of the company.  ALPHA and others WILL sell.  Would open VMS
    have come sooner if we hadn't tried to enter into that market as a
    software supplier?  The original version of that operating system was
    developed on Digital computers.  Why not sell high margin hardware
    rather than a losing software that cost us money in the form of
    royalities to provide?  Why did we gear up so fast on something we
    didn't own?  
    
    The kicker is that these hundreds of new hires were all good people. 
    The work they did was good and the product was good.  Being in on the
    ground floor of a new venture was exciting for me and I learned a lot
    about the company as a result.  I don't want to hurt or offend anyone
    with this note.  I just wanted to comment on the fact that we went
    crazy hiring and spending money in the mid-1980's without really
    understanding the market, how to get into it, how to support the
    product or when to cut our losses.
    
    I wonder if we can be all things to all people.  Why not stick with
    what we do best?  I don't think rehashing someone elses product is what
    we do best.
    

    
Re: .-1    

 >   Would open VMS
 >   have come sooner if we hadn't tried to enter into that market as a
 >   software supplier?  

     In my humble opinino, NO. During the timeframe you are talking, 
     1985-1989, the open VMS concept is not mature. DEC is live under
     proprietary dream then, and revenue stream is sweet. If we have 
     such foresight in our long term product/market strategy 10 yrs ago 
     and open VMS interface and free sources license, VMS will be the 
     industry hit as DOS in PC world. Did we call something "Snake Oil"
     in our dictionary ? Remember, at one time, every student in school 
     learn VMS. Now, it's the other way around, every student learn UNIX, 
     nothing else, because it's freeware. Guess, what those student will 
     prefer after gradute ? 

>Why not sell high margin hardware
>    rather than a losing software that cost us money in the form of
>    royalities to provide?  Why did we gear up so fast on something we
>    didn't own?  
 
If you look at the SW itself, I agree it may loss money by the amount
we invest on resources. However, lots of product is developved for
leverage purposes. Without it, you can't survive in that market at all.
Alos, HW is like commodity like, and getting more and more cut throat
competion, especially in low end iron offering. SW/Application is where   
bread and butter is. Look at Microsoft, how much they succeed with only
4 brainstorming products.

>    I just wanted to comment on the fact that we went
>    crazy hiring and spending money in the mid-1980's without really
>    understanding the market, how to get into it, how to support the
>    product or when to cut our losses.
 
Agreed. Industry changed faster than we as a company can adapt. We are slow
reponses in term of right product offering and timeness of product offering.
Also, shifting the proper resources to do more revenue focusing business.

Just my $.002
Michael