Conference netcad::hub_mgnt

514.0. "DEChub vs Chipcom" by QUIVER::SLAWRENCE () Mon Nov 22 1993 11:57

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        | d i g i t a l |          I N T E R O F F I C E   M E M O R A N D U M 
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        TO: SLT                         DATE: November 18, 1993
            Territory Managers          FROM: Larry Walker
                                        DEPT: Networks Engineering
        CC:  Engineering Staff          EXT:  226 7871
             Networks Staff             L/MS: LKG01-3/D19
             DEChub Team                NET:  DELNI::WALKER  
                                        ID:   memo15

        SUBJECT: Chipcom Hubs vs. Digital Hubs - Consultant Comparison
                 Results in Strong Recommendation to Drop Chipcom Product


             CONCLUSION

             Chipcom, a supplier of hubs whose  products  have  been
        aggressively   moved  by  Digital  for  several  years,  and
        Digital,  a  more  recent  supplier   of   hubs,   subjected
        themselves  to  a  comparison  of  hubs by three independent
        consultants.  The  resulting  consensus  recommendation  was
        that   Chipcom   and   Digital   are   in  competition,  not
        partnership; that the partnership we had  has  now  outlived
        its  utility  to  Digital;  and,  specifically, that Digital
        should NOT OEM Chipcom's upcoming Oncore product offering.

             This is important for you to know  and  to  share  with
        your  organizations,  as  there  is  considerable  confusion
        throughout the field.   This  is  a  simple  result  of  the
        history   of  the  relationship,  and  we  urge  you  to  be
        definitive with your groups:  we have invested in making our
        own  hub  products,  we  get  better margins selling our own
        rather  than  reselling  others'   products,   and   outside
        independent  observers  have  concluded  that  there  is  no
        product reason to be reselling theirs.  Let's sell  DEChubs.
        Period.

             DETAIL

             Yesterday, we met with Chipcom's  CEO,  Rob  Held,  and
        three  consultants  to  discuss  the wisdom of continuing to
        partner closely with Chipcom to supply hubs to  the  market.
        As  you  know, we, as a company, have been doing so for many
        years, as Chipcom was among the earliest suppliers of  hubs.
        In  recent  years,  we  have worked hard to catch up and now
        have a solid hub offering of our  own,  culminating  in  the
        DEChub  900  announcement  three  months ago.  The resulting
        dislocation for Chipcom, coupled with their  own  perception
        that their hub is superior to ours, led them to argue loudly
        - with many of you and anyone else in Digital they could get
        to  listen - for continuing the relationship and positioning

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        their hubs as 'high-end' or  'enterprise'  hubs  co-existing
        with  our  'low-end' hubs.  While we in Networks Engineering
        have been refuting this argument, Digital  as  a  whole  has
        still   been  moving  their  equipment,  and  the  resulting
        confusion prompted a review.

             Chipcom  proposed  that  we  get  together  with  three
        independent  consultants,  with  an eye toward convincing us
        that their hub can co-exist well with ours.   We  agreed  in
        this   extraordinary   case   so  that  we  could  put  this
        contentious issue to bed.  The three were Michael Howard  of
        Infonetics,  Jim  Herman  of  Northeast Consulting, and Todd
        Dagres  of  the   Yankee   Group.    The   gist   of   their
        recommendation  on  the  specific issue of whether or not we
        should OEM their new Oncore hub was that we should not, and,
        further,  that  we should move aggressively to sell our own.
        Two of the three consultants recommended this course,  while
        the third stopped short of being that specific.

             The analysis each of the consultants did  consisted  of
        comparisons  of  the  features  of  each  hub product line -
        features that, in their experience, customers  cared  about.
        All  three  stated  that they did not see big differences in
        the capabilities of the hubs - they  both  accomplished  the
        same functions to first order.  Two of the three saw a small
        advantage, actually, for Chipcom, while one saw our products
        as  better, but mostly they saw overlap.  All three saw that
        there would be tremendous  difficulty,  with  that  overlap,
        integrating  the  two  product  lines seamlessly, leading to
        confusion for our customers and demoralization of the  field
        and   engineering   forces   within  Digital.   Hence  their
        recommendation was that we should recognize that we  are  in
        competition now and proceed accordingly.

             The other implications the three saw for us  were  that
        we need now to aggressively get the word out about our solid
        products.  They cited our unassertive advertising  and  mind
        share  position, and they made suggestions like "turn on the
        sales force" and "must goal  the  sales  force"  around  hub
        products.   In  addition, they said that we must continue to
        develop the products so as to  finish  catching  up  to  the
        current  hub  leaders  (Synoptics  and Cabletron) as well as
        Chipcom.

             Chipcom has been aggressive in contacting  and  selling
        to  many  of  you  personally - hence my desire to reach you
        directly and quickly with the results of this study.   As  I
        said  above,  it's  time  for  us to sell our own products -
        DEChubs - now.

    Any chance of getting a copy of the consultants report that is
    mentioned?
    /j

    I HOPE it is abundantly clear to ALL that while it is very important to
    lead with our own products at every opportunity; there are occasions
    where there is no opportunity. In cases where the customer has a
    Chipcom based network (which we may well have sold them) and is adding
    to it - insisting on Chipcom product so as to remain consistent or
    where for some other reason, such as a RFP, etc. Chipcom is speced we
    will have to respond with their product in order to meet the customer
    requirements. It seems clear that we will have to maintain a level of
    purchasing agreement with Chipcom to meet these needs. I too would like
    to see the consultant's report posted.

    Chipcom is also very attractive because it is shipping (and has been
    for a long time) multiple buses, 17 slots, and a bridge module that 
    can be connected via software to any of them...  It also is a good
    mid-range hub to connect several DEChubs to, with multiple networks. 
    We don't have product yet in this space, and we can't tell customers 
    when we might.
    
    So even new sites are still getting Chipcom where I come from...
    
    JR