4

A Quora question Why did Digital Equipment Corporation (DEC) fail? has gathered some really interesting answers, including from former DEC people.

There is one such answer I do not quite understand:

We never had a clear partner model. This meant we were never able to get into important industries like Finance in the way IBM did. Of course this all came to a head when DEC and Compaq merged, as Compaq had no direct sales.

Did IBM have a partner model for getting into industries like finance? If so, how did it work, who were their partners? This was something I wasn't previously aware of.

Or does he mean something more like: DEC didn't have as strong a direct sales force as IBM, but the best way to remedy this would have been to partner with companies who did?

1
  • 9
    I worked for DEC during this period, and I can assure you that DEC had a very strong partner model. The succinct answer to "What killed DEC?" was it's failure to transition from the minicomputer market to the microcomputer market, which was ultimately a failure of vision and leadership. The full truth is more complicated than that, but ultimately you can boil it down to that, and that is also the reason that I left DEC: it was abundantly clear that they would not see the truth/future until it was too late. – RBarryYoung Dec 6 '20 at 15:26
15

I don't agree with the answer you read on quora. DEC did have a partner relationship with a certain kind of customer, namely engineering and science labs. Ken Olsen and the engineering staff at DEC all understood how scientists and engineers think and what they want. But this was without any marketing specialists to act as liaisons. Sometime in the 1970s, DEC began selling more to business types like banks and insurance companies. That's where the big money was. But the engineers didn't have an intuitive grasp of those customers' preferences. DEC continued to thrive with superior products but inferior marketing. When the desktop computer began to displace the minicomputer, they were completely unprepared to sell into that market. They didn't have a partnership model with retailers, and they couldn't make much money selling to retail customers. At this point in time, the quora answer makes sense.

IBM's middle name was Business. DEC's middle name was Equipment.

7
  • 1
    DEC actually had extensive partnerships in many industries and sectors, it most cases second only to IBM's. – RBarryYoung Dec 6 '20 at 15:44
  • 1
    Sure. And their sales levels would have been sufficient to keep the company afloat if their costs had remained flat. But there costs were predicated on growth, and sales gradually flattened off. – Walter Mitty Dec 6 '20 at 16:39
  • 1
    DEC making their PC line not completely compatible was a real problem. When I was in grad school in the mid-80's, I recall another group getting a DEC PC. The default floppy format was different from every other PC (and unreadable on them), leading to all kinds of issues. Nobody else in the department bothered to acquire one. – Jon Custer Dec 6 '20 at 19:10
  • 1
    Yes. This was partly historical accident. At the time they began design on RX-50 floppies, the idea of interchangeability was not yet visible. By the time they got to market, incompatibility was a disaster. If you could make a null modem and get a pair of Kermit's, you could move data pretty well. But most people didn't want to do that. – Walter Mitty Dec 6 '20 at 21:14
  • 2
    Re, "Business" vs. "Equipment": This is right on the money. IBM, at least, back in the day, was not a computer company; they were a business process company. They started making computers when that became the best way to implement the processes that they were selling. DEC, on the other hand, started making computers when they realized that their customers were building their own computers out of the electronic modules that DEC was selling at the time. – Solomon Slow Dec 7 '20 at 14:15
10

My answer is conventional; I put the blame on a very successful established product set, an entrenched culture that valued technical excellence and disdained non-DEC approaches, a notorious lack of sales expertise, and ultimately, failure to see that those toy computers were no longer toys.

I don't think "more partners" would have made a lot of difference. We had an outdated view of the marketplace and a reliance on unsustainable margins.

There is of course a tragic irony that much of DEC's success in the 1980s came from persuading customers that they didn't need the big machines that were previously the standard.

Me? A digit, 1977-1992. Leaving "home" was hard, but I shoulda left sooner.

8
  • 1
    Yep. See my comment to the question above. They just never believed that either PCs or inter-networking were going to be real in a business-lines/profit sense and their whole strategy was to try to force the markets to use minicomputers to serve both. Since they respected neither and didn't have anywhere near the control over their customers or the markets that they thought they would (unlike say, IBM) that went over like a couple of lead balloons and even without the poor management might have been enough to sink them. – RBarryYoung Dec 6 '20 at 18:39
  • 2
    Well, DECnet phase IV was clearly superior to TCP/IP :-) – another-dave Dec 6 '20 at 18:40
  • 2
    Well, at it's time it was definitely a serious contender with tcp/ip (and the only one, really). If they had recognized where the market was going (towards simpler, cheaper) and had made a product to compete in that space, instead of the disastrous DECnet Phase V, a product 5 years late, bloated beyond recognition whose only purpose seemed to be to force customers to use minicomputers to serve it, they might actually have been able to compete with tcp/ip. – RBarryYoung Dec 6 '20 at 18:46
  • 1
    Indeed. I had some involvement with a corner of DECnet/OSI; it was not a good thing. We bet on the wrong set of "industry standards". – another-dave Dec 6 '20 at 18:57
  • 2
    Superior to standard unfortunately means non standard. Usually. – Walter Mitty Dec 6 '20 at 21:19
6

DEC suffered from a problem that you can see throughout their history in different contexts: partners invariably came to be seen as competitors.

A good example late in their evolution can be seen in MIPS/Alpha. In the late 1980s it was clear the VAX was running out of steam - their own sales teams were telling them in no uncertain terms that customers who had VMS platforms were interested in new ones, but absolutely no one else was interested even in the slightest. If they needed "big iron", IBM's AS/400 was highly competitive, while those looking for compute performance for engineering and science could buy off the shelf RISC stations running Unix that were competitive at a fraction of the price and would clearly be faster than VAX within a couple of years.

Within DEC this caused massive confusion. With Olsen's ear, the 9000 team delivered DECs version of the Itanic, completely oblivious to the changing market. No one was going to buy one even if it was cheaper than IBM, because anyone even considering a non-IBM mainframe would just buy a Unix server. So there goes a couple of billion dollars that would have come in handy.

Others within DEC were perfectly aware of the problem and began development of their own RISC designs, only to be repeatedly shut down. This led the California offices to develop their own workstations based on MIPS. There were some real problems with the R4400, but all they needed was some time and money, both of which they eventually received. But that was not to be...

... because DEC decided that they could not, in good conscience, give money to some other company when they could take all of that money for themselves. So instead of helping MIPS they re-started their own efforts and delivered Alpha. Don't get me wrong, Alpha is a fine chip, but there are immutable laws in the building of chips and their resulting price/performance that DEC had absolutely no way of hitting. Had they stayed with MIPS, who was also selling to SGI, maybe it would have worked, but with their own chip in their own products? No way in a million years.

They could have aggressively marketed Alpha and moved to be a supplier, but those around at the time will no doubt remember their half-assed attempts. Other companies at the high-end had their own designs - MIPS, SPARC, POWER, etc., and, like DEC, felt their design was the secret sauce to future success and would never consider someone else's design.

That left only the smaller vendors who were not going to have the volumes required. And those guys were targeting the server market, which is precisely where DEC was trying to go. Once again, potential partners were instead seen as the enemy. And so DEC's big outside marketing effort was to offer one-off development boards and hobby kits. That was not going to sustain them.

So DEC became one of many companies pushing a RISC chip into a market that had room for perhaps one mass-market design. Intel was going gangbusters through this period, so by the late 90s the jig is up; x86 is offering reasonable performance relative to the RISC chips but at a tiny fraction of the price, and free Unix systems are available for download.

And that was that.

2
  • 1
    DEC had multiple attempts at RISC architectures - SAFE, TITAN (not sure about that one), PRISM, Alpha. The first two might have got no further than paper exercises. The trouble, of course, was the VAX. – another-dave Dec 7 '20 at 13:43
  • Yup, nothing like a cash cow to kill innovation. – Maury Markowitz Dec 7 '20 at 13:51
0

A natural consequence of Ries and Ries observation that markets tend to devolve to one leader a clear 2nd and then others that will hang on until they change to a new market or fail.

There were way more computer manufacturers than needed. Businesses wanted to hire people who knew the computer not train them from scratch. IBM was bigger and had more users so that advantage helped them succeed, along with better marketing of wider product line, and some luck.

3
  • 3
    DEC was the clear #2 which you say the market devolves into. – RonJohn Dec 7 '20 at 0:34
  • 1
    @RonJohn I disagree that DEC was the clear #2. Sun's early Unix platforms and RISC architecture were both more flexible and cheaper than the MIPS based microvax. As the OP mentioned, but put in a different way... Sun aggressively pushed into Higher Education supplanting VAX Mini's but not IBM big Iron at first though that was to come. As students graduated, without VMS experience, they didn't push for industry to keep the VMS systems. Another nail was DECs' poor interoperability as interfaces standardized. About the only thing that survives is VT100 compatibility from really cheap terminals. – Rowan Hawkins Dec 7 '20 at 23:59
  • @RowanHawkins what you write is true, but ignores what came before SPARC. DEC was the clear #2. That's because it did have by far the second highest revenue and profit throughout the early and mid 1980s. Until... Sun SPARC, SGI MIPS, etc, ate it all up. – RonJohn Dec 8 '20 at 4:00

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.