On January 26, 1998, the world's oldest and largest computer company was acquired by Compaq due to financial crisis. On February 2, 1998, DEC held a shareholders' meeting and approved this proposal. DEC was acquired for US$9.6 billion, with its market share estimated at US$7 billion at the time. The entire merger and acquisition process lasted about half a year. On June 11, 1998, DEC was officially delisted from the New York Stock Exchange.
The two parties began to contact each other in 1995. In 1996, DEC executives agreed to Compaq's acquisition proposal, and it only took three years for DEC to be finally delisted in 1998. According to a company report in 1989, DEC has approximately 130,000 employees and a market value of more than $14 billion. It is the largest computer manufacturing company in the United States after IBM. They also have an excellent research/development department and a large-scale production factory. People have reason to ask: Why did such a huge company collapse in an instant? The reasons are naturally complicated, and the seven major failures of DEC will be described one by one below.
One of the failings is backward thinking
For a long time, the sales philosophy of Kenneth Olsen, the founder and CEO of DEC, has been greatly deviated. As an engineer, he didn't know much about sales. He once said that "an excellent product can be sold by itself." This sentence profoundly reflects DEC's consistent attitude towards product promotion and market development. He also believed that "it is impossible for every household to have a computer."
Perhaps these ideas may have been correct in the past, because computers at that time were produced in small quantities and prices were high. However, at the end of the 20th century, millions of computers were sold every year. Computer sales outlets were all over the United States, and consumers could easily buy a computer that suited them. At the same time, the consumers who buy computers have also changed. The main body of consumption has shifted from technical/professional people to ordinary people. These consumers have no professional background knowledge and cannot even distinguish between "transistor" and "resistor". Writing method (note: transistor and resistor are written similarly, transistor and resistor respectively). Therefore, they don't pay enough attention to market promotion and are not sensitive enough to market changes. They still use the method of selling to professionals and sell products to ordinary consumers, and the result is twice the result with half the effort. This is a failure.
Failure No. 2, missed opportunity
In February 1991, DEC launched the EV4 processor. At the same time, APPLE engineers were looking for a better-performing processor for the company's products, and the introduction of EV4 left a deep impression on them. So APPLE CEO John Sculley met with Kenneth Olsen in June of the same year, hoping to use DEC's new processor in future APPLE computers. However, Olsen believed that the time for EV4 to be launched on the market was not yet mature, and the potential of the VAX architecture had not yet been fully exploited, so he rejected APPLE's request.
A few months later, APPLE launched Macs based on PowerPC developed by IBM and Motorola. On April 28, 1997, William Demmer, an engineer at DEC who participated in the development of VAX and Alpha, pointed out in an interview with Business Weekly that the company's executives did not want to bet their future on APPLE. Therefore, being indecisive and missing good opportunities is the second failure
The third reason for failure is not paying enough attention to the production of accessories
DEC produces all accessories and peripherals related to the Alpha processor in-house , but the motherboards developed for desktop computers did not support SMP. At that time, almost all companies using Alpha processors would use multi-processor systems, so the desktop models launched by DEC were very uncompetitive. However, these motherboards are very good in electrical design. Since the layout circuits of these motherboards are publicly available, they have attracted many companies to imitate and transform them and produce a large number of cloned versions.
During this period, only one company developed its own motherboard for the desktop market, the DeskStation.
Although more and more companies are selling their motherboards to users using Alpha processors, DEC does not care about this. They believe that it is most important to sell their own workstations or complete servers first. Some The fragmented market for computer accessories is unimportant. Therefore, some people commented: DEC company occupied the market, but did not conquer the market.
The fourth reason for failure is overpricing
DEC has never thought of lowering the price of their products (processors, chipsets and motherboards) to most potential Prices that consumers can afford. For example, in early 1995, the price of 266MHz and 300MHz EV5 was as high as US$2,052 and US$2,937 per thousand units. Of course, this is still the wholesale price. If the actual retail price is taken into account, the price of EV5 is more than twice higher than that of RISC design competitors at the same time.
Although DEC once released a low-cost product Alcor, this motherboard sold for $295 per 5,000 pieces. Although it was far lower than the price of the processor, it made the processor (EB164, 1MB L2 cache) and 16MB main memory bundled. Because the main memory was too small, it was too limited for the programs at the time. This console was priced at US$7,500.
The fifth reason for failure is charging expensive patent fees;
Although DEC advocates the concept of open architecture and the Alpha project has been open from the beginning, it has always been All research and development work is performed by DEC's own engineers, with only the production phase entrusted to Mitsubishi. Since it was completed by myself, only the general product framework is disclosed, while the most important hardware design part is kept secret, and high patent fees are required to obtain it.
Although DEC has extended an olive branch to Intel, MOTOROLA, NEC and Texas Instruments since EV4, but the patent fees were too high, and none of these companies accepted DEC's "good intentions". Developed its own products. Short-sightedness and blindness due to sharpness are the fifth cause of defeat.
No matter how good a computer is, it cannot do without the support of the operating system, otherwise it will be just an expensive heating machine. Therefore, DEC pays special attention to the operating system. Windows NT, Digital UNIX and OpenVMS have all become the choices of the company's senior executives, but...
The sixth reason for failure is to choose NT architecture as the preferred operating system
The first thing to know is that WINNT is designed for users, not programmers. There are no integrated software development tools in the operating system, and running software requires pre-compilation. At that time, there were already quite a few software developed based on Alpha and i386 on the market. The two could not run on each other's platforms, which required a conversion first.
FX!32, released in 1996 and developed by Anton Chernoff's team, can simulate and convert x86 to Alpha very well, but the result of the conversion is about a 40% performance loss. Any driver and FX! 32 can't do anything about this, and everyone is puzzled by this. Then a few programmers discovered that WINNT is a 32-bit operating system. Even if it can work on the 64-bit Alpha platform, it is difficult to give full play to the 64-bit The potential of architecture. In fact, NT should not be used as the preferred operating system for the Alpha architecture at all. It should only be used as an alternative at most.
The seventh reason for failure is that the operating system is expensive
In fact, there are two operating systems on the market that are very suitable for the Alpha architecture, namely OpenVMS and Digital UNIX. However, the pricing of these two commercial operating systems is too high, resulting in a very low market share, and they are not open source. Furthermore, the support for peripherals of these two operating systems is not as rich as that of NT. Problems with the operating system have always plagued the popularity of Alpha, and all the selected operating systems are unsatisfactory.
The eighth reason for failure is not using open source operating systems
Although all commercial operating systems have problems of one kind or another and have not been successfully promoted to the Alpha platform, DEC There has always been no support for free open source operating systems.
As early as 1995, NetBSD was ported to the Alpha platform, followed by Linux, OpenBSD and FreeBSD. The performance of these systems is not as bad as Digital UNIX and OpenVMS, and their hardware compatibility is better than WINNT. They can also provide a large number of open source programs for users to use. Therefore, these systems later became widely popular on the Alpha platform.
Of course, one can continue to list the long list of DEC’s strategic mistakes, including that they did not pay enough attention to the changes in the mainstream market and the personal computer market, etc. However, these are not directly related to the Alpha architecture itself, so they will not be mentioned here. Don’t talk about it. All in all, DEC did put a lot of effort into Alpha, but after the product was launched, DEC only thought about how to exchange money for the Alpha architecture, rather than how to promote this architecture.
Summary
During the late 1980s and early 1990s, DEC made many bad decisions, including the newly appointed chairman of the board of directors Robert Palmer in 1992, who conducted a review of DEC. Series reorganization. Palmer believes that the existing matrix model (different departments are divided according to different functions, and each project is coordinated and completed by multiple departments) is not suitable for the company, and it must return to the traditional vertical model (from top to bottom, everyone's Positions and tasks are assigned very specifically).
From 1991 to 1994, DEC lost more than 4 billion U.S. dollars. In 1993 to 1994 alone, it lost 2 billion yuan. In order to cover the large fiscal deficit, Palmer plans to sell off all other parts of DEC that can be divided. So begins a global sale. In July 1994, DEC's storage division, which produced hard disk drives, was sold to Quantum for US$400 million. Shortly afterwards, the database software research and development department was sold to Oracle for US$100 million. In November 1997, DEC once again sold its network products division to Cabletron for US$430 million.
DEC, which was seriously ill, also took Intel to court in 1997, claiming that it used 10 Alpha processor patents in Pentium, Pentium Pro and Pentium II processors. In September 1997, the two sides went to court and refused to give in. But on October 27 of the same year, the two parties reached an understanding outside the court. DEC licensed Intel the production rights for all hardware (except Alpha) and agreed to support its IA-64 architecture development plans in the future. Intel also purchased DEC's manufacturing plant in Hudson and design centers in Israel and Texas for US$625 million, and agreed to produce DEC's Alpha processors in the future, and also obtained a 10-year license to all DEC patents. Rights of use.
Finally, I have to talk about the whereabouts of those talented engineers who have worked at DEC for many years. Derrick Meyer joined AMD to design K7; James Keller also went to AMD, but was the architect of K8. Daniel Leibholz went to Sun to develop UltraSPARC V. Intel was not as lucky as imagined: although it received a lot of benefits at the last minute from DEC, the StrongARM architecture could only watch it die because the chief architects who originally designed the StrongARM-110—Daniel Dobberpuhl and Richard Witek , Gregory Hoeppner and Liam Madden none wanted to join Intel. Richard Sites, who was the first to propose the Alpha architecture, failed to recover and never found a decent job...
By May 18, 1998, Compaq, which had only 32,000 employees, acquired DEC, which had 38,000 employees. , ended DEC's last act on the historical stage.