[Info-vax] Did Ken Olsen kill Alpha?

[Neil Rieck]

On Oct 17, 11:56 pm, JF Mezei <jfmezei.spam... at vaxination.ca> wrote:
> With regards to Alpha costs.
>
> Was DEC able to make competitive VAX chips (cost wise) ?
>
> It seems to me that in the 1980s when DEC made so much of its own stuff,
> it was able to compete against IBM. In fact, even in the 1990s when DEC
> was no longer competitive, it was still competitive at making ethernet
> controllers and ARM chips.
>
> Seems to me that there may have been some really screwy accounting to
> inflate the real costs of the Alpha chip.  Perhaps Alpha were paying for
> 100% of the FAB when that FAB was also used to make ARM, ethernet and
> plenty of other chipsé
>
> My guess is that DEC, as usual, thought its products were unique and way
> above the competition and warranted a HUGE margin over the competition
> (like its compilers, disk drives etc).
>
> The difference with Apple is that Apple has been pretty good at
> measuring the right amout of markup that people are willing to pay to
> get the lighted Apple logo on their laptop.  DEC failed to realise that
> people stopped being willig to pay a markup to buy something from
> "Digital Equipment Corporation".  And yeah, that was definitely during
> the Olsen days, but it lasted through the early Palmer years where
> palmer was focused on cutting costs and lowering prices to raise volumes
> was unthinkable for him. In fairness, Palmer did produce some products
> later in the 1990s where the margins were more reasonable, but "too
> little too late" seems to be the right way to describe it.
>
> I think that Olsen's mistep with VAX9000 vs Alpha was not that important
> in the grand scheme of things. His inability to gauge who the real
> competition was (focusing only against high priced IBM and ignoring the
> others) was what reallt set Digital back in the marketplace.
>
> The solution was relatively simple for Palmer. Instead, Palmer opted for
> the staf and product cuts (often ill conceived). Cutting sales force
> wasn't too bright.
>
> There should have been parralell efforts to lower price of products AND
> streamline Digital's administation costs. And there should have been
> much mareting instead of spending budget to change the DIgital logo.

I agree with almost everything you posted here except the VAX9000
comment. In the book "DEC is dead, long live DEC" (which is a post
mortem based upon employee interviews, there is a lot of input from
Gordon Bell (he actually wrote all of Appendix "E") where he makes
good arguments as to why computer architectures are only good for ten
years or so, and that the time was right for DEC to move from 32-bit
CISC (VAX) to 64-bit RISC (Alpha), just as DEC had done 10 years
earlier in 1977 when they moved from 16-bit PDP (supporting physical
memory) to 32-bit VAX (supporting virtual memory).

But after the death of Olsen's mentors, Olsen turned to his VPs for
advice. Many of these VPs represented sales and claimed to have talked
to customers demanding VAX 9000. But VAX 9000 flopped when it hit the
market place. Did customers lie to DEC sales, or had DEC salespeople
deluded themselves into believing there was customer demand? Not sure
of the answer but DEC was never able to recover the development costs.

There is another book out there called "In Search of Stupidity" which
talks about all the problems made by companies who went broke
competing with themselves. IMHO, once DEC made the decision to migrate
from 32-bit CISC to 64-bit RISC, they should have stopped developing
VAX. This would have left DEC with more cash available to weather the
future.

Speculation: IBM had huge financial problems between the late 1980s
and early 1990s. I'll bet there were some people at DEC who believed
that DEC would survive the 1990s while IBM might fail. These people
could have made life better for both companies by having DEC
manufacture their chip in an IBM fab, but this would be like throwing
IBM a life line.

NSR