[Info-vax] Message from HP.

[mcleanjoh at gmail.com]

Let's look at a few things from Digital's and HP's perspective.  The Alpha chip was selling for around $1700 and was hoped to set the world on fire but apart from a Japanese manufacturer (Fujitsu?) no-one else used it.  That left Digital carrying the can on all costs - staff, manufacturing plant and raw materials - and the volume of Alpha sales, even if they were to loyal Digital customers, just didn't produce the profit to keep Alpha viable.  We could argue for weeks (and some still might) about the lack of advertising for VMS and how an increased customer base might have created the critical mass for both VMS-related Alpha sales and sales for wider use of Alpha (Windows?), but that advertising didn't happen and what's past is past.

Jump to the present and look at VMS.  Maybe it's currently covering its costs and returning a reasonable profit to HP but VMS is a declining market (maybe the lack of advertising again!).  Sure VMS could be ported to a new Integrity chip or an x86 chip but the $100 million or so to do that has to be recovered in sales and support, and on top of that a profit needs to be made. Can you honestly see HP's income from VMS generating enough money over the next 5 years to make a decent profit on the porting investment?  I can't.  (Mind you HP's idea of "a decent profit" might be considerably higher than yours.)

But don't think for a moment that HP will be fine and dandy if VMS disappears.  The Integrity chip was supposed to be a new industry benchmark and maybe it was for a while, that "while" being just until other 64-bit chips appeared.  If you were HP's competition would you prefer to buy a chip from HP (and help your competitor) or would you prefer to buy from a vendor-neutral company like Intel?  To me that's a no-brainer, and it spells the end for Integrity.

But wait, there's more. HP-UX and Linux tend to compete for the same market and there's precious little profit in either of them because external competition is also fierce.  Sure the market is big but profit margins are pared to the bone. Will HP-UX and Linux generate a decent profit in 5 years' time?  I can't see that happening either.

And from what I've read the margins in PC's aren't that great either.  The sales spike for Y2K issues is long gone, businesses don't seem to update machines as much as they used to (e.g. see the high percentage still on Windows XP) and home PC's are losing ground to mobile phones and tablets.

I think it's The Register or TechEye that refers to HP as a printer ink and services company.  That mightn't be far off the mark, especially in a few more years.

Put in this context I think you should be able to see likely reasons why Alpha was terminated and why VMS is on the downhill slide.