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#AI@Work: What Happened to DEC?

DEC began in 1957 and focused on the small end of the market with very little competition. The PDP series in the 1960s and 1970s cemented their place in the sector. They remained the second largest employer n Massachusetts next to the state government. The VAX 11 series put them into competition with the IBM 370s and was the first 32-bit machine. More powerful 32-bit computers came along. By the early 1990s DEC was in big trouble. They tried a 64-bit computer, but the evolution in chip production by Intel and others quickly surpassed any of the efforts by DEC. DEC was acquired in 1998 by Compaq. Compaq was a personal computer manufacturer who had no idea what to do with DEC. They also got into financial trouble. Compaq was eventually acquired by Hewlett-Packard (HP) in May 2002.

There are many explanations for the fall of the tech giant, DEC. DEC was clearly focused on competing with IBM on the high end of the market. The market sector had shifted to low end personal computers. How did they not see this? IBM almost missed it too. There was clear frustration with the leadership for failure to give clear vision and guidance on how to move forward. Most of these organizations were vertical. The movement was toward a more horizontally organized company. The BUNCH – Burroughs, Univac, NCR, CDC and Honeywell – were all vertically orientated. Vertical structure can be anything but agile. Customers began to lose faith and leadership changes – like Ken Olsen being dropped in 1992 and Bob Palmer being instated – didn’t help. Olsen thought his product was so good, DEC did not need to pay sales commissions. The product would sell itself. The competition, IBM, paid very healthy commissions. Gordon Bell, DEC’s technical guru, left because he was unable to pursue a personal computer and X-Windows strategy. Some would argue it was when Bell left that DEC, which was an engineering company, lost its hero. Still others report a serious lack of strategy as the problem.

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