An end of an era

It was a bittersweet experience for me last week to see Digital Equipment Corporation become formally subsumed into Compaq Computer and cease to exist. Digital's torturous decline is testament to how brutally this industry punishes companies that misjudge shifts in the market.

Digital was, first and always, an engineer's company, with all the pride, brilliance and arrogance that entails. It tolerated what was by most accounts a lot of waste and overhead so that its technologists could build products that were best in class.

What Digital's leadership failed to see, though, was the shift in customer preferences to flexibility over performance. And as Hewlett-Packard, Sun Microsystems and, yes, even Compaq began to exploit the shift toward open systems in the late 1980s, Digital stubbornly persisted in its belief that buyers would continue to pay a premium to have the best.

In hindsight, we can see that Digital made a lot of mistakes: its late adoption of Unix, its futile pursuit of the Alpha chip, its dismissive attitude toward PCs and its ill-fated entry into the mainframe business. But at the time, none of those seemed so crazy. Digital wanted to become another IBM, and it doggedly followed IBM's blueprint even as that model was crumbling beneath them both. Digital's enemy wasn't IBM. Its enemy was choice.

It's ironic that Compaq may actually succeed where Digital failed: re-creating the model of the vertically integrated hardware companies that dominated the industry for so long.

And in a supreme twist of fate, Digital's biggest contribution to that may be the global service organisation it built to support the products that, ultimately, failed to sustain it in the marketplace.

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Paul Gillin

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