Silicon Insider: DEC’s Final Demise

B U R L I N G A M E, Calif., Sept. 19 -- With last week’s announcement that Web search company AltaVista Co. was going to lay off 225 employees, one-fourth of its workforce, I finally concluded that Digital Equipment Corp., AltaVista’s founder, is the greatest single object lesson of the electronics age.

I used to think that unenviable title was held by DEC’s old neighbor, Wang. After all, it was that company’s newly crowned dauphin, Fred Wang, who, when challenged about his business prowess, said that Wang was “a billion dollar company, and billion companies don’t disappear overnight.” And then, of course, Wang proceeded to do just that.

That was not only a lesson in monumental hubris, but also a testament to the destructive power of rapid change in high tech.

But the DEC story goes much deeper, and its lessons are more sweeping.

A Former Powerhouse

Twenty-five years ago, when I was a junior flack at Hewlett-Packard, the very initials DEC stuck terror in my workmates. Digital Equipment was a colossus, dominating the minicomputer world the way Microsoft does operating systems today. Sure, there were impressive competitors, including HP, Data General, and even mighty IBM, but DEC was the defining force in the field.

Its VAX was the gold standard of minicomputers, the model by which all others were measured. The VAX remains the single most influential computer of all time — not just because of its pre-eminence among minis in the 1970s and 1980s, but because Ted Hoff so admired it that he used its architecture as the basis of the Intel 4004, the world’s first microprocessor. Thus, the VAX is the godfather of the PC as well.

It wasn’t just technological prowess that made DEC awesome. It was generally agreed to have the best sales force in tech, the best run organization and some of the cleverest marketing. Its chairman and president, Ken Olsen, was widely considered the smartest CEO in the business, and treated with the awe that Jack Welch is today.

To the little entrepreneurial companies of Silicon Valley, DEC — with its magnificent corporate campus, its fully verticalized operations, its labs filled with some of the top researchers in the world — looked like Mount Everest. How could you ever challenge it and survive?