Digital Equipment Corporation (DEC) was a United States manufacturer best known for designing a new family of low-priced minicomputers that were created for use in scientific laboratories and research organizations. At its apex in 1990, Digital employed over 120,000 people internationally, with revenues of more than $14 billion.
Digital was founded in 1957 by Kenneth Olsen (1926- ) and Harlan Anderson, graduates in electronics engineering from the Massachusetts Institute of Technology (MIT). An article in the business magazine Fortune that claimed few companies were making money selling computers was their initial motivation. The two men thought that selling computers could be a profitable venture, and so a business plan was developed in order to attract investors to their company for the purpose of manufacturing electronic "modules." Their proposal was based on the idea of creating a family of high-performance, low-cost computers that could combine and analyze data from a wide range of scientific devices while still being used by non-technical users. Three years later Digital introduced its first computer, the Programmable Data Processor-1 (PDP-1); it featured a cathode-ray tube monitor and was much smaller than available mainframes. The PDP-1 contained one of the most advanced (transistor-driven core) memory systems of its time and was able to improve on existing timeshare capabilities (that is, the computer's ability to be used simultaneously by several users). Selling for about $120,000, the PDP-1 still cost much less than mainframes, which were priced at about $1 million. Eventually fifty PDP-1s were sold, almost half for message switching systems at International Telephone and Telegraph. The capabilities of the PDP-1 made it the first machine compatible for multiuser computer games, which were just beginning to be developed at that time (the early 1960s).
In 1965 Digital introduced the PDP-8. Again priced below the current market, the PDP-8 at $18,500 was one of the least expensive computers being sold at that time. It was well received by university computing facilities and research laboratories as the first alternative to expensive mainframe computers that were being sold by large companies such as International Business Machines (IBM) and Sperry Rand Corporation. Digital grew quickly during the decade of the 1960s, rising from a regional company of 117 workers and sales of $1.3 million in 1960 to an international company of 5,800 employees with production sales of $135 million in 1970. By 1973 the PDP-8 was the world's largest-selling computer, and was the first minicomputer to achieve outstanding commercial success. In 1970 the PDP-11 was introduced as the first computer to feature the UNIBUS, a stand-alone data communications path that did not need the central processing unit in order to transport interior data. With its advanced features the PDP-11 appealed to a variety of technical markets. The PDP-11 model sold very well, and updated versions were sold until 1997. In the end, the PDP family of computers maintained Digital's growth for twenty years.
By 1975 the company saw its dominance start to decline in the minicomputer industry as IBM and others surged ahead. During most of the next ten years, Digital ranked second to IBM in overall computer sales. In the late 1970s Digital developed the Virtual Address Extension (VAX) family of computers that featured simple software development within the operating system and additional power over previous minicomputers. Digital welcomed the stronger sales growth created by the VAX, and was considered by many as the most successful minicomputer up until that time. The VAX family ranged from units of modestly priced desktop workstations to high-end computers that sold alongside IBM's most powerful mainframes. Virtual Memory System (VMS), Digital's operating system, became popular among software developers, resulting in an extensive choice of software applications for VAX users.
During the early 1980s Digital successfully competed with the other major minicomputer manufacturing companies by streamlining its production process and procedures. One noteworthy innovation was building cost-efficient assembly facilities in inner cities. International expansion during the period was also helped along when Digital, in 1971, founded its European manufacturing operation in Ireland, just before the country was admitted into the European Common Market.
In order to target educational institutions and to compete with other companies building systems that contained Universal Interactive Executive (UNIX), Digital developed in the early 1980s a version of the UNIX operating system to run on their VAX. Because the VAX/UNIX combination was so popular VAX sales by 1990 ranked Digital just behind leader IBM with respect to computer sales. Unfortunately, Digital's profits began to decrease later in the 1990s because of increased competition in the minicomputer and workstation industry, Digital's late entrance into the personal computer market, and poor sales due to the 1991-92 U.S. economic recession. Digital also lost extensive market share when their proprietary VMS operating system was adaptable to far fewer software applications than the nonproprietary UNIX system. As a result, the company did not see profits between 1990 and 1995, which led to a re-organization, including drastic cuts in operating expenses.
The company continued to introduce and expand numerous new products and services, including the 64-bit Alpha microprocessor, which in 1994 was possibly the world's fastest chip; its highly visited Alta Vista Internet search engine; and Digital's services division, which was growing into one of the industry's most respected and profitable. Unable to regain its competitive hold, the Compaq Computer Corporation purchased Digital in 1998 for $9.6 billion. At that time Digital was manufacturing personal computers, microprocessors, network systems, servers, mainframe computers, printers, and software, along with providing management services to computer networking companies. When it was sold Digital had 53,500 employees, less than half of its 1990 peak. The merged company that operated under the Compaq name became the world's second-largest computer manufacturer.
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