Recession, S-Curves and Digital Equipment Corporation - History of Computing: Learning from the Past - page 179

Recession, S-Curves and Digital Equipment Corporation
David T. Goodwin and Roger G. Johnson
Birkbeck College, University of London
[e-mail], [e-mail]
Abstract. Digital Equipment Corporation (DEC) was founded in 1957 by two
MIT engineers. By 1988 it had grown to be the world's second largest computer
corporation. From this heady height it took a mere 10 years for the company to
disappear completely. This paper looks at DEC both in relation to the S-curve
of technology and how it conformed to this model in the first thirty years but
missed out on the disruptive technology of PCs and workstations in the late
1980s.Also how they did not see the wave in the late 1990s and missed the op-
portunity to lead the market once again.
Keywords: S-curve, Digital Equipment Corporation, DEC, recession, exemplar.
Michael Mahoney wrote a number of papers 1 on the History of Computing and one
thing he was always urging researchers and historical authors to do was to capture the
history of failed computer companies as these are not usually written up and their
archives are often destroyed, especially if they are US based. This paper goes some
way to realising that goal.
Digital Equipment Corporation (DEC) was founded in 1957 by two MIT research
engineers, Kenneth Olsen and Harlen Andersen. They obtained a loan of $70,000
from ARD one of the first venture capital companies, led by General Georges Doriot.
Olsen created the business plan from topics he had read and this plan is now housed
in the Ken Olsen archives at Gordon College along with many of Olsen's memos.
DEC was the jewel in the crown for ARD, making it more than $355million. In its
first thirty years DEC became the second largest computer manufacturer worldwide.
However over the next ten years it declined spectacularly to be taken over by a PC
manufacturer. The reasons for its decline are multiple and interrelated as opposed to
Schein's [1] straightforward view that it was the lack of the money gene in DEC man-
agement and its cultural DNA that brought about its downfall. Certainly, Olsen was
not driven by profit, he was driven by technical excellence which defined the com-
pany direction.
DECs early history is not one without its problems, it had to survive a number of
trying times as competitors rose to challenge its traditional markets. It also had to resist
a number of takeover attempts from companies such as A T & T. Each time DEC
emerged a stronger company except for the final time. Their growth can be linked to
disruptive technology, the 'S-curve' and also to the world's financial 'wave'. The
world went through four recessions and the US six, including one double-dip in the
1 http://www.princeton.edu/~mike/computing.html accessed Nov 2009.