Editing Digital Equipment Corporation (section)

=== Palmer's reign (1992–1998) ===
[[File:Digital Equipment Corporation 1993 logo.svg|thumb|Redesigned logo introduced in 1993]]
At its peak in the late 1980s, DEC had $14 billion in sales and ranked among the most profitable companies in the US. With its strong staff of engineers, DEC was expected to usher in the age of personal computers, but the commonly misunderstood belief then argued by the board to its shareholders was that Mr. Olsen was openly skeptical of the desktop machines, stating "the personal computer will fall flat on its face in business", and regarding them as "toys" used for playing video games. This was made in 1977 about what could be more characterised as home automation devices.<ref>{{Cite web |last=Mikkelson |first=David |date=2004-09-21 |title=Ken Olsen |url=https://www.snopes.com/fact-check/ken-olsen/ |access-date=2023-04-29 |website=Snopes |language=en}}</ref>

By 1991 DEC was still unable to sell PCs to its customers, which standardized on other vendors like Compaq and HP.<ref name="pastore19910520">{{Cite magazine |last=Pastore |first=Richard |date=1991-05-20 |title=DEC  aims PCs at its own users |url=https://books.google.com/books?id=18WeIm6AXYoC&pg=PA4 |access-date=March 1, 2026 |magazine=Computerworld |page=4 |volume=XXV |issue=20}}</ref> The board forced Olsen to resign as president in July 1992<ref>{{Cite news|url=https://www.nytimes.com/2011/02/08/technology/business-computing/08olsen.html?_r=0|title = Ken Olsen, Who Built DEC into a Power, Dies at 84|newspaper = The New York Times|date = February 8, 2011|last1 = Rifkin|first1 = Glenn}}</ref> after two years of losses in operating income.<ref>{{Cite web |title=Digital Equipment Corporation |url=https://sutherla.tripod.com/infsoc/computers/dec_pl.html |access-date=2023-04-29 |website=sutherla.tripod.com |url-status=dead |archive-url=https://web.archive.org/web/20230429082542/https://sutherla.tripod.com/infsoc/computers/dec_pl.html |archive-date=2023-04-29}}</ref> He was replaced by [[Robert Palmer (computer businessman)|Robert Palmer]] as the company's president. DEC's board of directors also granted Palmer the title of chief executive officer ("CEO"), a title that had never been used during DEC's 35-year existence. Palmer had joined DEC in 1985 to run Semiconductor Engineering and Manufacturing. His relentless campaign to be CEO, and success with the Alpha microprocessor family, made him a candidate to succeed Olsen. At the same time a more modern logo was designed.<ref>[[Ned Batchelder]] and [http://vt100.net/dec/logo Vt100.net]</ref> Alpha was so important to the company that ''[[PC Week]]'' wrote of its introduction, "Beleaguered Digital Equipment Corp. will begin this week what may be the fight of its life". DEC was, the magazine said, "undergoing wrenching organization change, including thousands of layoffs".<ref name="fisher19921109">{{Cite magazine |last=Fisher |first=Susan E. |date=1992-11-09 |title=It's show time for RISC; DEC to debut Alpha systems, as Sun, HP wait in wings |url=https://galeapps.gale.com/apps/auth?userGroupName=wikipedia&sid=bookmark-GPS&origURL=https%3A%2F%2Fgo.gale.com%2Fps%2Fi.do%3Fp%3DGPS%26u%3Dwikipedia%26id%3DGALE%25257CA12756142%26v%3D2.1%26it%3Dr%26sid%3Dbookmark-GPS%26asid%3D940f7d98&prodId=GPS |access-date=2025-09-29 |magazine=PC Week |via=Gale |volume=9 |issue=45}}</ref> By then DEC was stating when marketing [[DECpc]] that while "the Digital of yesterday was not known for competitive prices, this new line of PC offerings is competitive in features and price",<ref name="badgett19921116">{{Cite magazine |last=Badgett |first=Tom |date=1992-11-16 |title=DEC's New PCs |url=https://books.google.com/books?id=N1EEAAAAMBAJ&pg=PA91 |access-date=2025-06-30 |magazine=InfoWorld |page=DEC5 |volume=14 |issue=46}}</ref> and bragging about its more than $1 billion in annual [[mail order]] sales.<ref name="dec19921116">{{Cite magazine |last=|first=|date=1992-11-16 |title=Desktop Incompatibility Can Make Life at the Top a Little Too Hot. |url=https://books.google.com/books?id=N1EEAAAAMBAJ&pg=PA95 |access-date=2025-06-30 |magazine=InfoWorld |page=DEC9-DEC10 |volume=14 |issue=46}}</ref>

Palmer restructured DEC into nine business units that reported directly to him. Nonetheless, DEC continued to suffer record losses, including a loss of $260.5 million for the quarter that ended on September 30, 1992. It reported $2.8 billion in losses for its fiscal year 1992. January 5, 1993, saw the retirement of John F. Smith as senior vice president of operations, the second in command at DEC, and his position was not filled. A 35-year company veteran, he had joined DEC in 1958 as the company's 12th employee, passing up a chance to work for Bell Laboratories in New Jersey to work for DEC. Smith rose to become one of the three senior vice presidents in 1987 and was widely considered among the potential successors to Ken Olsen, especially when Smith was appointed chief operating officer in 1991. Smith became a corporate spokesman on financial issues, and had filled in at trouble spots for which Olsen ordered more attention. Smith was passed over in favor of Palmer when Olsen was forced to resign in July 1992, though Smith stayed on for a time to help turn around the struggling company.<ref>{{cite news|url=https://www.nytimes.com/1993/01/06/business/company-news-no-2-officer-retires-at-digital-equipment.html|title=COMPANY NEWS; No. 2 Officer Retires at Digital Equipment|newspaper=[[The New York Times]]|date=January 6, 1993|access-date=April 12, 2014}}</ref>

In June 1993, Palmer and several of his top lieutenants presented their reorganization plans to applause from the board of directors, and several weeks later DEC reported its first profitable quarter in several years. However, on April 15, 1994, DEC reported a loss of $183 million—three to four times higher than the loss many people on Wall Street had predicted (compared with a loss of $30 million in the comparable period a year earlier), causing the stock price on the NYSE to plunge $5.875 to $23, a 20% drop. The losses at that point totaled $339 million for the current fiscal year. Sales of the VAX, long the company's biggest moneymaker, continued to decline, which in turn also hurt DEC's lucrative service and maintenance business (this made up more than a third of DEC's revenue of $14 billion in the 1993 fiscal year), which declined 11% year over year to $1.5 billion in the most recent quarter.

When Olsen resigned, an industry analyst said "If Alpha fails, DEC is dead".<ref name="ballou19920720">{{Cite magazine |last=Ballou |first=Melinda-Carol |date=1992-07-20 |title=VMS opened for Alpha initiative |url=https://books.google.com/books?id=wJswszKTwl4C&pg=PA74 |access-date=2025-06-30 |magazine=Computerworld |page=16 |volume=XXVI |issue=29}}</ref> Market acceptance of Alpha computers and chips was slower than the company had hoped, even though Alpha's sales for the quarter estimated at $275 million were up significantly from $165 million in the December quarter. DEC had also made a strong push into personal computers and workstations, which had even lower margins than Alpha computers and chips. Also, DEC was playing catchup with its own Unix offerings for client-server networks, as it long emphasized its own VMS software, while corporate computer users based their client-server networks on the industry-standard Unix software (of which Hewlett-Packard was one of the market leaders). DEC's problems were similar to that of larger rival IBM, due to the fundamental shift in the computer industry that made it unlikely that DEC could ever again operate profitably at its former size of 120,000 employees, and while its workforce had been reduced to 92,000 people many analysts expected that they would have to cut another 20,000.<ref>{{cite news|url=https://www.nytimes.com/1994/04/16/business/company-reports-a-deepening-of-losses-at-digital-equipment.html|title=COMPANY REPORTS; A Deepening of Losses at Digital Equipment|first=Glenn|last=Rifkin|date=April 16, 1994|newspaper=[[The New York Times]]|access-date=April 12, 2014}}</ref>

==== Selloffs ====
[[File:Locale_RS6_DECpc 425SE Color.JPG|thumb|[[DECpc]] 425SE Color: a notebook computer released by Digital in 1993]]
During the profitable years up until the early 1990s, DEC was a company that boasted that it never had a general layoff.<ref>Schein, ''et al'', pp. 67, 109.</ref> Following the [[Early 1990s recession|1992 economic downturn]], layoffs became regular events as the company continually downsized to try to stay afloat.<ref>Schein, ''et al'', p. 233.</ref> Palmer was tasked with the goal of bringing DEC back to profitability, which he attempted to do by changing the established DEC business culture, hiring new executives from outside the company, and selling off various non-core business units:<ref>Schein, ''et al'', pp. 128, 144, 234.</ref>
* Worldwide training was spun off to form an independent/new company called Global Knowledge Network.
* [[Oracle Rdb|Rdb]], DEC's database product, was sold to [[Oracle Corporation|Oracle]].
* Rights to the [[PDP-11]] line and several PDP-11 operating systems were sold to [[Mentec]] in 1994, though DEC continued to produce some PDP-11 hardware for a few years.<ref>{{cite web|url=http://www.mentec-inc.com/|title=PDP-11 RSX RT RSTS Emulator Osprey Charon|archive-url=https://web.archive.org/web/20060813131029/http://www.mentec-inc.com/|archive-date=August 13, 2006|url-status=dead}}</ref>
* Disk and [[Digital Linear Tape|DLT]] technologies was sold to [[Quantum Corporation]] in 1994.
* [[Text terminal]] business ([[VT100]] and its successors) was sold in August 1995 to [[Boundless Technologies]].
* [[CORBA]]-based product, ObjectBroker, and its messaging software, MessageQ, were sold to [[BEA Systems|BEA Systems, Inc]] in March 1997.
* Printer business was sold in 1997 to [[GENICOM]] (now TallyGenicom), which then produced models bearing the Digital logo.
* Networking business was sold c.1997 to [[Cabletron Systems]], and subsequently spun off as [[Digital Network Products Group]].
* [[DECtalk]] and [[DECvoice]] voice products were spun off, and eventually arrived at [[Fonix Speech Group]].