Wednesday, June 9, 2021

Digital Equipment Corporation

The blue logo
 On June 14, at 7:00 p.m., the Maynard Public Library will present a Zoomed talk titled: “Digital Equipment Corporation.” Register at This is the fifth in a monthly series of history lectures produced by the Sesquicentennial Steering Committee as part of Maynard’s celebration of the 150th anniversary of its creation on April 19, 1871. The July talk will be “The Bands Played On (Musical Maynard).” A new history book “MAYNARD MASSACHUSETTS: A Brief History”, with an entire chapter about Digital, is for sale for $21.99 at 6 Bridges Gallery, 63 Nason Street, WED-SAT, 12-5.  

The rise and fall of Digital Equipment Corporation (DEC) was a 41-year arc that started with a bit of rented space in the mill buildings in 1957, then peaked in size and sales in 1990 with the mill complex being the world headquarters of a 125,000 employee empire that reached $14 billion in annual sales. Then, as a result of management and technology missteps, the company repeatedly downsized, had a fire sale of assets, and was finally sold to Compaq Corporation in 1998.

Anderson's badge
August 1957, Kenneth ‘Ken’ Olsen and Harlan Anderson, colleagues at MIT’s Lincoln Labs, signed a three-year lease for 8,680 square feet in building #12 of Maynard’s mill complex at $300/month. They spent days painting the space themselves. They also went to Gruber Bros. Furniture and bought $69 worth of office furniture – on 30 days credit. Money remained tight. Weekends, spring and fall, there was no heat in the building unless Raytheon, the larger tenant, chose to pay extra. Raytheon would call noon on Friday to specify which buildings it wanted heated. Olsen would call at 1:00 to see if he was going to get his part of the building heated for free.

In the early years, many of the employees were women, some who had worked in the same buildings in the woolen mill era, which had ended in 1950. Why women? A DEC job openings advertisement from 1959 specified a preference for women with good eyesight and nimble fingers. Some women worked the “Mother Shift,” meaning their day ended in time for them to be home when their kids got out of school.

DEC came to dominate the minicomputer niche. In 1971, Massachusetts Governor Francis William Sargent declared Maynard “Minicomputer Capital of the World.” By then, DEC had expanded to renting most of the mill. A year later it bought the 60-acre Parker Street industrial complex. In 1974 it bought the entire mill complex, and in time a few other buildings in town, bringing the total to more than two million square feet of office and factory space. A town-wide celebration of DEC’s 25th anniversary, and DEC’s restoration of the 90-year old clock tower took place in 1983.

Exact numbers are not available, but estimates are that Digital employed between one-third and one-half of the adults living in Maynard. Students were hired right out of high school. Other employees commuted – Routes 117 and 27 had twice daily traffic jams – and the mill pond was partially filled in to create more parking space. Evenings, restaurants and bars were flooded with employees. There were no empty storefronts. Was there a downside? Yes, in that Maynard was once again a one-company town.  

Kenneth 'Ken' Olsen working
while donating blood
Olsen was correctly quoted but misunderstood when in a talk given to a 1977 World Future Society meeting in Boston he said “There is no reason for any individual to have a computer in their home.” This statement was repeated in TIME magazine and elsewhere. Keep in mind that the first non-hobbyist ‘personal computers’ were reaching the market that year. Olsen knew that computers were evolving so rapidly that any purchased home computer would soon become obsolete (true!). In his mind the proper solution was to have video screens, keyboards and printers in homes, all linked electronically to company-owned computers that would provide the software and memory storage.

Stumbles in the end that contributed to DEC’s decline and fall were many. Circa 1985, DEC decided to compete in the arena of commercial data centers. This market traditionally belonged to IBM, and to complete would require a massive increase in staff involved in sales and service. Staffing increased 26,800 in two years. Meanwhile, competition gained ground. Sun Microsystems and Data General competed head-to-head in the mini-computer niche. DEC had expensively failed in an attempt to compete with IBM in the mainframe niche. And while DEC was focusing upward at IBM, all the micro-computer companies were approaching from below.

DEC’s crash was fast. The last year of billion-dollar profits was 1989. Total revenue continued to increase, but 1990 was only marginally profitable, and subsequent years saw losses in the hundreds of millions of dollars. The layoffs began in earnest in January 1991, including in Maynard. All company operations in the mill buildings shut down in 1993, with lay-offs or relocations of 2,100 employees. The Parker Street complex closed soon after. Company headquarters were relocated to a new building on Powdermill Road.

In July 1992, the company’s Board of Directors forced Olsen to resign. For thousands of employees, working for DEC within the empowering management system and mantra of “Do the right thing,” this was a heart-wrenching event. A forum comment from one employee “I used to drive to the office in the morning, and I couldn’t wait to get to work – I love my job and the company environment… The company doesn’t love itself anymore. Now I drive to work in the morning and all I can think about is getting out of this company and doing something else.”

Click to enlarge image
Over the next six years there were plant closings, staff relocations, layoffs of 60,000 employees and sale of many of the major components of the company. Downsizing cost the company close to $5 billion in layoffs and facility closings. Even during the decline, there had been successes. Digital launched the internet search engine AltaVista in 1995. It was the most popular among many competing search engines until Google came to dominate the market after 2000.

After protracted negotiations, Compaq agreed to acquire a downsized Digital Equipment Corporation in January 1998. The deal closed in June. The purchase price was $9.6 billion dollars. Was the sale inevitable? Probably not. With a different senior management, it is possible that Digital could have survived, perhaps prospered, but unlikely that it could have regained its aura as a radically innovative company attracting the best and the brightest. What DEC had not seen coming were changes embodied by a famous quote from Georges Doriot, the venture capitalist who provided the initial funding for DEC: “Someone, somewhere, is making a product that will make your product obsolete."

My thanks to all the DEC people who contributed their comments and memories of DEC for the Maynard Public Library presentation (taped and available) on June 14, 2021.

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