Digital Makes BIg Comeback in Personal Computer Industry

Article excerpt

BOSTON (AP) _ In the annals of personal computing, few products have been bigger flops than the Rainbow.

That was the ill-fated line of PCs Digital Equipment Corp. introduced a decade ago, but then halted in 1985 when it couldn't crack the dominance of International Business Machines Corp. and Apple Computer Inc.

Digital's retreat from the PC market proved costly and embarrassing. It left the nation's second-largest computer company virtually absent from the industry's fastest growing market.

But in a dramatic turnaround, Digital is now emerging as a force in personal computers, proving that it's possible to get over the Rainbow.

"A lot of people in the industry have been surprised because DEC hasn't been known as a PC company," said Dan Ness, an analyst with Computer Intelligence, a market research firm in La Jolla, Calif.

For more than a year, Digital has been aggressively selling PCs via direct-marketing, sending catalogs to buyers around the world and slashing prices.

Twice in 1992, Digital topped Computer Intelligence's monthly ranking for PC market share growth. By the end of the year, Digital climbed into the top 10 among U.S. personal computer makers.

The comeback is noteworthy. The fast-paced computer industry doesn't normally forgive mistakes. One example is another Massachusetts computer firm, Wang Laboratories Inc., which also missed out on the PC revolution and landed in bankruptcy court.

But the roster of players in the personal computer market has been shifting, with smaller companies such as Dell Computer Corp. making inroads by selling IBM-compatible PCs at cutthroat prices.

"The shakeout that we are witnessing today is what gives an opportunity to a company like Digital," said Enrico Pesatori, hired by Digital last month to run the company's PC business.

Pesatori, a PC industry veteran who worked for Italian computer maker Olivetti Co. then joined Zenith Data Systems Inc. as chief executive officer, was brought on board by Digital's new president, Robert B. Palmer.

Palmer took over the Maynard, Mass.-based company last fall, succeeding Kenneth Olsen, Digital's legendary co-founder, who resigned under a cloud when he couldn't end a series of staggering losses.

Olsen had led Digital to great heights by moving computing away from giant mainframes to midsized minicomputers. But as this trend moved down to the desktop Digital was caught flatfooted, critics say. …

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