Digital Equipment Corp has duly come out top in the bidding for Philips Electronics NV’s Philips Information Systems, and will add the company to its other big European acquisition, Mannesmann-Kienzle GmbH, which it bought late last year. DEC is paying an undisclosed sum for everything except Philips’ personal computer business, Smart Card operations and dictation systems, but needless to say will leave Philips to sort out the Eiserfeld factory in Germany. The German plant was in large part responsible for the downfall of Philips, because the cost of manufacturing there made its products uncompetitive. The two most interesting elements DEC gets are the banking terminals and the Megadoc document image processing system, which is claimed to be the European market leader. It will take on the 7,000 non manufacturing employees – 620 in the UK- and gets a business said to be doing annual sales of almost $1,000m. In addition to the transfer of the information systems activities, Philips said that it will explore further possibilities for co-operation with DEC in the areas of personal computers, components, and compact disk interactive. At present, DEC buys its personal computers sold in Europe OEM from Ing C Olivetti & Co SpA: no doubt Philips would like to take on that business. There is little product logic in the acquisition: Philips these days buys most of its computers OEM from Motorola Inc and Sun Microsystems Inc – and the fact that Motorola failed to buy the company raises a question mark over how serious the chipmaker really is about making it in computers. Philips’ OEM agreement with Motorola Computer Systems is to be continued for a transitional period.
