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October 16, 1995

DEC’S LONG CLIMB-BACK GETS UNDER WAY IN FRANCE

By CBR Staff Writer

Based on a quick survey of users and distributors, Digital Equipment Corp appears to be making a slow but steady comeback in France. Its market-leading Alpha RISC architecture and low-priced quality personal computers, indirect sales policy and reputation for excellent service are all helping to rebuild DEC’s installed base with new clients. More shipments of higher-end, more heavily configured workstations caused DEC’s share of market revenues for workstations both in France and across Europe between 1993 and 1994 to grow to 13.2% from 12.5% and to 15% from 14%, respectively, according to Dataquest Europe figures. Although DEC’s unit share market position in Europe dropped to 17% from 19% over the same period, its quarterly unit market share rebounded in the second quarter after a difficult first quarter, increasing to 8.8% from 8.4%.

Blocking off

It was likely to have been a result of the successful launch of the AlphaStation 250, which accounted for 40% of second quarter shipments, and reduced concerns by customers over the company’s financial situation, says Dataquest workstation analyst Karen Benson. She adds that she expects to see the same positive revenue growth trend for the rest of 1995. I think Digital has indeed succeeded in blocking off erosion of its installed base and is regaining market presence. Although it has all of the best ingredients with its leading technology, a very aggressive pricing strategy… it is taking much longer than anyone would have imagined, she said. In fact, among the six DEC users interviewed, only two said it was unlikely they would buy Digital for the few servers they intend to purchase in the next year. And one of those, Guy Vere, an engineer at Cap Gemini Innovation near Grenoble, said he would personally choose DEC technology, but is constrained by his client’s preference for Sun Microsystems Inc, still t he workstation market leader in France. The other three indicated that they were either considering or will consider DEC in upcoming purchase decisions. One, a manufacturer of pharmaceuticals, cited Alpha machines as preferable to upgrading its VAX 4200s to handle Oracle, while the other is evaluating DEC’s Windows NT offering. Said Udo Haverkampf, data processing manager for margarine manufacturer Astra-Calve SA, We are dreaming of Alpha for Sherpa [Corp.’s object-oriented product data management system], but we are not at that technical level yet. The only competitive threat to Alpha is apparently Hewlett-Packard’s PA-8000 machine, due out in early 1996.

By Marsha Johnston

A non-DEC user also said DEC was a possible buy for Windows NT clusters to replace an IBM host in the next two or three years. Microsoft told us they are working with Digital on something native that would be supported by either NCR or DEC, so we’re interested in that and will continue to monitor it. The system developer user also called DEC a driver for NT solutions. More importantly, three separate distributors – one a wholesale distributor of DEC personal computers to value-added resellers and the other two value-added resellers for the full range of DEC products – were unanimous – DEC is gaining new clients in all domains, from small businesses to auto manufacturing. Says Benson, Digital is now identifying and focusing on a small number of markets t hat clearly benefit from the Alpha technology (electrical and mechanical computer-aided design, geographic information systems and software engineering). The message is getting through and Digital is capturing interest from the power-seeking application developers and is on the right track for moving more volume. DEC’s change to indirect sales was an important factor in gaining new clients, according to two of the distributors. The margin for our sales agents is better for DEC than for Compaq or Hewlett-Packard, so they do a lot of work, talking up Digital over the better market image of Compaq or Hewlett-Packard, said a wholesale distributor. As a result of the change, said Jacques Rolland, sales engin

ee r for Lyon-based ESC, We have added pre-sales service and we even stock product. Benson concurred: a clear focus on partners and channels is now evident, with a `no direct’ policy that is designed to reduce channel conflict and improve confidence. One of the distributors, however, noted that the indirect policy was not as clear-cut for Alpha as for personal computers, and needs to be. The majority of users also raved about DEC’s service. One, who uses Digital machines that are owned by Electronic Data Systems Corp, said that when he fights with the General Motors Corp subsidiary about the low quality of its service, he threatens to go to Digital directly. They have an excellent response time, usually four hours, with truly competent people, he said. Incessant price-cutting, demanded by the market, is helping DEC’s case too. They’ve really made an effort and now have an image of good products that are not expensive, said Cap Gemini Innovation’s Vere. They have good prices. It’s actually hard to compar e their prices to others because, on paper, Alpha is very powerful. We have to put it to work to see what we actually get in operation, said Haverkampf. DEC’s weakest technology points remain the uncertainty about OSF/1 Unix and the proprietary nature of VMS.

Won’t buy VMS

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They are the only ones doing that operating system, and even they don’t know if they will continue with it, said Vere. Jean-Daniel Jouanneault, software manager at Aerospatiale SA, said, We won’t buy VMS, we buy only Unix servers and DEC’s is not recent enough. DEC’s progress is not yet spectacular enough to sway all non-DEC clients. Take Marc Boussounian, information services manager at luxury goods maker S T Dupont’s factory in Saverges, for example. An important Hewlett-Packard customer, he says, Today, I don’t have a good image of DEC. Given their delicate situation, I would prefer to stay with Hewlett-Packard. He adds, however, that he is virtually next door to a Hewlett-Packard manufacturing plant and that his two-dimensional computer-aided design applications do not need Alpha performance.

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