The new strategy with which Digital Equipment Corp is stepping up its effort to become – at long last – a serious player in personal computers looks likely to be copied by other global companies frustrated at their inability to make their clout count in the elusive market. The company must be deeply regretting allowing its once-in-a-lifetime opportunity pass it by when it rejected an offer by John Sculley to have it acquire Apple Computer Inc in 1990, but this is no time for looking back with regret, and the company has thought long and hard about how to get a crucial edge in the market. The six modular personal computers in the DECpc LP line, which will be assembled at seven DEC integration centres across the world from subassemblies manufactured at DEC’s Taiwan facility, range from a 33MHz Am386SX-based machine with 2Mb, 52Mb disk, floppy and MS-DOS and Windows 3.1 at $900 to a top-of-the-line 66MHz 80486DX2 machine with 4Mb, 128Kb secondary writeback cache, local bus Super VGA and 122Mb disk for $2,200. James Liu, vice-president of DEC’s Personal Computer Business unit, told Microbytes Daily at the company’s Acton, Massachusetts facility that DEC is using a franchise model to ship high-quality machines at budget prices worldwide while tightly controlling engineering, manufacturing and shipping to reduce costs. The DECpc LPs are designed so that all processor-specific components are housed on a daughterboard that snaps to the motherboard, so that 80% of the components are common to all six models. Subassemblies made at the highly-automated Taiwan plant are shipped across the world for final assembly at DEC’s regional assembly sites, which are in Japan, Australia, Taiwan, Brazil, Scotland, Canada and the US. DEC can ship generic components that will fit several models by less expensive sea freight while shipping processor-specific daughterboards by timely but expensive air freight. DEC will also save money on import duties by shipping parts instead of assembled systems. All these savings make a contribution to our margin, Liu said. In this market, you don’t define the price, the price is defined by the market. Without this new business architecture, it would be very difficult to make money and survive. Liu said that by having its regional centres do the final manufacturing, DEC can use a form of just-in-time inventory control while ensuring its large-volume customers that they can expect the same system and service from DEC no matter where their DECpcs are bought. Under the franchise model, the regional assembly centres will operate using the same testing, manufacturing and support procedures. DEC began test marketing its new integrated business strategy in early 1992 in the Pacific Rim region. When it beat several Asian firms to a contract to sell 2,000 machines to the Hong Kong Stock Exchange, which Liu said was the largest single order of personal computers in the history of Hong Kong, the company knew it was on the right track.
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