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Volume 3, Number 7____________________________________________________________ December 1984
Jim Osterhoff Named Vice President And Chief Financial Officer
Compliance With Export Laws Coincides With Efforts To Curb Brokering
Engineering Realigns To Implement ’Styles Of Computing’ Strategy
Jack Mackeen To Head Realigned OEM Group
VAX 8600 ("Venus") - More Than A Mainframe
Field Operations Realigned In Europe
GIA Manufacturing And Engineering Organization
Steve Bourne Joins Digital As Senior Consulting Engineer
1985 U.S. Salary Planning Guidebook Arrives In January
Digital Named #2 In Software Products And Services
Three Receive ACM Award
U.S. Congress Approves Tuition Refund Exemption
Jim Osterhoff has been appointed as vice president and chief financial officer, reporting to Ken Olsen, president. He will assume responsibility for the financial and legal functions of the corporation, succeeding Al Bertocchi.
Since 1979, Jim has served as controller of Ford Motor Company's Tractor Operations, managing their financial and MIS functions. His responsibilities included business planning, financial analysis, accounting and internal control, systems development, and operations in North America, Europe, and Brazil. Jim previously held a succession of financial management positions at Ford, including vice president of Finance and chief financial officer, Ford Motor Credit Company; and controller, Car Operations, North American Automotive Operations.
Commenting on the appointment, Ken said, "We are pleased to have an individual of Jim's stature and experience join Digital. As chief financial officer, he will be building upon the strengths of our finance function to meet the demands and complexities of controlling Digital's expected growth in the coming years."
Al Bertocchi, who has managed Digital's worldwide financial affairs for the past 12 years, is stepping down from his position as Digital's chief financial officer. "We are sorry Al will be leaving day-to-day operations, but I am please to report that he will be available to consult with us on financial matters and other key corporate issues," said Ken Olsen, president. Al joined Digital in 1971.
Digital gained important insights from last year's much publicized incidents involving attempted diversion of VAX computer equipment to the Soviet Union This experience has helped in developing business plans export situation and the definition of 'OEM.'
"The investigations and audits we conducted plus the investigations, and audits conducted by other agencies involving other companies, all indicate that smugglers commonly use individuals posing as legitimate OEMs to obtain embargoed equipment," explains Cliff Clarke, manager, International Trade and Policy. "So our efforts to ensure strict compliance with export laws involved careful scrutiny of what we mean by the term 'OEM' and scrupulous and diligent attention in managing our relationship with OEMs. It happened that at the same time the company was examining those same issues relative to problems with 'brokers.' So the export experience helped us develop necessary business plans.
"An OEM is a company that takes our product and enhances it in some materially significant way, adding to its value by adding technical functionality and marketing activity. We choose not to sell in quantity and at discounted prices to 'brokers' — people who will merely resell our products at discounted prices.
"Our concern about brokers stems from our feelings of responsibility toward the final customer," says Cliff. "Brokers tend to have no regard for their customers' needs. Unfortunate situations arise all too often, where the wrong product or an incomplete set of products is sold and the customer is left with a total mish-mash of problems. Then the customer comes to us for a solution, since the product was originally ours. Such problems reflect on our reputation for customer satisfaction. And, even though these customers have no legal or ethical recourse to seek help from Digital, we often end up helping them and trying to bail them out of their difficulties, sometimes incurring great expense.
"In addition, brokers sometimes sell our products in remote areas of the world, without making any provision for support. In some areas outside our normal sphere of business, it is extremely difficult to provide service because of licensing problems, vast distances, and poor communications and transportation. When Digital sells directly into such countries, we do so with scrupulous planning and qualification and preparation, so proper spares and support will be available when needed. Brokers, on the other hand, will dump products indiscriminately, merely for a fast sale, with little or no regard to the eventual support of the product. Once again, the irresponsibility of brokers works to the detriment not only of the customer, but of Digital and Digital's reputation.
"So business reasons as well as the export issue led us to pay special attention to the intents and practices of OEMs. As a result of this study, in July we adopted a new set of terms and conditions for our contracts with OEMs worldwide. These terms outline what we expect of OEMs and our responsibilities toward OEMs. In addition, we put together a checklist to be used in completing those terms and conditions — all of which should give us a comprehensive look at the business intentions of OEM companies and give us better insights into the stockholders and management of these firms — who they are, and where and what they truly intend to sell," notes Cliff.
Each application for an OEM contract is evaluated by a Digital management review board made up of representatives from the geography, the law department and, on a rotating basis, senior management from the geographies. The US, GIA and Europe each has its own separate review board. In the US, it
meets once a week. There are uniform and consistent rules, but they are interpreted by local people who understand local conditions, customs and sensitivities. Applications are rejected when it is unclear whether the applicant is a legitimate OEM.
Different criteria apply in the case of personal computers. "In that case, the distribution in and of itself is something that we value," explains Cliff. "There’s enormous competition out there, and you've got to move huge quantities of these products over very broad geographic areas to be successful in the marketplace. Our distributors fill a legitimate need by covering broad geographies on a reasonably low unit cost sales. To qualify to distribute Digital products that lend themselves to mass merchandising, companies have to demonstrate, management acumen, and marketing and sales skills. We look at their distribution network, what saturation they will be able to achieve in certain market segments, and what kind of sales and marketing literature they will develop to support the sale of our products."
"During the past several months we've made significant progress in refining and clarifying our product strategy based on the 'styles of computing' model," says Jack Smith, vice president, Manufacturing and Engineering. "It is appropriate to realign our organization to assure achievement of our goals in each "computing style."
"In particular, we want to better focus attention on local area systems and on the development of a family of workstations. In addition, we want development of low-cost, high-volume systems, like personal computers, closely tied to LSI development, because in that realm, improvements in functionality and reductions in cost tend to be driven by advances in semiconductor technology.
"We also need to focus on development of multi-processor and clustered systems at both the high end and the mid-range of our VAX family. And, of course, we have to pay special attention to the 'systemsness' of our entire product line, and to the software and networking products that help our systems work together and communicate smoothly and easily with one another."
Personal computing, team computing and workstations
"'Team computing' (low cost, multi-user systems), 'personal computing' (low , standalone systems), and 'workstations' (high functionality single-user systems) are under intense competitive pressure," explains Jack. "Over the last several years, we have made significant progress in our semiconductor capabilities -- dealing with microprocessors, architecture choices. Now is the time to capitalize on these capabilities to maximize our opportunities for leadership in workstations and low cost systems."
"So, in addition to his responsibilities for the LSI Group, Jeff Kalb, vice president and group manager, is now responsible for "team computing, "personal computing" and workstation programs.
The following now report to Jeff:
o Dom LaCava, group manager of Micro Systems Development (MSD), with responsibility for "team computing" (including both MicroVAX and PDP-11 development)
o Barry James Folsom, group manager of Rainbow Business Group, with responsibility for "personal computing";
o Cathy Learoyd, manager of Low End Workstations;
o John Gilbert, acting manager of High End Workstations;
o Ron Ham, manager of the PRO Group, and
o Bill Picott, manager of Low End Engineering Process Group.
"This organization will provide us with the unique opportunity to bring our extensive experience in personal computing, workstations, team computing and complex chip development together into a powerful, competitive force," notes Jack. To reflect this expanded role, Jeff's group has changed its name to "Low End Systems and Technology" (LEST).
Local Area Systems and Wide Area Networks
"We must put more emphasis on delivering complete computer systems that can be effectively tied together in local and wide area networks," says Jack. "It is critical that we have a single focal point to assure the integration of workstations, servers, interconnect, software and market messages for our Local Area Systems products."
To assure that this very complex integration task is effectively managed, Bill (BJ) Johnson, vice president and group manager, is now responsible for Local Area Systems and Networks/Communications groups in addition to his responsibilities for CIM (Computer Integrated Manufacturing), BOSE (Business, Office and Systems Engineering) , Image Systems Engineering and European Engineering.
Mary Breslin, manager of the Local Area System Program, now reports to BJ. A taskforce of Bill's current staff will determine transition plans for their respective functions from the Systems and Clusters (SAC) Group to the new organizations. During this transition, these functional managers continue to report to BJ.
Bob Glorioso, Bill Heffner and Bill Demmer, who previously reported to BJ, now report directly to Jack Smith.
High Performance and Mid-Range Systems
"We have segmented the VAX area from MicroVAX all the way up to clusters by price band," explains Jack. "Today we talk about high-end clusters. A year or two from now, we'll also be talking about low-end clusters. Over time, the cluster concept will permeate the whole VAX-family."
Bob Glorioso, group manager, is responsible for the High Performance Systems. He is also responsible for supporting the needs of DECSYSTEM-10/20 customers and helping them migrate new applications to VAXclusters.
Bill Demmer, vice president and group manager, is responsible for the Mid-Range Systems. This includes expanding multi-processors and parallel processors into the mid-range of systems products as well as continuing to provide leadership with current 32-bit Systems.
"Software systems provide 'the glue' to integrate all of these capabilities into one cohesive family," emphasizes Jack. Reporting to Jack, Bill Heffner, group manager for Software Systems, is responsible for VMS, ULTRIX and their layered products development. His job is to assume visibility and success in this critical area.
"To assure we have the management systems and procedures in place to successfully execute our product strategy and achieve our business plans, Jim Cudmore, vice president and group manager, is responsible for the newly created function of 'Product Operations,'" adds Jack. "Jim will work closely with both the Manufacturing and Engineering organizations to significantly improve overall performance in the products dimension.
"These changes should significantly clarify responsibilities and increase our effectiveness in providing complete systems and carrying out our overall strategy," he concludes.
Jack MacKeen has been named group manager of the OEM Product Group, reporting to Ward MacKenzie, vice president and group manager of OEM and the Business Computer Group (BCG). Jack will be responsible for marketing activities focused on Digital's technical indirect suppliers. This group now includes the MicroComponents Product Group, the Technical OEM (TOEM) Product Group and the newly formed Marketing Services Group. The Commercial OEM (COEM) Product Group, formerly part of OEM, is now part of BCG.
Jack, who joined Digital in 1961, has managed both the TOEM and MicroComponents Product Groups during his tenure with the company.
The TOEM Product Group will maintain its traditional role of marketing products and services to indirect suppliers of technical-application products and solutions. The group's product focus will extend from personal computers at the low end to the VAX 8600, networks and clusters at the high end. This group will be managed by Eli Lipcon, who joins the OEM Group from his current position as Operations manager of the U.S. Sales Distribution Group. Eli has held various marketing and finance positions with the TOEM and Personal Computer groups in the past.
The MicroComponents Product Group will also continue its traditional market focus of chips, boards, subassemblies and development tools for those customers who wish to extend their use of Digital architectures below the level of traditional systems. Dick Heaton will continue to manage the MicroComponents Product Group.
The Marketing Services Group has been formed to facilitate common activities between the TOEM and MicroComponents groups. Since they market to similar customer bases, the service functions of Marketing Communications, Market Analysis and Planning, Program and Policy Development, Technical Support and Management Sciences have been combined to achieve efficiency and commonality. This group will be managed by Joe Arayas, who brings extensive experience in the OEM business to this expanded role. Joe has managed the planning, management sciences and policy development functions of the OEM Group in the past.
Also reporting to Jack MacKeen are Leigh Bodington, OEM Group Personnel manager, and Don Resnick, OEM Group Finance & Administration manager. Leigh had been Personnel manager for TOEM and MicroComponents. Don joins the OEM Group from his previous position as F&A manager for the Small Systems Group.
In addition to the above changes, parts of the OEM Group have relocated. TOEM, Marketing Services (with the exception of Technical Support), Personnel, F&A, and the OEM staff (with the exception of Dick Heaton) have moved to Mount Royal (UPO2) in Marlboro. The MicroComponents Group remains in Hudson (HLO2), and Technical Support remains in Marlboro (MR03).
"The VAX 8600, Digital's new top of the line VAX computer system, represents the first of a whole new generation of VAX systems — a new generation of technology, a new generation of performance and a new generation of quality," said Bob Glorioso, manager, High Performance Systems, at the Oct. 31 product announcement.
The eighth processor in the VAX family, the 8600 delivers up to 4.2 times the performance of the VAX-11/780. "With this new VAX, Digital is the only company to offer a single, fully compatible computing environment from the desk through the data center," noted Bob. "We have designed the VAX 8600 to serve as both a high end extension to our VAX family and as a prominent member of our VAXclusters. In fact, when you combine 8600s in a VAXcluster system, the end result yields more power and more capability than today's mainframe systems.
"A product of this magnitude requires the contributions of many people with diverse skills, all committed to achieving professional excellence," he emphasized. "The efforts of people at 40 different engineering and manufacturing facilities made this product possible."
A full member of the VAX family, the 8600 uses exactly the same 32-bit architecture and VMS virtual operating system as every other VAX processor. VMS applications software written for other VAX systems will run on this new system without the need for any modification.
The VAX 8600 uses customized emitter coupled logic (ECL) to achieve high speed CPU performance. "These customized circuits, called "macro cell arrays," allow us to pack more computing power into less space. By com
pressing the logic into a smaller area, we have been able to increase the basic speed of the processor, commonly known as the cycle time, by a factor of 2.5 times that of the VAX-11/780," explained Bob. "This means improved performance and enhanced reliability for our customers."
Another factor which contributes to the improvement in CPU speed on the 8600 is four-stage "pipeline" processing. Pipeline processing, also found in other high performance systems, overlaps the steps involved in executing each processor instruction, thus reducing the number of cycles per instruction executed.
Use of the latest 256K bit MOS memory chips makes it possible to pack up to 32 million bytes of memory into the main cabinet. As a result, for all of its added performance and capacity, the VAX 8600 is very compact. It requires only slightly more electrical power and uses the exact same amount of floor space as the VAX-11/780.
"As a standalone system, the 8600 represents a major milestone in the growth of the VAX family. And within a VAXcluster the 8600 offers truly astonishing opportunities." And the 8600 can operate in a VAXcluster configuration of up to 16 VAX-11/750, 11/780 or 11/785 processors and HSC50 intelligent storage controller subsystems. A cluster of about eight 8600s could provide greater performance than IBM’s largest mainframe. "That's why we call it 'more than a mainframe,'" concluded Bob.
Full systems will sell for from $576K to $970K, and VAXcluster upgrade configurations for $450K.
To support the increasing strength, size and capabilities of the European subsidiaries as well as the successful decentralization of their work, all country managers now report to Pier-Carlo Falotti, vice president of Field Operations in Europe.
"This new phase of our organization will further increase the speed and effectiveness of our communication and the implementation of strategic programs," explains Pier-Carlo. He plans to use quarterly meetings to discuss and determine the actions needed to implement strategies. He expects this to help ensure a synchronized and common understanding of the direction of all of the European subsidiaries.
In addition, some changes have been made in responsibilities. Specifically, Bruno D'Avanzo, country manager in Italy, will return to Geneva as European Marketing manager, and Pier Paolo Monduzzi will become the country manager in Italy. Michel Ferreboeuff, European Marketing manager for the last two years, will return to France as Sales and Marketing manager for that country.
To help Pier-Carlo provide day-to-day assistance as needed, share ideas and common needs, coach and counsel;
Claude Sournac, in addition to being country manager in France, will help support the country managers of Spain, Portugal, SEENA and Israel.
David Barlow, in addition to being country manager of Denmark, will help support country managers in Norway, Sweden and Finland.
Don Frost, country manager in Holland, will help support country managers in Belgium, Switzerland and Austria.
Geoff Shingles will continue to manage the United Kingdom, Ireland and the Middle East.
Willi Kister will continue to manage Germany, and
Pier Paolo Monduzzi will manage Italy.
The General International Area (GIA) Manufacturing and Engineering group, formed in October to integrate the Manufacturing and and Engineering operations in that geography, has been organized into two groups: Far East and Western Hemisphere operations. Both groups report to Dick Yen, vice president, GIA Manufacturing and Engineering.
Dick Yen is currently acting manager of Far East Manufacturing and Engineering Operations, which is responsible for Taiwan, Hong Kong, Singapore and the Japan vendor management and purchasing office.
Western Hemisphere Operations, managed by Ed McDonough, is responsible for Kanata, Puerto Rico, and the GIA Business Center. Reporting to Ed are Maurice Tavares, Kanata plant manager; James Bishop, Puerto Rico general manager; and Bill Guilfoil, GIA Business Center manager.
Ed will also manage GIA Manufacturing and Engineering support, a domestic unit responsible for supporting all GIA Manufacturing and Engineering operations. Reporting to Ed in this group are Angelo Farinelli, Computer Systems Manufacturing (CSM) Business; Earl Ingalls, Micros and CSM Business; Bob Jones, Memories Business; Joe Lombardo, Storage Systems Business; Jim Melvin, Technology; Charlie Polay, Materials; Ed Shanley, Hybrids Business; and John Sistaire, Low End Business.
Supporting the GIA Manufacturing and Engineering group are Fran Barton, group Finance & Administration manager, and George Borrero, group Personnel manager. Both report to Dick Yen.
Steve Bourne has recently joined Digital as a Senior Consulting Software engineer reporting to Glen Johnson, manager of the UNIX Program Office. He will manage a new group in Palo Alto, Calif., with specific responsibility for developing software for a UNIX*-based graphics workstation.
Steve most recently worked for Silicon Graphics, Inc. and previously worked for Bell Laboratories where he was a member of the group that produced the seventh edition UNIX system. His contributions to the system included the UNIX Command Language known as the "Bourne Shell" and the debugging tool called ADB. He subsequently designed an early RISC machine called the "Z Machine" and developed a set of circuit design tools called UCDS is recognized as a standard text. His 1983 book, "The UNIX System", is recognized as a standard text.
UNIX* is a trademark of Bell Laboratories
Over the next couple months, supervisors in the U.S. will be developing their salary plans for the April 1985 to March 1986 time period. To support this effort, a new Salary Planning Guidebook will be distributed in January. It describes both the pay program's objectives and the strategies for achieving those objectives. Any supervisors who have questions after reading the guidebook should consult their manager or their compensation or personnel specialist.
Carol I. Burke has been named Personnel manager, Marketing/Finance & Administration, reporting to the chief financial officer and John Sims, vice president, Corporate Personnel. She will also be a member of the Personnel management Committee. Carol, who joined Digital in 1977, has held several Personnel management positions in Manufacturing, and most recently served as Group Personnel manager, Systems and Clusters Engineering.
Dick Corley has been named Product Group manager of the Medical Systems Group (MSG), reporting to Ed Kramer, vice president, Technical Group. He will be responsible for all marketing, engineering and other functions currently part of MSG. Dick joined Digital as a Principal Marketing specialist in MSG in 1980, and was named Product Line Marketing manager in 1983. He previously worked in sales and service management for Baird Corporation.
Brian Deery has been named manager of Software Service, Canada. Prior to this appointment, he managed Central Canada District Software Services for ten years. Before joining Digital in 1974, Brian was a nuclear physicist and held research and teaching positions in the U.S., Europe and Canada.
Ralph Gillespie has joined the MASS Area Manufacturing staff as manager of the Government Manufacturing Group, a newly-formed unit responsible for planning and executing complex, non-standard government projects for all areas in the U.S. Ralph, who has been with Digital for eight years, and most recently was manager of the Boston plant, will report to Abbott Weiss, AMC Manufacturing manager, and Harvey Weiss, vice president, Mid-Atlantic and Southern States Area.
Kevin Melia has been appointed Manufacturing External Resource manager, reporting to Bill Hanson, vice president, Manufacturing Operations. Reporting to Kevin are Ray Michel, Distribution manager; Paul Mantos, Materials manager; Mike Ryan, Demand/Supply manager; and Frank After, Demand and Supply manager. Pete Seuffert, manager, Inventory Purchasing, will report to Kevin as well as to Ron Payne, manager, Corporate Purchasing. Kevin has been with Digital, in various Manufacturing positions, for 12 years.
In a related move, Dan Infante, Manufacturing Controller, will assume additional responsibility for Manufacturing Processes, which had been managed by Kevin Melia, and the DIS organization in Manufacturing. Business Center functions such as Management Information Systems, Finance, and Personnel, which had previously reported to Kevin, will now be handled by the Area Manufacturing managers. Dan has been with Digital for 12 years.
John F. Mucci has been named Product Group manager of the Laboratory Data Products group, reporting to Ed Kramer, vice president, Technical Group. An employee for 14 years, John spent nine years in Marketing for LDP. For the last five years, he has been with the Government Systems Group serving as Product Line manager and most recently as Product Group manager.
In a related move, Frank Posey has been named manager of the Government Systems Group, reporting to Harvey Weiss, vice president, Mid-Atlantic and Southern States. Frank has been the Washington, D.C., District manager for the past three years, and has held various sales and unit positions in the Washington and Philadelphia districts. He has worked for Digital for ten years.
Geoff Sackman has been named to the newly created position of Corporate Standard Services Personnel manager. He will report functionally to the Personnel Management Committee and administratively to Ted Sares, Corporate Employee Relations manager. Geoff, who has been with Digital for ten years in various line and corporate Personnel management functions, will be responsible for providing direction for and support to standard Personnel services throughout the company.
Linda St.Clair has been named the Manufacturing Personnel Programs manager, reporting to Bill Hanson, vice president, Manufacturing Operations, and Dick Farrahar, Personnel manager, Engineering and Manufacturing. Linda, who has been with Digital for seven years, will be responsible for providing Personnel focus to the Manufacturing Operations staff.
Digital is now the second largest supplier of software products and services according to the 1984 report by International Computers Inc. ICP analyzes the top 200 U.S. suppliers of software products and services to provide a statistical portrait of the industry in terms of revenues, growth trends and related data. Information in their report is compiled from Dun & Bradstreet, Standard & Poor's and the annual reports of the top 200 U.S. suppliers
Digital was the only company actively supplying products and services in every category ranked and was the largest vendor to provide custom software programming. Digital's revenue position moved from third to second place, passing Control Data Corporation.
IBM was ranked as the largest supplier. Although they are about eight times Digital's size, IBM's revenue from software products and services is $2.81 billion; just double Digital's $1.4 billion from software revenues.
Three Digital employees recently received the Software System Award from the Association for Computing Machinery (ACM). Butler Lampson, Senior Consulting engineer; Bob Taylor, manager of the Systems Research Center, and Chuck Thacker, Senior Consulting engineer, were recognized for conceiving and guiding the development of the Altra system, which was developed at Xerox and demonstrates that a distributed personal computer system can provide a desirable and practical alternative to time-sharing.
The U.S. Congress has approved a continued exemption from income taxes for reimbursements made to employees for courses that Digital generally defined as Career Related or Knowledge/Perspective Broadening.
The legislation, which ahs been signed by President Reagan, reinstates, with some modifications, a law which expired one year ago. The new exception covers the 1984 and 1985 tax years. While the subject reimbursements are not generally taxable and will not generally be reported as income, the new legislation provide a $5,000 cap per calendar year. Amounts over this will be subject to tax and must be withheld and reported as income on employee W-2 forms.