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Volume 4, Number 1                __________________________________________________ February, 1985


Changes In Field Organization Aimed At Customer Satisfaction


Digital Sues To Bar C. Itoh From Selling Vt220 Look-Alikes


Four VP Positions Created In Digital Europe


Developing One-Company Promotion Plan


Anthony Lauck Chosen As One Of 100 Brightest U.S. Scientists


DECweek '85 To Make Connections With Digital Customers


Put Idle Assets To Work




Treasury Tax Proposal And R&D Credit Update by Bruce Holbein,* Manager, Governmetn Relations

Changes In Field Organization Aimed At Customer Satisfaction


Recent changes in the structure of Digital's Field organization will make it easier for customers to deal with the company while optimizing internal resources.


"Our business is becoming less hardware- and more system-oriented. A customer purcheses a 'total system; from Digital, but we have traditionally divided responsibility for servicing that system among several groups," says Jack Shields, vice president, Sales and SErvice. "This has made us unnecessarily complex to our customers and has slowed the intrenal decision-maknig process."


To focus on "systems," the management of after-sale hardware and software support has been consolidated into one organization. This group will include Field Service; the Spares business, previously part of the Peripherals & Supplies Group (PSG); and the Software Product Support business, previously part of Software Services. Dick Poulsen, vice president, Field Service, will manage this effort on behalf of the Field. Besides making Digital easier for 9 customers to deal with, these changes will enable Software Services and PSG to strategically concentrate their resources.


Computer Special Systems (CSS), managed by Russ Gullotti, will now report to Don Busiek, vice president, Software Services. "Putting CSS and SWS-- Digital's system solution organizations -- under one manager will enhance our ability to be more systems-oriented," says Jack. No further organizational changes in CSS are anticipated.


John Alexanderson, vice president, Peripherals & Supplies Group, will continue to focus his organization on increasing Digital's share of the system upgrade market, through the Add-On and Upgrade Group and the Accessories and Supplies Group. John will also work with Dick Pousen to better align the charters of the Traditional Proucts group and the Trade-In Refurbishment group.


"I have also asked the Sales organization to make specific recommendations as to how to improve our selling efforts for services and after-sale pro­ducts," says Jack. "We want our Sales organization to sell all of Digital's products and services. This effort is planned to be underway in FY86.


"The end results of these changes will be significant to Digital and to our customers."


Workstation Organization Aligned


Steve Teicher has been made manager of Digital's workstation effort and Ron Ham the manager of Applications and Base Product Marketing for workstations. In making the announcement, Jeff Kalb, vice president, Low End Systems and Technology, noted, "We will now have one workstation gruop and look to developa common architecture, common strategy and single workstation message for our customers. This aliignment also confirms the position of the PRO in the workstation space, which has been its focus for the last year. In the PRO-300 Series, we have an extremely strong competitor to the IBM AT for workstation-like applications."


Steve will take responsibility for the high-end and low-end workstation groups as well as the part of the PRO organization that is directly involved with software and hardware. He will also be responsible for hardware, the base operating systems where appropriate, and advanced development, diagnostics, graphics work and product management.


Ron will focus on hardware and software applications and on base product marketing. He will coordinate with the Marketing and Sales organizations to leverage all of our efforts towards having the broadest possible offerings to our customers within our selected marketplaces. In base product market­ing, Ron will emphasize competitive and pre/post sales analysis, field sales, software service, and application center support. Ron will retain responsibility for special workstation projects.


Digital Sues To Bar C. Itoh From Selling Vt220 Look-Alikes

Digital has filed suit in the U.S. District Court of New Jersey against C. Itoh, a manufacturer and distributor of computer-related products, seeking an injunction against further marketing, selling and distribution of the C. Itoh CIT-220+ video display terminal.


Digital charges that the C. Itoh product is a direct and unauthorized copy of the distinct external appearance of Digital's VT220 terminal product, including its wedge-shaped video monitor and unique keyboard layout. Additionally, Digital charges that C. Itoh copied VT220 documentation and set-up screen formats in violation of Digial's copoyright protection.


The distinctive appearance features were originated by Digital with introduction of its personal computers in May 1982, and subsequently employed in the VT220 series which was announced in November 1983. Digital claims that the widespread exposure of the wedge monitor and the low-profile keyboard, in association with its name, have come to be recognized as trademarks of Digital.


A number of manufacturers do sell products which emulate Digital's termi­nals. Such products deliver similar functionality but are based on those manufacturers' uniqueness in design.


The recent actions taken by Digital are in keeping with the company's long-standing policy to vigorously protect innovations resulting from its investments in research and development, which bring unique benefits to Digital customers.


In addition to a permanent injunction against C. Itoh which would prohibit them from further manufacturing, sales or distribution of the CIT-220+, the suit specifically seeks: treble damages based on the gains and profits derived by C. Itoh from the sales of CIT-220+ products; a recall of all existing CIT-220+ terminals and manuals from C. Itoh customers; delivery to Digital of all CIt-220+ manuals and materials used to produce the manuals; the disposition of any and all promotional and packaging material bearing CIT-220+ designations; and advertising by C. Itoh to correct false claims about the CIT-220+.


Also named in the suit were C. Itoh and Co., Ltd., of Japan; and C. Itoh Electronics, Inc., and CIE Terminals, Inc., both of Irvine, Calif.


Digital's action followed an October 29 issuance of a writ against C. Itoh Electronics, Ltd., in the United Kingdom, which resulted in C. Itoh's agreement to suspend distribution of the CIT-220+ in that country.

Four VP Positions Created In Digital Europe


Four of Europe's senior Field Operations managers have been named vice presidents of Digital Equipment Corp. International (Europe). They are Bruno d'Avanzo, Marketing; Bobby Choonavala, International Sales; David Stone, Engineering and Software & Application Services; and Don Zereski, Field Se rvice.


In making the announcement, Pier-Carlo Falotti noted that the appointments recognize "their contributions to the company and the importance of the positions they hold in the European organization."


Bruno d'Avanzo became European Marketing manager in the fall of 1984 after serving four years as the Country manager for Italy. Immediately prior to that he was the Sales manager of Digital's Italian subsidiary for two years. Bruno joined Digital in 1976 as the IPG Marketing manager for what was then Digital Europe's South-West Region, which was composed of Belgium, France, Italy, the Netherlands, Spain, Switzerland and Yugoslavia. He holds a degree in electrical engineering from the University of Padua, and was a Fulbright Scholar at the University of Pennsylvania.


Bobby Choonavala was named International Sales manager in 1983 after five years as European Sales manager. He joined Digital in 1966 as a Project Engineer in Maynard, and two years later became the first manager of the company's Dutch subsidiary. He then served as a district manager in Europe before serving as manager of the former South-West Region in Europe from 1973-1978. Bobby holds degrees from the University of Bombay and Technische Hochschule, Aachen (Germany).


David Stone, who joined Digital in 1970, became Corporate Software Engineer­ing manager in 1972, and two years later was named European Software Serv­ices manager. In 1983, he was named European Engineering manager, also retaining the European Software Services job. During the last two years, he has had several other responsibilities for European Engineering, including the US-based International Product Office, and all European engineering based in Valbonne (France), Reading (UK) and Geneva (Switzerland). David holds degrees from Harvard University and the University of Pennsylvania.


Don Zereski was named the European Field Service manager in 1983 after serving the General International Area as Field Service manager for nine years.

He joined Digital in 1962 and held several positions in Engineering, Manufacturing and Field Service.  Don was Corporate Product Support manager, for Digital's worldwide mid-range systems support, from 1968 to 1974. He also managed the Field Service Test Equipment Manufacturing and Process Development Group and the Field Service Repairs Operations Group. Don completed the Worcester Polytechnic SIM (School of Industrial Managment) Program and the Harvard University Program for Management Development.


Developing One-Company Promotion Plan


To support Digital's efforts to become one company with one overall message, the Corporate Communications Group (CCG) has reorganized to ensure the company's ability to deliver a truly integrated, company[wide promotion plan for FY86.


"The key is thoughtful planning against explicit strategic objecties, explains Dick Berube, Corporate Communications director. "To ensure that the company has a promotion plan which targets Digital's major marketing objectives, is implemented efficientlyh and yeilds the most effective results against those objectives, we have formed a Planning and Account Services organization within CCG whose job is to work closely with the market, product and service groups to produce the kind of plan Digital needs.


"Our goal is to present a plan to MSSC (Marketing and Sales Strategy Commit­tee) by May 1 which will contain prioritized objectives around products, applications, markets and channels. These will be supported by strategies, measurement criteria, messages and costs for the major promotional activi­ties in which the company decides to invest. If we can reach agreement on the 'what' and 'why', we can then begin to understand the 'when' and 'how'. This will allow us to assign some priorities and make well-informed trade­offs and, therefore, intelligent investment decisions around 'how much' for each of the various promotional activities that will bring the most useful results, remembering that the goal of promotion is to predispose the market­place and shorten the sales cycle. This approach should also take consider­able hassle out of the budgeting process, and will allow for regular review and re-allocation, if necessary.


"Creating an effective promotional planning process will require the partic­ipation and support of all the strategic and base product marketing organi­zations, service groups and geographies in the company. It's a tall order but, with everyone's cooperation, it is eminently achievable," Dick says.


In a related matter, Dick reported that Ketchum Advertising of Pittsburgh, PA, has been given the green light to begin an advertising campaign which is designed to increase awareness of Digital as a leading vendor of effective computing solutions to major business problems. The campaign will use testimonials by important, well-known companies for whom Digital has solved tough information management problems.


"Having our customers tell the world about Digital’s superior products, leadership technology, outstanding service and unique abilities is much more believable and influential than our saying the same things about ourselves," Dick said. The first phase of the campaign, which breaks February 5, will include such companies as General Electric, Avon, Chase Manhattan, AMF and Bank of Boston.

Anthony Lauck Chosen As One Of 100 Brightest U.S. Scientists


Anthony Lauck, manager of Networks and Communications Architecture and Advanced Development, has been chosen by Science Digest as one of America's 100 Brightest Scientists. A Digital employee since 1974, Anthony is one of 10 scientists from Massachusetts and one of 25 employed in the computer industry selected by the magazine.


He was chosen because of his work as a major contributor to the design and development of Digital's networking products. Anthony is the author of several technical communications articles, co-inventor of Local Area Trans­port (LAT), and has played a leading role in the development of IEEE stan­dard number 802.3 for CSMA/CD local area networks. He has also served on thp National Research Council Committee on Computer-Computer Communications Protocols.

DECweek '85 To Make Connections With Digital Customers


DECweek '85 will take to the road in February, traveling through the Mid­Atlantic and Southern States (MASS) for three months to present programs tailored to customers in each district. The program will include market- • focused presentations, technical and management seminars, and product demonstrations at cities within the districts. DECweek '85 is designed to help the MASS sales force finalize sales pending in Q3 and Q4 and to develop new business opportunities.


According to John Reilly, MASS Area Marketing Communications manager, DECweek '85 will extend the momentum of the Boston DECWORLD '85 show by focusing on Digital's styles of computing and computing solutions. With a theme of "Making Connections", it will showcase Digital's ability to connect products together with a consistent architecture, and to inform customers about the products and solutions that meet their applications needs.


Put Idle Assets To Work


If your cost center has terminals, typewriters or furniture it no longer uses, contact Digital Idle Asset Listing (DIAL) to redirect them to other groups within the company that need them. Also contact DIAL if you need equipment that someone else in the company might have but not need. DIAL features on-line updating and inquiry capabilities using a VAX-11/780. To receive a DIAL User Manual and access information, contact: Idle Material Management, Cathy Kennedy, mailstop IMM/IMM, RCS code IMMX, DTN 261-3410.




Doug Hammond has been appointed Corporate Administrative manager, reporting to John Sims, vice president, Corporate Personnel, in an effort to provide standard administrative services in a logical and efficient manner. Doug, who joined Digital in 1983 as manager of Aviation Services, will oversee the Real Estate and Construction Group, Corporate Space Planning, Travel, Aviation Services, Domestic Relocation, Corporate Facilities and Admini­strative Purchasing. He is a graduate from Otterbein College.


Paul McGaunn has joined the Corporate Quality Group as the Manufacturing interface for Customer Satisfactin, reporting to Frank McCabe, manager, corporate Quality. He will work on a task force which is charged with establishing Digital as number one int he industry in customer satisfaction. Paul, who has been with Digital for 21 years, has spent the past 11 years in Westfield. He most recently served as the plant manager.  Paul holds a B.S. from Northeastern University.


Joe Zercoe has joined the Corporate Sales Group, reporting to Jerry Paxton, manager, Corporate Sales. He will be responsible for the strategic planning activities of the Sales organization. Joe, who joined Digital in 1969, has been Sales manager for both the New York and new Jersey districts, Sales Program manager for the Technical Group, and most recently, U.S. Distribution Sales manager. He is a graduate of Fairleigh Dickinson Universtiy.


Russ Gullotti has been named manager of Comptuer Special Systems (CSS), reporting to Don Busiek, vice president of Software SErvices and CSS. He joine Digital in 1977 as CSS's Nashua Manufacturing manager, and in 1979 became the CSS Worldwide Manufacturing manager. He then joined Computer Systems Manufacturing for two years as manager of the Salem Plant. He most recently served as the Business Operations manager for CSS. Russ holds degrees from Boston University and the University of new Hampshire.


Treasury Tax Proposal And R&D Credit Update by Bruce Holbein,* Manager, Governmetn Relations

The Department of Treasury's tax proposals attempt to implement two far-reaching concepts: broadening the base and lowering the rates of income tax by eliminating a wide range of special Code deductions, credits and exclusions. The tax proposal also indexes the tax system to inflation to help assure that only real income and gains, rather than inflation-induced amounts, are subjec to tax.


Because electronics companies currently have among the highest effective tax rates of all manufacturing industries, these reforms, if carefully drafted, can offer an opportunity for an improved tax environment.


The Treasury proposal in its present form eliminates, however, some incen­tive provisions important to electronics companies, primarily the investment tax credit. ACRS, the system of accelerated depreciation which was enacted in 1981, would also be replaced with a less favorable approach to deprecia­tion .


In return for this base broadening, the corporate tax rate would be reduced to 33 percent. For many electronics companies, the benefits of this rate reduction may exceed the loss of ACRS and the investment credit. Moreover, the Treasury proposals retain the incentive provisions important to most electronics companies: the R&D tax credit and export tax incentives.


But the proposals also make changes in the U.S. taxation of foreign opera­tions which are not beneficial. The special tax incentives applicable to manufacturing operations in Puerto Rico could be reduced and eventually eliminated. In a similar manner, the proposals could reduce the benefits of manufacturing operations in low-tax foreign countries.


Under the Treasury proposal, several employee benefit tax exemptions would be eliminated or capped, although profit sharing and retirement plans gen­erally are not affected. Also, employees would be treated as receiving ad­ditional income subject to tax to the extent that their employer-provided health insurance payments exceed $170 per month for families ($70 for indiv­iduals) , and the cost of employer-provided educational assistance which is not "job related" would be treated as income for the receiving employee. And incentive stock option plans would be eliminated for the future, al­though existing options would continue. These changes are part of a package which reduces individual tax rates substantially — including setting a top tax rate of 35 percent.


The reaction of the high-technology sector to these proposals has been mixed. Small companies, dependent upon venture capital, protested the elim­ination of preferential treatment of capital gains. Larger companies ex­pressed misgivings about proposed changes for tax-haven operations. Also, there is concern over the employer-provided health benefits question.


However, all elements of the high-technology sector praised the Treasury's endorsement of an extension of the R&D tax credit, which expires at the end of calendar 1985.


In January, a coalition of companies, universities and trade associations filed legislation to make the R&D tax credit permanent. The bill will nar­row the scope of industry activity that is eligible for the credit but will expand the range of funded university research that is eligible.


*Prepared with Paul Oosterhuis, an outside consultant to high tech industry on tax matters. Paul is a member of the law firm of Hogan & Hartson, Washington, DC.  privacy statement