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Digital Equipment Corp. Unveils Biggest Computers

January 20, 1987

NEW YORK (AP) _ Digital Equipment Corp. invaded International Business Machines Corp.’s most secure and profitable turf Tuesday, unveiling a pair of computers that equal the power of IBM’s biggest mainframes.

Digital has stolen sales from IBM in the midsize computer market, but until now it has not competed for sales of the biggest computers, which are used by Fortune 500 companies for a wide variety of information processing.

″DEC is making it very clear that they’re in the mainframe business. That is clearly not good news for IBM,″ said William Zachmann, an analyst for International Data Corp. in Framingham, Mass.

The new computers - the VAX 8974 and VAX 8978 - are actually clusters of four to eight smaller computers tied together by special software, company officials said Monday in a preview before Tuesday’s official unveiling.

Although Digital’s traditional strength is in the scientific and engineering marketplace, the new computer systems are intended for general use, said Rose Ann Giordano, vice president for information systems marketing.

Digital has become the darling of Wall Street in recent weeks as investors have become convinced the Maynard, Mass.-based company is a strong alternative to IBM. The company’s stock has risen nearly $40 since the beginning of January.

″These systems, as an extension of VAX, should allow us to compete across the board in corporate information systems,″ she said.

IBM customers are unlikely to junk their existing computers and buy Digital’s, but they might decide to buy the Digital computers for new purposes, Zachmann said.

IBM continues to have more than 70 percent of the market for mainframes, and even more than that in the biggest of the mainframes such as those Digital is challenging.

Direct costs of manufacturing probably eat up only about 20 cents of every dollar IBM charges for its mainframes, making them among the company’s most profitable products, estimates Carol Muratore, an analyst for Morgan Stanley & Co.

″They (Digital) recognized that the biggest, slowest-moving target was IBM’s mainframes, and that’s what they’re going after,″ Zachmann said.

Digital’s VAX 8974 performs about 25 million instructions per second, roughly the same as IBM’s 3090 Model 200, and the VAX 8978 performs about 50 million instructions per second, about the same as IBM’s top-of-the-lin e 3090 Model 400, Giordano said.

The smaller system is built around four VAX 8700 processors and the bigger one has eight of them. IBM’s equivalent computers have two and four processors, respectively. The Digital computers include new data-storage devices and software that allow them to switch data in and out as fast as typical mainframes, according to Grant Saviers, Digital’s vice president for storage systems.

Digital’s VAX line is a series of computers ranging from the desktop to the corporate computing center that have similar internal structures so they can share programs and information easily.

The complete systems range in price from $2.6 million to about $4.8 million and are available now.

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