Engineering Strategy Overview

This "Preliminary Engineering Strategy Overview," dated March 1982, outlines Digital Equipment Corporation's (DEC) vision for computing's technical direction, critical market factors, and resource allocation. It serves as a foundational document for the Operations Committee, emphasizing the transition to the "Fifth Computer Generation" (1980-1987), characterized by 16-bit microprocessors, large memory, low-cost storage, and Ethernet communication, leading to the rise of Personal Computer Clusters (PCCs) as alternatives to traditional mainframes and minicomputers.

Key strategic pillars for DEC include:

1. Homogeneous Architecture: Adopting a single VAX-11/VMS architecture across a broad price range, interconnected by a homogeneous network (DECnet IV/Ethernet), to preserve customer investments and foster unique applications.
2. Product Evolution: Transitioning from 16-bit rack-and-stack systems to 32-bit architectures, and evolving traditional terminals into "computing terminals" (PCs). This requires a shift in hardware design towards VLSI, standardization, and optimizing total system cost.
3. Resource Allocation: Criteria for engineering investment focus on maximizing long-term return through building "great products" (requiring responsible engineering, clear metrics, and effective execution), strategic vertical integration (deciding what to "make vs. buy"), and ensuring quality, productivity, and responsiveness.

The document identifies several strategic threats and opportunities:

• Threats: Loss of leadership image, adoption of "wrong" industry standards (e.g., IBM SNA), risk of second-rate quality, unresponsiveness to rapid technological change, and intensifying margin/price pressures from key competitors like IBM, Fujitsu, Hitachi, NEC, AT&T, and Convergent Technologies.
• Opportunities: Leveraging advancing technology and the growing demand for information processing.

Detailed technology assessments are provided for nine key areas:

• Semiconductors: DEC must lead in MOS processes (2-micron, 1.5-micron CMOS) and VLSI design methods, owning critical silicon technologies.
• Storage: High-impact area requiring internal development for high-end products, focusing on competitive disk solutions and optical storage.
• Communications/Nets: Emphasizing "invisible networking," Ethernet as the standard, and leadership in price/performance connections for terminals.
• Power & Packaging: Addressing modular packaging for OEMs, evolving packaging for small systems/workstations, and meeting increasing regulatory demands for ergonomics and EMI.
• Computing Systems (PSD, MSD, LSG): Focus on enhancing functionality, utilizing gate arrays and custom chips, and developing integrated design tools for 32-bit systems and parallel processing.
• Human Factors: Prioritizing user experience, objective testing, and holistic design of hardware/software/documentation as a single system.
• Terminals & Workstations: Aiming to be the standard-setter in human factors and develop integrated, compatible families of products.
• Software: Improving engineering productivity, developing high-level tools for distributed processing, supporting end-user capabilities, and integrating human factors and new capabilities (graphics, security, voice).
• Applications: Although detailed in the table of contents, specific application strategies are largely integrated into other sections like software and computing systems.

Finally, the document includes quantitative measures of engineering investment, product positioning (using price-performance and gestation time charts), and market analysis (size, growth, shares, and financial metrics), to guide future investments. A significant shift in engineering investment towards 32-bit systems, terminals/workstations, and storage is noted. The appendix lists technologies for internal development, external funding, and those with disruptive potential.