720328 DECsystem-10 Woods Meeting Notes

This document outlines DEC's DECsystem-10 strategy and market outlook in March 1972, encompassing its history, financial performance, market positioning, and future development plans for hardware and software.

Key Points:

1. History & Financials:

   • The DECsystem-10 product line, starting with the PDP-6 in 1963 and the PDP-10 in 1968, is now in its 10th year. Approximately 230 processors are installed, valued at $110 million.
   • While the PDP-6 initially incurred losses, add-on sales made it profitable. The PDP-10 was profitable, encouraging DEC to proceed with its development despite early market challenges (e.g., SDS competition) and underestimating initial system costs.
   • Financial projections show significant growth, with net bookings anticipated to rise from $27 million in FY72 to $90 million in FY77, and profit before tax growing from $1.3 million to $19.25 million in the same period.

2. Market Strategy & Competition:

   • DEC's strategy involves building a stronger field sales force and developing cost-competitive hardware compatible with existing software to attract a broader market.
   • Target markets include Education (already strong, focusing on new FORTRAN/WATFOR, Data Management), Commercial (newspapers, large firms in specific metro areas), Industrial (system houses, large companies; not closed-loop process control), Scientific (well-established), and Data Services (on-line, timesharing, remote batch).
   • Major competitors are IBM (especially 370/135, 145, 155), Honeywell (6000 Series), and Univac (EXEC8), with others like XDS, Burroughs, CDC, and ICL also present. DEC aims for price-performance competitiveness.
   • Market share goals for DECsystem-10 class systems range from 1% (Commercial) to 17% (Data Services) in FY73.

3. Future Product Direction ("NOAH"):

   • "NOAH" is a low-cost extension of the DECsystem-1040/1050, leveraging existing software and languages. It's designed for medium-sized businesses, offering capabilities comparable to IBM 370/145/155 at a 370/135 price point, with ease of expansion and PDP-11 interfacing.
   • NOAH's market potential is estimated at $6.8 billion worldwide by 1975, with DEC targeting a 0.8% penetration ($55 million).

4. Hardware Development Plans:

   • Current projects include the KI10 Processor, disk systems (RP10C/RP03), magnetic tape drives, and the DC75 Synchronous Front End.
   • Future peripheral development focuses on meeting industry standards (e.g., IBM 3330 disk capability), reducing costs, and improving performance across disks, magnetic tapes, mass memory, line printers, card equipment, and communication terminals.
   • Specific future projects include the "NOAH" system components (KL10 processor, ML10 memory, RP05 disk, PDP-11 subsystems), MS10 memory, RS10 drum system, and enhanced asynchronous communication and remote station support.

5. Software Development Needs:

   • Urgent improvements are required for editors/utilities (current ones are "crusty"), monitors, languages, and application packages.
   • Monitor development faces challenges of "longevity," supporting multiple monitors, and increasing capabilities (virtual memory, file interlock, displays, throughput). A study into total redesign, strenuous overhaul, or configuration freeze is recommended.
   • Language efforts include new FORTRAN, WATFOR, PL/1, APL, and creating a common run-time system.
   • Emphasis is placed on competitive awareness, using BLISS for new software, improving quality assurance (e.g., concurrent test development), enhancing documentation to be user-focused, and automating field support processes.
   • Strategic applications include networks, shared file structures, and a complete redesign of terminal support to handle fast and buffered displays, moving beyond teletype-centric systems.

6. Industry Trends (from AMA Conference):

   • The EDP industry is growing, with users increasingly driving computer acquisition decisions based on productivity gains.
   • There's a shift from hardware cost reduction to efficiency in personnel and applications.
   • The market demands interactive programming, application packages, and vendor guidance in planning new applications.
   • Data communications, remote batch, and intelligent mini-computer-based terminals are identified as high-growth areas. New computer users are becoming more "skeptical" and performance-focused.