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Document:	Microvax Business Plan
Order Number:	XX-4D386-8F
Revision:	0
Pages:	53
Original Filename:	Microvax_Business_Plan_Dec83.pdf

OCR Text

TO:

Distribution

INTEROFFICE MEMORANDUM

:
'

SUB:

DATE:

14 DEC 83

FROM:

Peter Graham

DEPT:

MicroVAX Pro g.

EXT:

225-5358

LOC:

HLO2-1/004

NODE:

VAXINE/EMS

Office

MicroVAX BUSINESS PLAN

Attached for your information is a copy of the MicroVAX Business Plan.
The MicroVAX chip and the MicroVAX family of products came about as a

response to a perceived change in the competitive environment for low
end computing products.

The MicroVAX Business Plan describes the

changing low end environment and outlines the rationale and intended
results of the MicroVAX Program.

This progfam-level plan is intended to be a supplement to the specific
(and more detailed) product business plans. The MicroVAX Program
Office will update this plan as required and will measure program
results against the objectives stated here. Your comments are welcome.

‘Distribution
MicroVAX Product Marketing Team
MicroVAX Program Office

Team

MicroVAX Program Office Group
MicroVAX Interest List

OEM Staff
LEE Staff

LEE Finance Staff
SBAM

Burlington Manufacturing

AMC/GIA 32-bit Forecasters

MicroVAX BUSINESS PLAN

December

14,

1983

MICRO

Vo3
MicroVAX Program Office

Peter Graham
Ian Evans

Don Lewine
Kaj Larsen
‘Joel Platt
Martha

Stone

Norm Tripp

Function

Team Member

Designated Rep

Don Jenkins

PC's

Bill Avery

George Champine

Workstations

Dave Cutler

Reid Brown

Dick Hustvedt
Bill McBride

Dick Angel
Jan Tuttle

BI Systems

Jesse Lipcon
Bill Strecker

Sharon Lipp
D. Bhandarkar

Mayflower

Bob Supnik
Joel Berman
Frank McCabe

Randy Spears

Chips

Kevan Sanderson

32 Bit

- COMPANY CONFIDENTIAL -

MicroVAX I,

VAXelan

MicroVMS

VAX Architecture
CSSE

Systems Manufacturing

EXECUTIVE SUMMARY

SCOPE

This business plan summarizes the external environment, the market
opportunity and DEC's product and marketing response to the emerging market
for 32-bit supermicrocomputers. The MicroVAX Program is a cross-functional
effort to develop and implement a product and marketing strategy for a
family of products based on the MicroVAX chip. This business plan addresses
the family strategy. Individual business plans for each MicroVAX product
will address the specific product plans.

'ENVIRONMENT

A high growth market for low end 32-bit supermicrocomputers will emerge in
FY84/85 because of advances in technology and changes in patterns of
computer usage. Key advances in technology include the availability of
single chip 32-bit microprocessors, low cost 256K bit RAM's, and
inexpensive, compact hard disk storage.
usage

include major growth in

Changes in patterns of computer

single user systems,

increased demand

for

transportable software and development of multiple network solutions.
The total low end market,

computer

products

from $1K to $U40K,

will

increase

2.5x in size from $14B in FY84 to $35B in FY88. The highest growth segments
will

32-bit

single

and multi-user

systems

selling

office markets. The 32-bit market will grow from
to

50%

in FY88.

the

technical

and

10% of the low end in FY84

The low end

32-bit market will

account
for a significant

proportion of the growth in

the total computer

industry.

Competition

in the low end will come from relatively small application-

oriented systems integrators (Apollo, Fortune, Sun Microsystems) and from
large vertically integrated companies (IBM, HP and Data General). Low end
32-bit microcomputers will
purpose markets.

have broad application in vertical
'

and general

MicroVAX RESPONSE

Analysis of the environment
greatly influence the

suggests that:

overall

trends in

development of computing,

strategic position in the low end

the low end
2)

will

achieving a

is critically important to DEC, and 3)
is changing and competition will

the nature of competition in the low end
be extremely challenging.

The MicroVAX marketing plan calls for DEC to:
the

32-bit supermicro

components and

segment,

workstations and

primarily through

the

direct

Analysis of DEC's

strengths and

market by FY87 or

about

include:

$3B in
1)

target the technical and office market

OEM channels.

weaknesses

suggests

that a

family of

10% share of revenue in the total low end
potential revenue.

time-to-market

for

acceptance of VAX/VMS in new applications,
competitive low cost,

1) Place highest priority on

Develop time-to-market systems,

and

MicroVAX products can achieve a

Program risks

high volume

products,

3)
4)

the chip and/or

products,

ability tc manufacture
commitment to

focus on

VAX

and to deemphasize other products, 5) implementation of programs to market
and

sell

Digital

low end
products.

products,

and,

availability of application

software

for

TABLE OF CONTENTS

Executive Summary

Analysis of Low End

page

Computer Environment

cee

2.0 Technology Analysis

ceo

3.0 Competitive Analysis

)

...

«es

1.0 Market Analysis

1.1
1.2

Evolution of Customer Needs
Low End Computer Market Size

1.3

Applications
for Super Microcomputer

The MicroVAX Response

4.0 Conclusions and

5.0 Digital's

Implications for Digital

Strengths and Weaknesses

6.0 The MicroVAX Program
6.1
6.2
6.3
6.4

oo 10

Program Objectives
Product Strategy
Marketing Strategy
Program

Risks/Issues

7.0 MicroVAX Program Results

.eo 14

7.1 Market Share Goals
7.2 Product
7.3

Simple

Forecasts
Business

Models

Appendix

Market

Sizing and

Segmentation

Competitive

Product

Descriptions and

Market

Sizing Methodology

Charts

ees31

schedule

«oo 34
... 40

ANALYSIS OF LOW END COMPUTER ENVIRONMENT

1.0

MARKET ANALYSIS

1.1

EVOLUTION OF CUSTOMER NEEDS

Since the end of the 1970's, industry, particularly in the U.S and Western
Europe, has been forced to rethink it's strategic goals.
Inflation,
competitive threats from new directions, and explosive demands for
information have created a need for greatly improved productivity to remain
competitive. The process of re-allocating resources to achieve greater

performance has just begun. Inflation has focused industry on the need to

protect their investments, and to increase their returns from existing
assets.

As the demand for productivity of people and machines increases,
businesses are turning to computing technology for answers.
There is

a growing need for information that can be obtained, processed and
communicated quickly and inexpensively.
Effective decision-making requires
timely information. This need is paramount in the service businesses and
physical science industries. The rise of decentralized decision-making
is also creating a new need for efficient intergroup communication.
Computer

solutions

these needs have been

prevalent, but the need,

today,

is to expand their employment in industry to new uses.
The end user is
demanding effortless computing and minimal cost of ownership. Increasing
computer
driving

literacy,
the need

This evolution
effective,
hardware

easy to

of needs will

low end

and

from grade schools thru chief executives,

for

use,
cause

computers.

software

easy to maintain,

an expansion of the market

Those

solutions

is also

inexpensive computers.

computer vendors who

these

needs will

for

provide

successful

cost
the best
in

the

1980's.

1.2

LOW END COMPUTER MARKET SIZE

The market

for

opportunity

equipment
to

low end

for

priced

$35 Billion

computer

solutions

computer vendors.

between

$1K

revenue.

and

The

$40K will

(Appendix

for computers of all

types will be

increase

50% of the

five

from 25% to

years.

integration.

Demand

exists

1.3

1).

total

Component, multi-user

a major

increase

computer

and

The

growth

for computer

2.5X in

For comparison,

$70 Billion.

for computer

solutions to different needs

represents

available market

size by FY88,
-

the

total market

low end market will

industry revenue

products at

all

single-user

computers will

in office,

technical,

and

the next

levels of
provide

education markets.

APPLICATIONS FOR SUPER MICROCOMPUTERS

The demand for efficient and effective computer solutions is prevalent
in a variety of industries.
The limited supply of skilled professionals
will result in increased use of high performance computers to improve

page 3

their

productivity.

computing

power

Business people will need

to manipulate databases and

increasing amounts of

perform analyses.

Engineers

and scientists require high performance machines to do simulations and
graphics. Large organizations demand efficient solutions for processing and
communicating

information, both

organization.

Industries

increasing

function and

processors.
processor

types.

These

speed,

Image

2.0

external

to the

performance-driven with a high demand

a near-constant price,

will

require

for

their

processing,

powerful

graphic

economic,

instruction

workstations,

weather,

and

sets

and

expanded

data

industrial control,

nuclear

information

processing

few examples.

TECHNOLOGY ANALYSIS

More and more of the

software.

year

drops,

system design complexity is moving

from hardware to

The cost of a line of debugged software is increasing from

year with the general

inflation rate.

it becomes cost effective to use increased

storage

and

main memory to

vastly easier

increase

to develop software

human

for

the cost of hardware

CPU power, disk

productivity.

Thus,

32-bit computers than

if it

for

16-bit

computers, people will want the higher productivity environment.

There are several significant technical trends which have an impact
on

the growth of the

VLSI Technology

The

semiconductor

blocks"TM
single

"box-level"
"system on
chip".

high performance,

industry is moving

producing "solutions".

simple

logic

function.

function
a chip"

The

(CPU,

will

computer

dramatically decreased.
new users

will
buy

for

and

single chip performed

Memory controller).
"computer

the

technical

The

are

is
affordable

future of the computing

silicon

industry

VLSI technology.

solutions

uniqueness

The

advancements changes the

solutions

with the best

create

The cost of a system

performance

architect

components

Controller,

of these

High

1973,

a single chip performs a major

replace

industry.

by companies

who can not

standard

new applications.

be determined

Companies

Disk

low end market.

from producing "building

Today,

begin

implementation

economics of the

will be

forced

through marketing

to
and

software.
o]

Main Memory

MOS

RAMS have

the last

similar
1990).

five

increased
years

in density by a

(16K in

1978 to

generation

learning curve resulting
that

software

will

also

take

advantage of the

will

of
in

less

RAM

factor of sixteen over

256K today).

increase over the next five or
Each

for

32-bit

processors are needed to increase direct addressing and

and

telecommunications,

are a

inter-organization and

that are

six years

technology

has

We can

a steady increase

less

This implies

constrained by memory.

demand

for

increasing memory size,

page

RAMs by

followed a similar

plummeting cost per bit.
and

expect a

(4 megabit

a large address

There

space to

Disk

Disks are also increasing in density.
Two trends result.
First, disks are
getting physically smaller for a given capacity.
For example, 25 Megabytes

of PDP-1 disk would weigh 55 thousand pounds, consume 30,403 cubic feet and
45 Kilowatts at a cost of 4.3 million 1964 dollars.
disk capacity will weigh less than 10 pounds, consume
cubic foot and will cost less than $1000.
This means
which used to require a machine room full of disk can

In 1984 the same
less than one
that applications
soon fit on a

desktop.

Software

Software is becoming more complex, more expensive, and more important to
overall productivity.

As computers reach a wider and wider audience,

software will be expected to provide a total solution instead of a tool

kit.

Customers will ask for a computer with a good solution (mathmatical

This is

models, business management) instead of good FORTRAN or COBOL.

most dramatic in the low-end/new- user area where customers are looking for
very specific applications. For example, an auto parts dealer will want a
good automobile parts distributer package instead of a retailing
package
(and they have no interest in learning COBOL). As more productive tools are
required,

software will become the key factor in purchase decisions.

The right tools (as well as the right marketing) will help generate
the required application base.
The base hardware and software must
make the application look good.
o

Communications

Long distance communications costs
as

computer

computers

hardware costs.

and

timesharing

of desktop or

machines.
data.

are not dropping nearly as

This means

are

team computers.

This

turn

fast

large central

often more expensive

As the low~end machines

This

that

is expanding

than

a dispersed

demand

for low-end

proliferate, there is a need to

is generating demand

for

local

system

area networks and new

methods of long distance communications.

The

trend

is away from sharing the computer

job entry, dumb terminals)
processing).

We will

to sharing data

(timesharing systems, remote
(DECnet, distributed

see a explosion in "stand-alone" computers with the

ability to access remote computers and data.
o]

Merging of Different

Industries

As the prohibitive cost barriers of using computer technology are
stripped away, different industries will be competing in the same

For example, copier, computer, telecommunications and
markets.
facsimile technologies will merge into families of overlapping products.

page 5

3.0

COMPETITIVE ANALYSIS

Competition

changing

and

getting

tougher.

micro/mini/mainframe distinctions of the
new style

of competition

now seeing
product

CPU power

easy to

use

startup companies like

SUN and

APOLLO able

a very short
a

the

with

time

The

time.

DECsystem-10.

particularily in
emphasis on

The
In

low end,

the

low end

68020 chip has

same

uniqueness,

win.

key strengths and

Total

weaknesses of the

WEAKNESSES

product

Heavy capital
investment

etc.)

o Non-duplicable

o Technology

features

obsolescence

Time to market

(technology)
o

Business

focus

issues

Economies of scale

o0 Architectural control

Application-Oriented
System

Integrators

Superior

point

product capability

Dependence on
industry standard

(Apollo, Wang etc.)

products
o Low capital

o Weak product

investment
o0

differentiation

Time to market

(applications)

Exposure

price

competition

o Flexibility

Architectural
management

Appendix

2 analyzes the

specific

competition

family.

page 6

for

the

are

environment,

DEC needs product and marketing

integration

Intel

the

from startup to

computer market.

Companies

(IBM,

VLSI chips.

to go

about

STRENGTHS

Vertically Integrated

There is a brand

commodity

this new competitive

to market,

table below highlights the

competition

traditional

based

The

70s are gone.

MicroVAX product

THE MICROVAX RESPONSE

4,0

CONCLUSIONS AND IMPLICATIONS FOR DIGITAL

From the previous environmental analysis, there are three generic
conclusions that may be drawn.

o Relationship of Low End and High End

The overall concept of standalone, single user (or single application)
systems is flawed as a long term view of a computing environment.

Self contained computing systems are no more valid than isolated
people.
At some point and time, people must deal with others.
1In
computing, the need for systems to communicate with other systems is
as real and necessary as the need for people to communicate. Computing
systems are tools which make the communications task
easier

and more productive.

Small systems will need to communicate with large systems.
Conversely, large systems will "delegate" work to distributed, smaller,
Therefore,
This relationship is synergistic.
less expensive systems.
achieving high growth rates for small and large systems applications
will be leveraged by the availability of both. Failure to produce both is
a major

risk.

The first conclusion is that success in the high end and low end are
not decoupled.
To retain a strong market position in the mid and high
end computing systems market, Digital must expand market presence in the
low end.

o Low End As A Business

A substantial market will exist for medium and large computing systems.
This need will continue to grow as more small systems are installed.
But
low end systems growth will be disproportionately higher.
The available
markets and applications for inexpensive high performance small
will develop in new areas versus replacement or upgrading of
equipment

The

low end

incremental

established

traditional

represents an

emerging,

in the low end

the

areas.

high growth segment that

existing computing market.

will

increase the probability of retaining a strong, medium

high end

The

second conclusion is that Digital must be successful
to

is mostly

Achievement of market share

and

continue

systems

position.

achieve growth rates consistent with the

in the low end

overall computer

industry.

Competitive Position

The competitive environment for low end products is different in the
mid 80's than in the 70's.
The ability to design and manufacture
computing.systems is no longer
degree of vertical

skills

isolated

hardware
page

to a few companies with a high

and
7

computer architecture.

The

emergence of many systems

market

advantage or

product

integration

uniqueness,

fragmentation

- as

advantages must be clear,

But

Digital's

the

customer.

The

third

conclusion

is that

Digital

advantage with networks,

well

seeking

understood by,

and having value to

can no longer compete

software

competitive

and

CPU,

a clear

emerging markets.

Digital must establish

clusters,

as cost

all

create confusion and

typical of technology driven

leadership CPU architecture.
environment as

companies,

will

simply with a

a clear competitive

a homogeneous

storage,

computing

interconnect and

utilities.

5.0

DIGITAL'S STRENGTHS AND WEAKNESSES

Digital's

success

depends on

our

the high

ability to

performance,

exploit our

low end computer market

strengths,

understand

and

minimize our weaknesses.
The key strengths and weaknesses that will
impact Digital's success in this market are summarized below.
Key Strengths
o

System Architecture

Because

Digital

produces

such a wide range of computer

products (chips, modules, boxes,
software, application tools and
is

able

evaluate each component

solution, offering a broad
0

Quality

Because

Digital manufactures

quality must be designed

total

and

services products

high

in.

LSI Group

Hudson

is one of the

groups

the

best overall

design

and

fabrication

industry.

Software

for

has a very large application base and

quality,

Customer
There

Digital

terms of the

Engineering

Digital

range of compatible systems.

volume,
Hudson

systems, operating
Digital

applications),

productive

software

is recognized

tools.

Experience
a large number of customers
hardware or

software

and

potentials with

experience.

Service
Digital

has

a worldwide

support

for

all

service organization

products.

page 8

provide

Human

resources

Digital has talented people who can accomplish almost
anything.
VAX Recognition
VAX systems are

perceived

as the standard

to which the

competition must be compared.

Key Weaknesses
Lack of

Innovative

Focus

Resources have been directed
and

designing

at re-engineering products

unnecessary perfection rather

than new ideas.

Costs

High fixed costs and overhead
in

product

prices that are

Terms and

Conditions

Perceived

by the market

allocations have resulted

perceived as uncompetitive.

as being

inflexible and

confusing.

Distribution
No clear
Time

strategy on

distribution.

Market

New product
window

low end

for

introductions are often
timely technical

delivery commitments

too

late,

missing

the

Once

announced

large base of installed

software,

are

innovations.

not met.

Software
Although Digital
it

has

thought of as being overpriced,

ever changing.

page 9

cumbersome

and

6.0
The

THE MICROVAX PROGRAM
MicroVAX strategy was developed

and competitive
maximize

trends.

To gain

as a response

the market,

a jump on the competition,

success in the growing

Supermicro market,

and

technical

thereby

several objectives

were established.

Develop a

Focus on

32bit micro-system in
time to market

1984

(software

with minimal

and hardware).

risks.

Alter és little as possible in our traditional

customer

base

and

internal manufacturing.

Leverage

existing

power,

packaging

and

peripheral

products.

The

long-term MicroVAX Program goals evolved

6.1
o

for

the

VAX/VMS as

late

the

1980's.

architecutre into
Leverage market

preferred

Utilize

industry computer

technology to

extend

position

for

Digital's next generation of computer

systems by selling at

Design, manufacture

all

and market

VAX/VMS products in the

6.2

family of microprocessor-based

32-bit marketplace.

PRODUCT STRATEGY
Program,

range of products using different
hardware,

accelerate

and

time

Engineering,
Q-bus

the

systems.

levels of integration.

$1-40K,

At a very early stage of the
two

VAX/VMS

Achieve significant market position with profitable
Defend

architecture

the

the low-cost, high-volume market segment.

products.

these objectives.

PROGRAM GOALS
Establish

from

software

to market.

product,

Seahorse,

were

to develop

implementations.
defined

(MicroVAX I),

Initially,

to minimize risks
developed by

and

DEC West

is a time to market system designed to provide a low cost

VAX system

=11

one

the decision was made

technical

replaced

nominated by a

in a

short

period

by a

VAX.

Announced

trade

journal

of time.

Basically,

October

as one of the

Top

18,

the

MicroPDP-11

with

product has been

10 product announcements

1983.
Mayflower,

(MicroVAX II),

implementation of the
reduces

the

increases

within

will

Additionally,

memory

Mayflower

Engineering.

Mayflower

second

MicroVAX product,

MicroVAX chip designed by

CPU and

performance.

Low End

LSI bus.

level.

Seahorse

the

VLSI

The
sold

from

3 modules

the

Hudson.
1

and

greatly

is being developed by

MSD

Engineering,

product
at

Mayflower will

the

first
This

also designed

board,

box

and

to run

multi-user

the

Q22

system

be the basis for workstation products.

page

The

software

product is

MicroVMS,

a modular version of full VMS.

MicroVMS

also provides support for the emulated instructions defined in the MicroVAX
architecture.
It provides the same native-mode application environment
provided by full

VMS.

This dual-pronged technical strategy minimizes the risk of missing the
time to market threshold.
If the MicroVAX chip slips, Seahorse will be
available

the market

serve the

short term customer needs.

The

strategy also provided a product early, giving our internal software
developers a development system to work with.
This strategy has proven to be successful. The Seahorse development
group has been on schedule.
They will indeed produce product
approximately six months earlier than we currently expect our
competitors to offer similar products.
This will allow us to get both
software and hardware developers well under way before Mayflower is ready
to

announced.

The use of existing system bus and

packaging means we should have fewer

problems with a fast production ramp in manufacturing.

The use of the

Q-Bus on the VAX also allows us to offer a smoother migration path to our
large customer base have existing Q-Bus hardware investments.
In addition to the initial three products,

the MicroVAX product strategy

includes another multi-user system, a single user MicroVAX, the MicroVAX
chip

family and

two

additional

software

products.

AURORA

The third multi-user system in the MicroVAX family is Aurora.
Directed by
Polaris Development Group in the 32-bit Systems organization, Aurora

the

combines the MicroVAX chip with the new Backplane
This

technical

participation
Unibus

advancement
in

the

Low End market

I/0 replacement

includes

boards,

environment,

and

positions Aurora to

for

future

multi-user
Aurora

and

will

VAX's.

Aurora

(BI)

bus.

Digital's

introduce

The

systems compatible

based

Interconnect

expand

the

BI bus,

product

the

strategy

with an open office

VAX stations.

METEOR
Meteor

Digital's first

Low

End

Engineering,

the

low end,

the

Professional

not

for

PRO users

replacement

single-user

product

technical/scientific

workstations market.

downward

the

Meteor

Series

and

product

upward

and

should

high end

per

se,

MicroVAX product.

positioned
be

the

high end

effective

Developed

Meteor

for

office/business graphics

represents

and

within

strong competitor
follow-on

product to

VAX/Seahorse workstations.

functionality,

lower cost,

as a

Although

clear migration

VAX Workstation

path

applications

single user design center.

MICROVAX CHIP FAMILY
Designed
full

line

to
of

build

high performance,

low cost

support chips.

page

VAX solutions.

Includes

VAXELAN
A

Pascal based

runtime system for dedicated

real-time applications.

ULTRIX
Full

Berkeley,

UNIX*

running on MicroVAX hardware.

For a more detailed analysis of the MicroVAX product family,
Appendix

6.3

see

MARKETING STRATEGY

The marketing strategy is to position the MicroVAX products to address:-

those customers desiring high performance, low cost, 32-bit microprocessor
Of fer the customers products at all levels of integration to
products.
fully satisfy their broad range of computer needs. In addition, the
MicroVAX strategy is to extend and enhance sales of existing and future
products by developing a clearly competitive low-end product set for the
late

1980's.

customer a

complete

This goal

full

is consistent with Digital's goal

range of computer

array of choices for

Digital

their needs.

to offer the

The customers now have a

solutions.

offers competitive low

end 16-bit products, the MicroPDP-11 family for 16-bit applications, the
11/725 for those customers desiring large disk capacity, and MicroVAX for
32-bit applications.

focus can be

o Focus on

the

in the

32-bit

Supermicro

Leverage VAX/VMS architecture
No established

leader

Highest growth segment
Higher

lifecycle margins

DEC is on
Position

DEC

Leverage

networking capabilities

segment

following chart.

Rationale

Goals
00
O O

Market

summarized

The marketing

low end

technology curve

for development
of next generation products
across homogeneous

Develop

and

systems,

components

workstations

Provide a complete solution

o] Enhance competitive strength
in compatability,
and
o}

a registered

trademark of Bell

page

flexibility

product development and

manufacturing

communications

networking

Creates synergy and
in

¥*Unix

products

Labs

Target the

Technical

and

o Builds on current market

Office markets through the

strengths

direct and OEM channels

0 Addresses the largest market
segment
o

Uses

Allows the

familiar channels
fastest early market

penetration

o Requires minimum new product
development

Specific programs the MicroVAX Program Office has undertaken include the
following:

Adopt a family-focused pricing strategy.

Offer non-disclosure presentations to key customers to keep them
total product strategy

)

abreast of our

Develop a program level
in

addition

the

promotion strategy emphasizing the

specific

Coordinate communication

Strategic

6.4

family,

products.

among the

product development groups,

Marketing organizations and

recently,

the

Field.

MICROVAX PROGRAM RISKS

Inherent

concerns

and

resolving

any new strategy are
issues

with

risks.

the goal

or minimizing their

being

impact on

We
to

have documented
focus our

our

future efforts

the

MicroVAX program.

strategy for

MicroVAX products

RISKS/ISSUES
Lack of commercial
Need

software

focus corporate

efforts on

sales motivation

and

distribution channels
No

clear

network systems

Uncertainty of chip sales
Need

Open

issues

implementation

strategy;

clear direction of storage

timeliness,

around

single

user

floating point

products;

1/4,

tape,

ergonomics,

software,

VIA/VMS efforts need to be focused on low end

products

risks of 68000/IBM/Unix*

cartridge

cost,

applications,

Competitive

product definition,

CPU,

performance

entries

Need to invest resources to promote awareness of MicroVAX/VMS
benefits

the customer

and

internally
page

7.0
The

MICROVAX PROGRAM RESULTS
impact

the MicroVAX strategy will

low end computer market

share goals.

The market

have

Digital's success

analysis of our market
based on a market sizing

share goals are

analysis done by the MicroVAX Program Office.
The detail
is presented in Appendix 1 and summarized here.

7.1

in the

evidenced by the

information

MARKET SHARE SUMMARY
Methodology

The market share

forecast was developed by evaluating the following

factors and estimating a reasonable forecast
per formance.
o

The

total

available market by

segment

from known past
'

(from the Market

Sizing

Model)

00
O

Digital

product development plans

Anticipated competitive
Digital market goals

actions

Digital

strengths,

and competitive

weaknesses

and past

performance

low end

32-bit OEM

Conclusions
o

Digital will
systems and

first
o

obtain

a large,

Billion per

Digital will

gain

low share

assumed

development are
be more

year

proceeding

share goals
It depends

the

expected to become DEC's

32-bit desktop market.

product

plans

slowly and

the

the desktop

and

in
the

engineering

environment

expected

segment.

are predicated on a volume

the opportunity Digital has
guaranteed.

because

MicroVAX

product,

a modest

competitive

The market

early

components markets.

forecast that reflects

the Low End market.
successful

This opportunity is

resolution

of the

program

not

risks

previously mentioned.
This business plan therefore

includes two

products.,

labelled

The

first

forecast

forecasts

"opportunity"

for the MicroVAX
is

consolidation

the Phase 0 product plans for each MicroVAX product. The second forecast,
labelled "base case", is a best guess estimate made by the MicroVAX Program
Office Team. The base case is lower than the opportunity forecast because
conservative assumptions regarding the growth of the 32-bit segment

of more
and

a more

issues

realistic

view of our

surrounding the

zbility to

program.

page

deal

with

the

overall

risks

and

MicroVAX Business Plan
MARKET SHARE BY PRODUCT SEGMENT - OPPORTUNITY

Units

(K)

FY84

FY85

FY86

FY87

FY88

Multi-user Systems

251

334

444

579

718

Single-user Desktop

5976

Market

2475

3130

3986

4852

Components

160

200

280

360

400

Total

2886

3664

4710

5782

7094

Multi-user Systems

100

1095

Single-user Desktop

193

Components

Total

132

257

210

13
-

9%
-.

13%

18%

Single-user Desktop

Components

109

-3

MicroVAX

MicroVAX Share
Multi-user Systems

TOTAL MICROVAX SHARE

15%

Revenue $B
Market

$13.5

$17.5

$22.8

$28.6

$35.6

MicroVAX

$ 1.6

S 3.1

S 3.0

11%

MicroVAX Share

.03
-

.6
33

Components are board and box level products; definition excludes chips.

page

MicroVAX Business Plan

MARKET SHARE BY PRODUCT SEGMENT - BASE CASE
Units

(K)

FY84

FY85

FY86

FY87

FY88

251
2475

334
3130

444
3986

579
4852

5976

Market

Multi-user Systems
Single-user Desktop

718

Components

160

200

280

Total

360

400

2886

3664

4710

5782

7994

Components

2
-

28
48

45
129

Total

12
-

4%
-

MicrovAX

Multi-user Systems
Single-user Desktop

177

_36
174

MicroVAX Share
Multi-user Systems

Single-user Desktop
Components
TOTAL MICROVAX SHARE

1
19
23

Revenue SB
Market

$13.5

$17.5

$22.8

$28.6

$35.6

MicroVAX

$ 1.1

$ 2.1

$ 2.4

MicroVAX Share

.03
-

page

MicroVAX Business Plan
UNIT SHIPMENT AND REVENUE FORECAST

- Opportunity -

FY84

FY85

FY86

FY87

FY88

Units-K
Seahorse Systems

Workstations
Mayflower Systems
Workstations

15
2
(included in systems forecast)
12

Boards

Boxes

Aurora Systems

Workstations

(included in systems forecast)

Boards
Meteror

Total

_35

44.6

132

257

$182

50
210

Net Equipment Sales-SM
Seahorse

$2TMM

Mayflower
Aurora

Meteror

$27M

$ -

343

891

1401

933

497

1925

1630

307

719

436

$591

$1629

$3145

$2999

page

MicroVAX Business Plan
UNIT SHIPMENT AND REVENUE FORECAST
~ Base Case -

FY84

FY85

FY86

FY87

FY88

Units-K
Seahorse Systems

1.6

29
20

.3
2

2
5

2
12

2
15

_83

177

174

Workstations-QVSS
Mayflower Systems

Workstations-QVSS
-David

Boards

Aurora Systems

Workstations-WS32

Boards

Meteror
Total

2.9

23.

Net Equipment Sales-$M
Seahorse

$27

$100

Mayflower

213

503

794

834

Aurora

292

611

10906

Meteror
Total

397

$27

$346

$1114

page

719
$2124

436
$2360

CONFIDENTIAL
7.2

FINANCIAL SUMMARY

Based on Product Management's current forecasts, the MicroVAX family will
generate over a billion dollars in gross equipment sales in FY86.
The
forecast reflects the opportunity Digital has in the Low End marketplace.
The first product,

MicroVAX I, will generate $29M in operating revenue for

FY84, at current forecasted unit sales.

Operating profit margin is

estimated by MicroVAX Program Office Finance and the

13%.

Product Manager to be

The high margin is in part due to the relatively low engineering

investment

for this product.

The simple business models for the MicroVAX products represent the goals of

the MicroVAX Program Office and Product Manangement.
They are based on the
opportunity volume projections detailed on the previous pages.

page 19

MICROVAX I

(Seahorse - Phase 2)
- SIMPLE BUSINESS MODEL -

($ M)
FY8u4
Units

LIFETIME

2.0K

19.0K

MLP/unit

$20.2K

$18.1K

NOR

$29.14

Product Costs

$13.6

PRODUCT MARGIN

$15.8

PRODUCT MARGIN %
Field

Expenses

FIELD MARGIN
FIELD MARGIN

$136.0
:

$126.8

54%

48%

5.6

$ 47.1

$10.2
%

$262.8

$79.7

35%

Engineering

30%

3.1

13.7

Corporate Market/Advt/Admin

1.9

16.1

Other

1.4

13.3

$ 3.8
13%

$ 36.6
4%

Costs

(CMC,

0O/A)

OPERATING PROFIT
OPERATING PROFIT %

INTERNAL RATE OF

RETURN

23%

QUARTERS TO PAYBACK

The

IRR

for

the

product only has

MicroVAX I is
a

three

year

lower

than

life cycle.

page

corporate average because

the

MICROVAX II1

(Mayflower - Phase 0)
- SIMPLE BUSINESS MODEL -

($M)

FY85

LIFETIME

Units
MLP/unit

27K
$16. 4K

457K
$12.8K

NOR

$363.4

$5801.1

Product Costs

$142.0

$2608.0

PRODUCT MARGIN

$221.4

$3193.1

61%

55%

Field Expenses

$ 61.9

$ 823.0

FIELD MARGIN
FIELD MARGIN %

$159.5
uug

$2370.0
41

Engineering
Corporate Market/Advt/Admin
Other Costs

$ 18.4
$ 24.1

$ 101.1
$ 319.2

13.5

$ 245.2

OPERATING PROFIT

$103.5

$1704.6

PRODUCT MARGIN %

OPERATING PROFIT %

INTERNAL

RATE

RETURN

QUARTERS TO

PAYBACK

The

unit is

MLP per

systems

28%

29%

75.2%

average of all

the

and workstations.

page

Mayflower

configurations, boards,

AURORA - Phase 0

- SIMPLE BUSINESS MODEL -

($M)
FY85

LIFETIME

Units-K

2.1

MLP/unit

$35.6K

NOR

$62.9

$4688.0

$32.0

$1782.5

$30.9

$2905.5

49%

62%

$10.9

$ 743.6

$20.0

$2161.9

32%

46%

Product

Costs

PRODUCT MARGIN
PRODUCT MARGIN %
Field

Expenses

FIELD MARGIN
FIELD MARGIN %
Engineering

Corporate
Other

Market/Advt/Admin

Costs

193.3
$21.1K

$28.5

(CMC)

OPERATING

PROFIT

OPERATING

PROFIT %

INTERNAL RATE OF

($16.8)

RETURN

QUARTERS TILL PAYBACK

119.4

$ 356.9
119.6

$1566.0

33%

61.8%
10

page

METEOR - Phase 0
- SIMPLE BUSINESS MODEL -

($M)
FY85

LIFETIME

MLP/unit

$11.7K

NOR

$ u.4

$1686.7

Product Costs

$ 2.0

$ 773.8

PRODUCT MARGIN

$ 2.4

$ 912.9

PRODUCT MARGIN %

Field

55%

Expenses

FIELD MARGIN

FIELD MARGIN %

$11.5K

54%

1.0

$ 312.8

1.4

- $ 600.1

32%

36%

Engineering
Corporate Market/Advt/Admin
Other Costs

$18.2
$
.3
$ 2.7

$
83.7
$ 118.4
$ 132.4

OPERATING PROFIT
OPERATING PROFIT %

($19.8)
-

$ 265.6
16%

INTERNAL RATE OF

RETURN

28%

page 23

APPENDIX

MARKET SIZING OVERVIEW AND CONCLUSIONS

page

MARKET SIZING OVERVIEW

GOALS
Establish a single shipment forecast and revenue plan for all
MicroVAX products

Measure results against this plan over time

PHILOSOPHY

the market for

32-bit supermicro-computers will develop
independently of digital's participation

Digital's participation is a response to a market opportunity;
Digital can only influence the distribution of market share

METHODOLOGY

Identify an industry accepted market definition, "Computer
products priced between $1-40K

Develop a model to forecast the most likely total available
market

size

Segment the available market by price band, application,
product type, distribution channel and word length

Estimate Digital market share, shipment forecast and revenue
plan

page

MARKET SIZING CONCLUSIONS

GENERAL

The

available market

and

$40K will

The

low end market will

total

for

increase

computer

2.5x

equipment priced

between

$1K

size by FY88

increase

from

1/4 to

about

1/2 of the

computer market by FY88

Office (Small Business, F1000) and Technical applications
account

for more

than

80% of the

The

32-bit segment will

end

segment by FY88;

grow from

the

16-bit

$1-U40K market

10% to about
segment will

50% of the low
continue

to grow

through FY87
The
band

highest
and

32-bit penetration will occur

in the direct

and

Single-user, desktop products account
end

the

$16-40K price

OEM channels

for over

60% of the

low

revenue opportunity

SPECIFIC

The

target market

customers desiring

for

MicroVAX products

32-bit desktop and

between $6.25 and $40K,
and

distributed

target market

as those
selling

with office and technical applications

through the direct and

represents

is defined

system products,

15-20% of the

end market.

OEM channels.
total

‘

page

available

This
low

TOTAL AVAILABLE MARKET
(Revised 12/5/83)

AVAILABLE

TOTAL

MARKET

- Priceband

B
~
o

404
35

304

“

(1)

-—
—_—

$1-6.25
$6.25-16
$16-40

20-

15+

104

-t

FYB4
v

”

FY88

FY87

FYS6 -

FY85

Revenue ($B)

Price Band

CAGR

FY85

FY87

FY88

27%

$13.5

$17.5

$22.8

$28.6

$35.6

5560

Units (K)

$1-6.25

2360

2960

3760

4560

16-40

156

204

260

332

6.25-16

370

2886

690

500

4710

3664

890

5782

1110

4§24

7094

COMMENTS

The available market for computer equipment priced between $1K

Distribution of revenue by price band is roughly uniform.
Distribution of unit shipments by price band is heavily weighted

and $40K will increase 2.5 x in size by FY88.

towards the lowest price band.

Revenue and unit growth is greatest in the $6.25-16K price band.

page

TOTAL AVAILABLE MARKET
(Revised 12/5)

TOTAL AVAILABLE MARKET
- Application -

(]

4
1}

254

g'v--!kmeflhher!

20.

i@+

-t

ol
-t

i
Revenue ($B)

Application

FY84

Education
Home/Other

1.1
1.0

Technical
Office

FY85

FY8T

$ 4.3
T.1

$ 5.6
9.3

$ 7.3
12.1

$ 9.3
15.1

$11.7
18.8

$13.5

$17.5

$22.8

$28.6

$35.6

1026
2550
560
574

1272
3132
682
696

1572
3841
832
89

1.4
1.2

1.9
1.5

2.3
1.9

Units (K)

Technical
Office
Education
Home/Other

FY88

617
1561
349
359

2886

791
1982
440
451

3664

4710

5782

COMMENTS

2.8
2.3

7094

nical applications account for more than 80%
o Office and Techet.
the $1-40K mark

y
o All application segements are growing at approximatel
rate.

page 28

the same

TOTAL AVAILABLE MARKET

(Revised

TOTAL

12/5)

avaILABLE

MARKET

- Product

405 - Single-user

o
e

30-

Q-

—

Multi-user

15 { —

<] 4i

1@1

FYss

FYB4

T ST
T Fe=====cx

FY88

FYS7

FY86

Revenue ($B)
Product

FY84

FY85

FY86

FY87

FY88

Multi-user (System)
Single
(Desktop)

$ 4.3
8.8

$ 5.7
11.3

$ 7.5
14,6

$ 9.6
18.1

$12.1
22.5

Components

1.0

$13.5

$17.5

$22.8

$28.6

$35.6

Units (K)
Mulit-user

251

334

yuy

570

718

Single-user

2475

3130

3986

4852

5976

Components

160

200

280

360

400

2886

3664

4710

5782

7094

COMMENTS

Desktop products account

for over 60% of the low end market

opportunity.
0

System and Desktop products grow at

approximately the same rate

(no clear "winner").
o

Components remain relatively insignificant.

page

TOTAL AVAILABLE MARKET
(Revised 12/5)

TOTAL AVAILABLE MARKET
- Architecture -

0
Qa
G

C
O
o

’

FY84

FY85

FYS8

FYS7

FY8s
Revenue ($B)

Architecture

FY84

FY85

FY86

FY87

FY88

16-Bit

$12.1

$14.6

$16.7

$17.1

11.5
$28.6

$17.5

18.1
$35.6

4150
560

4524
1258

4630
2u64

32-Bit

1.4
$13.5

6.1
$22.8

2.9
$17.5

Units (K)

16-Bit
32-Bit

2797
89

2886

3452
212

4710

3664

5782

7094

COMMENTS

o The low end 32-bit market will show explosive growth through
FYS88. However, the 16-bit market will also continue to grow
through FY87.

The highest 32-bit market penetration will occur in the
$6.25-U40K price bands and in the direct and OEM channel.

page

APPENDIX 2

MICROVAX COMPETITION

page

EXHIBIT

TECHNICAL

MARKETPLACE

Functionality

MicroVAX

SUN Syst.A

SUN Syst.B

Apollo DN300O

HP_9020B

HP 9020S

DG Model

CPU

Implement.,

Cust.design

MABOO0O0

MG80O00

M68000

HP9000

8086

32-bit

23-bit

32-bit

20-bit

1.5

512

1.2

270

Yes

10
-

15
-

MOS

Address

size

Memory

Disk
-

Streaming

Z¢ obed

Asynch

R00

25+

8+8
-

tape

line

VT125

Comm.

Ethernet
system

Claimed

Performance

(11/780)

B/W

54
20

B/W

Color

UNIX

A-.9

B/W

$§

13"

28K

AOS

«3

50K

B/W

HP-UX

31.9K

DASHER

Color

3AK

B/W

AEGIS

«h-.9

19.9K

Nigital

20,.8K

UNIX

MB
-

Ethernet

ULTRIX

MB
MB
2

Ethernet

Not measured

Price(MLP)

Microvms

MicroVAX

Terminal

Oper.

(Formatted)

Floppy

~ Winchester
-

17K

Notes:

Sun:

Sys

The

13"

B/W

Sys

The

19"

Color

buffer

option

landscape

monitor

offers

1024x800

640x480x8

included.,

pixel

resolution.

resolution,

with

the

Color

Graphic

frame

Apollo: The price for additional lanquages in the DN300 : such as FORTRAN, Pascal is $1,500
each.
HP:

HP-UX

operating

includes

HP9020S

includes

thermal

Ethernet
DG :

single-user

HP9020B

The

price

option

includes

system

software.

printer.

both

printer.

systems

and

will

priced

$5K.

COMMERCIAL MARKETPLACE
ALTOS ACS

68000-RMC3

IBM Sys.36

68000

A8000

IBM Proprietary

23-bit
1 MB

23-bit
256 KB

23-bit
512 KB

24-b’t
128 KB

800 KB
25+ MB

327 KB
20 MB

5 MB
30 MB

64 MB

Yes
30 MB

Asynch line

Terminal

None

Communication

Ethernet

MicroVMs

UNIX

LINK-DOS

Performance (11/780)

Price (MLP)

$ 20.8K

$ 18,2K

$ 19.3K

$ 20.5K

$ 34K

MicroVAX I

CPU Implement.

Cust.design 68000

Address size
Memory

32-bit
1 MB

- Floppy
- Winchester

Disk

(Formatted)

Operating system

LINK-DATA

MOS

- Streamer tape

cc obed

IBM9000

Functionality

MicroVAX ULTRIX

Yes

)

System Support

Program

Notes:

IBM:

The IBM9000 includes a 12" raster scan CRT with graphic resolution of 768x480 pixels.
The price for System 36

includes a printer.

LINK-DATA: Link-Data system includes the layered software DYBALL (DIBOL) and
2 each VT100 compatible terminals, The Link-Data product is built
around the IBM9000 base system, priced at $ 5,695,

APPENDIX 3

MICROVAX PRODUCTS AND SCHEDULE

page 34

CONFIDENTIAL

MICROVAX PROGRAM OFFICE

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page 39

APPENDIX 4

MARKET SIZING METHODOLOGY AND ASSUMPTIONS

page

MicroVAX Program Office
PRODUCT FORECASTING METHODOLOGY

DECISION TREE MODEL
- SUMMARY -

Size

and

segment

interfaces,

0 Select a

the market by number of users/

(human and machine)

range of alternative

scenarios

for market

evolution.
Assign a probability of occurrence to
each possible scenario.
Structure a probability

tree to develop a weighted average

o Vary the assumptions

to test

page 41

forecast.

alternative outcomes.

DECISION TREE MODEL

o Size and Segment the market by number of users/
interfaces

Actual

computer

serving

the

shipments by US manufacturers,

US marketplace were

database

is developed

sheets.

This

using

information

provided

International

and non-US manufacturers

Joe

Data

Menard,

Corp's,

segments the computer market

VAX BPM.
His
(IDC), census

into pricebands

from

$1K to >$625K.
The segmentation is based on the average system value at
initial purchase; includes software and peripherals sold with the CPU.
The unit

shipments for FY81-FY83 were converted

interfaces, based

to the number of users or
average number of users per priceband.

on an

PRICEBAND

AVERAGE NUMBER OF USERS

$1-6.25K

6.25-16
16-40
40-100

2
4
8
16

100-250

250-625

32
96

>625
The estimated

number of computer

projections.

The

market

finite

number

varied,

but

rationale

objectively as

the

Ex.

users

year.

of users

the basis

for

this approach was to

possible.

any given
number

for

The number

the

available

of users/interfaces

The computer
remains

the market

analyze

solution

these

users

constant.

100 users/interfaces could be satisfied with one
11/780 solution or 100 PRO-350's.

VAX

Structure Probability

Using the calculated number
decision

tree

forecast

for

total

units

dollars.

approach was

the

alternative

outcomes

for

reflect

the wide

for

The

units

tool

allows

the

starting point,

weighted

forecast

average

segmented

and dollars,

and

five

year

by priceband,

non-32 bit

units and

the decision maker

each decision.
the

Tree

FY83 as

to model

32-bit

analytical

probability of occurrence,
to

of users
utilized

computer market.

and dollars,

This

(Decision)

Each

sum equalling

variety of computer

scenario
100%.

solutions a

to develop
is weighted by

This

technique

user

can

was

select

used

for

needs.
The model

specifically

analyzes

three

alternative

user/interface.

page 42

solution

paths

for

the

its

Moderate

Product Mix

Relatively even mix of high end
Ex.

50% of

100

Path

(>$40K)

solutions and

users select one VAX

low end

(<$40K)

11/780

25% select 25 PRO-350's

25% select 6 MPDP-11's

Total users

= 100

High end units

Low end units

Total units

= 32

Low End Multi-user
Majority of

users are

of the low end;
Ex.

(avg.

#users/system = U)

path

satisfied with the cost/performance

and desire multi-user
70% of

100

characteristics

solutions.

users select a low end

product

65% of these are multi-user (MPDP-11)
35% are single users

(PR0O-350)

the remaining 30% demand a high end product (VAX 11/750)
Total

users

High end

units

100

Low end units

Total units

= 36

Low End Single-user
Majority of users select a

path

low end

product;

and desire more

solutions.
Ex.

70% of

100 users select a low end product
65% of these are single-user

35% are multi-user

the remaining

30% demand a high end

Total users

100

High end

units

Low end units

= 52

Total

units

page 43

product

single

user

Once the product mix
is modeled.

is determined,

The basis

for

understanding of the mix
Penetration

Management.
IDC to
Wwill

estimates

incorporated

formulated

three

from

16 vs.

32 bit

architecture

today and estimates of 32-bit

were

analyze
into

inputs

is an
future penetration.

from VAX BPM and

Product

the

The % fiqures refer

years are

32-bit

low end market.

The

published

data

the model's assumptions.

The following chart details the
end market.

the decision concerning

split between

The MicroVAX Program Office has contracted with

specifically

the

illustrated.

final assumptions used
to the % of users.

The decision model

assigned probabilities of each solution path

page

For
also

forecast the
simplicity,

low

only

shown with the

MicroVAX ProRAM OFF ICE
MARKET SIZING MODEL
ProBABILITY TREE

MoberATE Probuct Mix

INCREASE IN ,

SiNGLE-USER VS
MuLTi-UsER SYSTEMS

FY83

# OF
CoMPUTER

INTERFACES

(USERS)

Decision Points

- page 45

INCREASE IN
MuLT1-USER VS

SINGLE-USER SYSTEMS

o€

\Qi\
'

80%

\\\\

32-Bit

meeeee-

50%

.13

“",,,—qu

A /\ A /\ /\ /f

s0%

.013

INCREASED

MobERATE ProDUCT MiIx

.0528

o
\\\\

(98]

(=)
o

;;;\\\\u

GROWTH

+ OF

SINGLE-USER VS

60%

USERS

INCREASED 454

Low ENnD

INCREASE IN

2-Bit
.

MoDERATE

ODERATE

80%

INCREASE 1IN

MULTI-USER VS
SINGLE USER SYZ2TELS

GROWTH

.1404

80%

15%

508

40%

60%

45%

,,/”//’,
55%

PROBABILITY TREE

;

page 46

cemeeea

o
.03

20%

.0081

ROt

.0324

80%

.0396

DECISION POINTS

Decision

point

Decision

growth forecast
for the number of
users

Assumptions

High path

Moderate

Low

30% /yr (FY84-86)
25%
(FY87-88)
20% /yr (FY8i-86)

15%
(FY87-88)
15% /yr (FY84-86)
10%
(FY87-88)

FY83

product mix

(%2 of users demanding

FY85

FY87

55%

62%

70%

Increased Low:

55%

64%

72%

Single-~user path:

FY83

FY85

FY87

62%
19
18

66%
19
15

67%
20
13

Moderate Path:

low end solutions)

single-user vs
multi-user low end

solution
(% of users)

1-6.25K :
:
:

6.25-16
16-40

Multi-user path:

1.-6.25
6.25-16

:
:

62%
20

52%
24

yug
29

16-40

FY83

FY85

FY87

32-bit penetration

Moderate

(penetration %)

Penetration
1-6.25

6.25-16
16-40

26%
)

1-6.25
:
6.25-16 :

5%
20

26%
45

16-40

Increased

Penetration

page

This methodology results
priceband.

(Appendix

conducted by external
was

used

for

in a forecast of the total

1).

The

firms.

comparison

forecast

available market by

was compared

Infocorp's

they follow a

to market research

forecast of the
similar

low end market

priceband

segmentation

the model.

TOTAL AVAILABLE MARKET BY PRICEBAND

- UNITS -

$1-6.25K

$6.25-16

$16-40

FYs4

F¥85

Fys6

Fya7

Infocorp

2671

3673

yu25

4980

Model

2360

2960

3760

4560

11%

19%

15%

Infocorp

421

522

594

657

Model

370

500

690

890

12%

16%

35%

Infocorp

186

o222

270

338

Model

156

204

260

332

16%

The comparison shows the model to be fairly consistent, within 20% of

external

forecasts.

page U8

MARKET SEGMENTATION

The total available market was further

segmented by product type,
application and architecture.
The segmentation analysis creates a
multi-dimensional view of the low end computer market.
Each dimension can
be compared with external market data for reasonableness in addition to
providing a method to understand the growth potential of each segment.

Using market information from Dataquest,

Infocorp, Digital BPM plans, and

VAX BPM, the market was segmented by priceband and application.

TAM BY APPLICATION AND BY PRICEBAND
- Inputs -

$1-6.25

Technical

17%

Office

54
14

Education
Home/Other

$6.25-16

Technical

100%
'

Office
Education
Home/Other

38%
58
3
1

100%

$16-40

Technical

48%

Office

46
5

Education
Home/Other

Technical

1
100%

Industrial, scientific, manufacturing, laboratory
applications

Office

Small business, F1350, word processing applications

Education

School systems, Universities, student use

Home/Other:

Home use,

Small EDP applications

page 49

The application by priceband
type.

This

segmentation was

information was compared

to both

further
internal

research.

segmented by product
and

external market

TOTAL AVAILABLE MARKET BY PRODUCT

- UNITS -

Multi-User

Single-user

Components

FY84

FY85

FY86

FY87

IDC

208

318

412

563

Model

251

334

yhy

570

21%

IDC

2975

4106

5341

6812

Model

2475

3130

3986

4852

17%

23%

25%

29%

OEM Group

139

185

250

345

Model

160

200

280

360

15%

12%

computers

Systems

Multi-user

Desktop

Single-user

Components

Board and box

personal computers and workstations
products

page

TOTAL AVAILABLE MARKET

(Revised 12/5)
- PRODUCT -

FY84

Units

FY85

FY86

Units

FY87

Units

FY88

Units

Multi-user

1-6.25

6.25-16
16-40

$1.3
3.0

131
120

$1.7
4,0

176
158

$2.5
5.0

244
200

$3.2
6.4

313
257

$3.9
8.2

389
329

Total

$4.3

251

$5.7

334

$7.5

Luy

$9.6

S5T0

$12.1

718

Single-user

1-6.25
6.25-16
6-30

5.5 2200
2.4 240
.9
_35

6.9 2760
3.3 324

8.7 3480
L4.5 H46

10.5 4200
5.7 57T

12.9 5160
T.2 720

Total

$8.8 2475

11.3 3130

14.6 3986

18.1 4852

22.5 5975

1.1

1.4

_60

_1.9

_2.4

_95

Components

1-6.25

160

6.25-16
16-40

Total

$ .4

160

200

280

360

1.0

400

)

200

280

360

1.0

400

page