Digital as a disk drive manufacturing company - Digital Equipment Corp

Digital's disk drive manufacturing operation has generally been very highly regarded within the industry. The company produced high quality, high capacity, but proprietary, drives.

As a result, Digital was somewhat sheltered from the rapid changes that characterize OEM disk drive markets. When Digital started producing industry standard SCSI drives starting last fall, it misjudged the moving-target price/performance expectations of major OEM customers. Its products were overpriced and underperforming.

For example, while Digital introduced a 5.25", 2GB, 3,600 rpm drive, the rest of the industry was producing 2.4 GB drives spinning at 5,400 rpm. of the same size. And, while Digital was producing an 850MB 3.5-,5400 r.p.m. drive, the rest of the industry was producing drives of the same form factor and spin speed, but which had 20-25% more capacity.

After its preliminary market miscalculations, Digital's latest products have been much more competitive. It increased the capacity of its 3.5" drive to 1GB, a capacity some competing OEMS had yet to achieve.

Digital's storage business will focus on high-performance, high-capacity disk drives. By choosing not to compete in the vicious desktop markets (where form factors, capacities and seek times improve with lightning speed) Digital's entry into the OEM business is somewhat simplified. HP chose a similar strategy when it launched its now-successful OEM strategy.

In order to successfully adapt to OEM disk drive markets, Digital faces three challenges: to increase its credibility with potential customers, to find ways to make doing business with Digital easier, and to continue to focus on reducing product time-to-market.

Establish Credibility

To gain credibility, Digital must deliver on its promises. quality drives in volume on time. It must establish and prove the ability to set and meet aggressive price/performance targets. It cannot afford to provide anything but they up of service that Seagate and Micropolis provide their customers. Indeed, it must focus the company to deliver service above and beyond that of its competitors.

Ease of Doing Business with Digital

Not only must Digital aim for aggressive price/ performance levels - and hit them - but it must also make the process of doing business with Digital-the OEM-supplier as easy as possible.

The proof is in the pudding. Digital has no major OEM customers for its disk drives. On the other hand, it appears that major high-performance storage sub-system manufacturers are taking Digital's products seriously, and an announcement is imminent.

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