To: axp-list@redhat.com Subject: More Dust Settling Date: Mon, 26 Jan 98 23:10:29 -0500 From: "Jon 'maddog' Hall, USG Senior Leader" <hall@zk3.dec.com> O.K. Partially to answer Keith Baker's rant against Compaq, and partially to keep you up-to-date with what is going on..... Digital is to be a wholly owned subsidiary of Compaq. We will continue to make Alpha chips, boards and systems. What will happen in the Intel PC space is unknown.....but you would not be on this list if you were too concerned about the Intel PC space.... One of the benefits to Compaq (according to this VP) is that they get good engineers in a campus fairly close to Boston. According to this VP, Compaq has a difficult time attracting the number of engineers they need to Houston, Texas, and they had been considering opening up an east-coast engineering group. This is not surprising. Sun and (until recently) HP also have campuses here. Between all of this (and the fact that both Digital and Compaq are actively hiring engineers) we do not expect any lay-offs of Alpha engineering personel. Nor do we anticipate any layoffs of support people. In fact, we have a long standing arrangement with Compaq previous to this to supply support to Compaq's customers. This just became easier, and I anticipate that we will be hiring even more support people, both Intel and Alpha. Finally, to answer Keith's question about how Compaq lowers prices, I will clarify that prices of computers drop dramatically when they get to high volume of manufacture for several reasons: o you can set up high volume lines to produce components and systems o you can order parts in much larger quantities Manufacturing lines are set up to produce certain things. Ideally what you want to do is to set up a line to produce *exactly* the right amount of widgets for *exactly* the life of the product. No inventory anywhere, just-in-time delivery of everything. Now that we have all had a laugh..... ...because while it is good in theory, it hardly ever happens, and it is more difficult for smaller lines and lower volumes. The real truth is that you get as close as you can, BUT in a lot of ways the larger the line, and the more you can produce on it in its life, the more you make up for the tooling costs, and hold in-bound inventory in check. Ergo, manufacturing in larger numbers almost always helps. Now, if you can spread those widgets manufactured over two or more products, you can even out your deliveries (taking into account lulls in sales performance), and extend the life of the line. So, "ramping up" for a large run helps. Compared to what Compaq does in any part of its manufacturing, Digital has small runs. Now for the purchasing part: Memory chips (for example) are memory chips. Only certain companies make them. But when a company that sells 1000 systems a month, each with 32 Meg in them tries to compete with a company that sells 100,000 systems a month with 32 Meg in them, guess who the memory company gives the better discount to? The better delivery dates (remember the "just in time" deliveries?) Now hold that concept and apply it to disk drives, capacitors, resistors, video displays, cables (ahhh, cables...talk about expense...) and we have not even talked about the concept of design yet. And a lot of what Keith did not like was the design, not the components. This is exactly why Digital applauded when AMD said that they would make their K7 use the same motherboards as Alpha. This meant that there would not just be a market for 10,000 Alpha boards, but 10,000,000 (some with Alpha and some with K7s). And (more importantly to our OEMS and to you, our end customers) Digital could not supply all of those 10,000,000, so there would develop a competative market for different board designs that met different needs. And prices would drop, perhaps to the same price as a "PC" motherboard. Which makes our OEM systems cheaper, which means more Alphas are sold. Incideous, isn't it? Selling more Alphas by selling more K7s, and from a company that sold its FAB to Intel. And don't get me wrong.....Compaq benefits from the increased volume of Digital's market as we benfit from the increased volumes of their market. Compaq has sold to a particular market in the past. While you may not like the fact that they built in a lot of the functionality onto the motherboard so it could not be upgraded easily, this fit a certain portion of their market. I do not believe that it is the market they wish to penetrate with Digital's engineering and products, ergo you will probably see a different style of engineering from the Alpha line. As always, these are my observations (with a little input from the VP) Actual reality may vary. With this, it is late, and I hear a pizza calling me, and perhaps a beer or two. Let's let the dust settle a little more. And now, back to technical discussions. md -- ============================================================================= Jon "maddog" Hall Internet: maddog@zk3.dec.com Senior Leader, UNIX Software Group Executive Director, Linux International Digital Equipment Corporation Linux International Mailstop ZK03-2/U15 80 Amherst St. 110 Spit Brook Rd. Amherst, N.H. 03031-3032 U.S.A. Nashua, N.H. 03062-2698 U.S.A. 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