Data General, part of a disappearing species
By Eric Auchard
NEW YORK, Aug 9 (Reuters) - Think of them as the dinosaurs
of the computer industry. Once high-flying computer makers like
Digital Equipment, Control Data, Wang, Burroughs and Univac,
have seen their original businesses vanish in the face of
changes brought on by the likes of Microsoft Corp., IBM and
Intel Corp.
On Monday, computer maker Data General Corp. <DGN.N>,
became the latest in a long list of fabled names to be
swallowed up -- in this case, by fast-growing EMC Corp., the
top maker of high-capacity data storage systems, in a $1.1
billion deal.
After an explosive 15-year-period of growth that powered it
into the mid-1980s, Data General had suffered a series of tough
technology transitions that left it struggling in several niche
businesses and selling products under other company's names.
John Jones, a computer industry analyst with brokerage
Salomon Smith Barney, said the principal lesson to be drawn
from the demise of such once great companies was that: "You
have to find a way to cover your technology flanks."
"Companies in this industry always have to take the next
technology opportunity, the next business, very seriously,"
Jones said, referring to prior transitions from mainframes to
minicomputers to UNIX machines and personal computers.
Today, established computer makers face new threats from
computers running Microsoft Corp.'s Window NT or Linux, a
renegade version of the UNIX software system that runs large
business computers. Meanwhile, personal computer makers are
girding for the arrival of so-called information appliances
that offer simpler to use, lower cost access to the Internet.
The computer industry is littered with tales of well-known
companies like Data General that rode a wave of demand for
their timely new machines, only to fall short on the transition
when a sudden shift to new technologies took place.
Data General has gone the way of other once familiar
minicomputer powerhouses like Digital, Wang, Tandem, and Prime.
Many one-time rivals of International Business Machines
Corp. <IBM.N> in the mainframe business are no longer
competitors in that business. Known as the "seven dwarfs,"
Burroughs, Control Data, Honeywell, RCA and Univac have had
their declining businesses absorbed by other companies, while
General Electric Co. <GE.N> and NCR Corp. <NCR.N> have
refocused in other areas.
Founded in 1968, Data General's heyday came in the 1980s,
when it unveiled what would become its hottest-selling
minicomputer line, a hardware engineering feat popularized in
the 1982 Pulitzer Prize book "The Soul of a New Machine" by
Tracy Kidder.
By 1984, when 13,000 gathered to hear Paul Anka sing "Sweet
16" at a company celebration, Data General was in hyper-growth
mode, with revenues topping the $1 billion mark for the first
time, company spokesman Ray Thomas recalled.
The company was growing at faster than 40 percent a year,
but in an industry -- minicomputers -- whose days were numbered
by the arrival of new UNIX computers and increasingly powerful
PCs. A far slimmer company with 5,000 employees will join EMC.
David Wu, a computer industry analyst with brokerage
ABN/Amro, said Data General was early among minicomputer makers
in realizing the competitive threat of new technologies, but
nonetheless was unable to transform itself.
"Data General was first to recognize the danger of UNIX to
its existing business, but it couldn't make the change quickly
enough to be the Sun Microsystems of the UNIX world," Wu said.
"They saw UNIX coming but still couldn't get out of the way."
Sun, a firm started by four college students in 1982,
became the world's top supplier of UNIX machines, sapping sales
away from minicomputers. Sun posted nearly $12 billion in
revenues in its most recent year.
Data General generated $1.5 billion in revenues in fiscal
1998, two-thirds of which came from sales of its AViiON
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