The IC3 Blue Train - A little journal about design, marketing, sales and other matters

How resilient are you against competitors?
Case study: The vanishing of minicomputers

If you are a start-up growing quickly, you will soon emerge on the radar screen of large competitors; and if your product is easy to imitate, you can be destroyed in a few months. However, the entry of big guys can legitimate your market but it becomes like sleeping with an elephant: you might get crushed in the process.

Smaller competitors can be even more dangerous because, like mice, they are faster, more ‘hungry’, and you may not notice them until they actually attack you.

The following case study illustrates both threats.

The vanishing of minicomputers (simplified history of ‘minis’)

• Minicomputers emerged in the 1960s using transistors and core memory to offer simple, compact, low-cost, and yet powerful boxes to users who were mainly engineers working on scientific, industrial or telecom applications.
• Initially, it was the story of start-ups eating market share off the established firms lead by IBM. Digital Equipment Corporation (DEC) created the minicomputer market with the PDP-8, a 12-bit machine launched in 1964. In 1969, Data General outflanked DEC with its 16-bit Nova (picture - Source: Wikimedia Commons) and quickly gained market share. Many small and large companies joined the mini bandwagon, including Hewlett Packard, Texas Instruments, Interdata, SEL, etc.
• Then the empires struck back. First, in 1976, IBM announced its Series/1 minicomputer that led Data General to produce an ad that said: "They Say IBM's Entry Into Minicomputers Will Legitimize The Market. The Bastards Say, Welcome". Then, DEC replied with its 32-bit VAX, regaining at the same time the lead over Data General.
• A few years later the PC tidal wave powered by IBM, Microsoft and Intel took over the control of the low end of the small computer market and, eventually, the mini makers disappeared one after the other. Logically, they were in a better position to fend off newcomers like Apple, Commodore and Tandy but they all missed this opportunity. In 1977, Ken Olsen, founder of DEC declared: “There is no reason for any individual to have a computer in his home.”
• Finally it became a shark eats shark business. In 1998, the first major casualty was the acquisition of DEC by Compaq, one of the leaders of the PC market. Compaq, that underestimated the direct selling model of Dell, a latecomer in the market, was in turn absorbed by Hewlett Packard (HP) in 2002. Meanwhile, Data General dwindled down until they were an easy prey for EMC in 1999.

The minicomputer had lasted less than 40 years.