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Associated Press Thu 04-SEP-1986 16:17                       Digital Products

   Digital Drives Deeper Into IBM Territory
                             By PETER COY
                          AP Business Writer
   NEW YORK (AP) - Digital Equipment Corp. hit IBM on its home
ground Thursday with products that several analysts said provide a
better way for personal computers to communicate with the wider
world.
   Digital's new packages of networking hardware and software
strengthen the company's challenge to International Business
Machines Corp.'s domination of office computing, several outside
experts said.
   Digital, which is based in Maynard, Mass., announced its products
at a news conference at its plant in Merrimack, N.H.
   ``I see these announcements as IBM killers. They're missiles
aimed directly at IBM accounts,'' said George Colony, president of
Forrester Research Corp., a consulting firm in Cambridge, Mass.
   Digital, which has grown rapidly to become the world's
second-biggest computer maker after IBM, bills itself as the leader
in building networks that allow computers to work together and share
information.
   IBM has announced several steps to improve communications between
its personal computers and its maze of other computer lines, but
Digital has won new customers with the message: ``Digital has it
now.''
   Digital announced three major products Thursday:
   -PC All-In-1, an $81,160 package of hardware and software that it
said ties together up to 30 IBM-compatible personal computers into
an office network with the company's MicroVAX II computer as the
traffic cop.
   -A piece of software called VAX-VMS Services for MS-DOS that sits
inside Digital's VAX and MicroVAX computers. It allows the powerful
machines to act as servants to IBM-compatible personal computers,
sharing files and programs with them in their own language. It
ranges in price from $650 to $19,500, depending on the configuration.
   -Digital's first IBM-compatible personal computer, dubbed
VAXmate, which is compatible with IBM's top-of-the-line PC AT. The
VAXmate has a base price of $4,045 and costs $6,040 with a
20-megabyte hard disk drive, which is costlier than big-name
competitors and about double the price of the cheapest AT
``clones.'' However, it has extra features enabling it to
communicate easily with Digital's own VAX line.
   Digital ignored the personal-computer revolution that was sparked
by IBM with its introduction of its PC five years ago, and the
announcement of the VAXmate is an important step toward getting into
the game, said John Dean, an analyst for Montgomery Securities Inc.
in San Francisco.
   In addition to Digital's, new personal computers built around
Intel Corp.'s fast 80286 microprocessor have been introduced this
week by IBM, Compaq Computer Corp. and Sperry Corp.
   However, although the VAXmate got most of the advance publicity,
analysts said the networks for linking computers to each other were
more significant.
   ``If you look at the 5 to 6 million PCs that are out there today,
the real opportunity for them is to try to integrate the existing
PCs into a DEC network,'' Dean said.
   ``It's not just a piece of wire; it's a very intelligent
network,'' Colony said. ``What is most irritating to IBM is that
Digital has it now. IBM has been quick to announce and slow to
deliver,'' he said.
   The Digital system should please the managers of information
systems at Fortune 1,000 companies because it will allow popular
programs such as Lotus 1-2-3 and Microsoft Word to sit on VAX
computers, where they are under more control. As it is now, each PC
user has the software on a different floppy disk, and discrepancies
can arise between versions.
   Microsoft Corp. of Redmond, Wash., and Network Innovations Corp.
of Cupertino, Calif., make some of the software used in the new
products.
   ``What we're seeing is the emergence of a strong No. 2 company in
the computer business. We've never had that before, unless you look
back to the 1950s, when there was Sperry UNIVAC, and IBM doesn't
like that,'' Colony said.
   Burroughs Corp. and Sperry will exceed Digital in computer
revenue when they complete their merger later this month, but most
analysts say IBM regards Digital as a more threatening rival.
   ``If you looked at the top three things that IBM was looking at
today, it would be AT&T; the Japanese, and DEC,'' Dean said. ``AT&T
because they are in the total information-processing world; the
Japanese because they need the latest computer technology to grow
their economy; and DEC because DEC has made such tremendous inroads
over the years.''
   ``Sneakernet'' is the way many companies share computerized
information today, Jack Shields, Digital's senior vice president for
sales and marketing, said in a telephone interview. That is, he
said, they put data on floppy disks and have messengers in sneakers
distribute it.
   One big New York financial-services company spends about $50,000
a month on ``sneakernet'' and will be able to make back its $81,000
investment in PC All-In-1 in about two months, Shields said.
   Although Shields said PC All-In-1 would work well even in
companies that had only IBM equipment, Dean said it was likely that
most sales would be made to companies that had some Digital
computers already.