DEC on OEM path for X line

Electronic News, July 27, 1992 by Craig Stedman

MAYNARD, MASS. -- Digital Equipment Corp. has put formal plans in place for marketing its line of X Window terminals to OEM customers on a private-label basis, after an executive suggested late last year that such a move was on the way.

Larry Cabrinety, vice president of DEC's video, image and print systems group, said then that the company was going the OEM route with its VXT 2000 machines as part of a strategy aimed at becoming "the dominant player" in the X terminal market (EN, Dec. 16, 1991).

The OEM thrust is targeted at market leader Network Computing Devices, which accounted for about 26 percent of X shipments in the first half of the year compared to 18 percent for second-place Hewlett-Packard and 13 percent for DEC, according to the X Business Group of Fremont, Calif.

With both HP and DEC selling their X terminals only through direct sales and distributors to this point, NCD has also cornered most of the OEM portion of the market. DEC claims, though, that its line is now wider and more integrated than NCD's and is also helped by last year's addition of a companion server that provides central storage and management.

The company has not signed on any OEM customers yet, but is "pretty close on a couple deals," said Mark Uhrich, private-label business manager in Mr. Cabrinety's group. He hopes to be able to disclose at least an initial OEM order "in the next several months."

Olivetti is thought to be one of the most likely candidates to buy the machines, as it already sources a text terminal from DEC and has yet to field an X offering. The two companies' generally closer ties were highlighted by a recent deal for DEC to buy nearly 10 percent of Olivetti in return for the latter's pledge to use the U.S. company's new Alpha RISC architecture in future systems (EN, June 29).

Mr. Uhrich would not comment specifically on whether DEC and Olivetti are talking about the VXT 2000 line, but said an agreement between the two "could be a possibility." Their year-old text terminal deal, for an offshoot of DEC's VT420 unit, "is doing very well," he added.

DEC is looking for orders of at least 3,000 terminals and will sell the machines either with or without monitors, Mr. Uhrich said. Pricing will be set on a case-by-case basis and was not disclosed, but it should be "very competitive" with what NCD charges, he noted.

While Mr. Uhrich wouldn't release OEM unit shipment projections, he said DEC hopes that channel can be "equal to or even larger than our own (direct) business" within three to five years. However, X Business Group vice president Greg Blatnik was skeptical about that, saying it would require "an enormous amount" of OEM orders.