Digital effects

Computer maker’s rise, fall still echo in Mass.

Ken Olsen made Digital Equipment Corp. the world’s second-largest computer maker for a time. Ken Olsen made Digital Equipment Corp. the world’s second-largest computer maker for a time. (Pam Berry/Globe Staff/File 1992)
By Hiawatha Bray
Globe Staff / February 15, 2011

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Today, the giant mill complex in the town of Maynard is home to a host of businesses. The online job-search firm is there; so are musical instrument maker Powell Flutes Inc., a Gold’s Gym, and lots of small offices.

But two decades ago, the mill housed only a single business — the largest and most influential company in Massachusetts: Digital Equipment Corp., which was for a time the world’s second-largest computer maker, after IBM Corp.

In those days, Massachusetts rivaled California’s Silicon Valley as a world center of the computer industry. Digital’s soaring success helped spawn an entire minicomputer industry in Massachusetts, with companies like Prime Computer Inc., Apollo Computer Inc., Wang Laboratories, and Data General Corp. Today, they’re all gone, victims of a technological transformation that overwhelmed even Ken Olsen, the brilliant cofounder of Digital, who died last week.

Remnants of Massachusetts’ once-mighty computer industry still remain. You can find one in Hudson, where Intel Corp. makes microchips at a factory where Digital once produced its own high-powered processors. There’s another at EMC Corp. of Hopkinton, whose Clariion line of data storage systems derives from technology pioneered by Data General.

Massachusetts industry veterans have also had a big impact on the global computer industry. For example, Dave Cutler, designer of the operating system for Digital’s VAX computer line, went on to become one of the top designers of operating systems at Microsoft Corp. Former Wang executive John Chambers is now chief executive of Cisco Systems Inc., the giant data networking company.

Perhaps Digital’s greatest legacy is financial. Launched in 1957 with $70,000 from one of the earliest venture capital firms, the company’s success established Boston as a haven for venture investors willing to invest in high-tech start-ups. The success of Digital “demonstrated that the modern venture capital model could work,’’ said Robert Metcalfe, co-inventor of Ethernet networking technology and professor of innovation at the University of Texas at Austin.

Still, the Massachusetts high-tech sector has never fully recovered from the collapse of Digital and the state’s other leading computer companies.

“In the ’80s, there was a vibrant computer industry and a software industry that went with it,’’ said Willy Shih, professor of management practice at Harvard Business School. “There still is a lot of tech and software, but frankly, there’s very little of the computer industry in Massachusetts any more.’’

And while there were more than 256,000 high-tech workers in Massachusetts as of 2008, those jobs were concentrated in elite occupations like designing electronic devices or writing software. During the heyday of minicomputers, local tech companies employed thousands of blue-collar factory workers.

Digital, for example, was the state’s largest private-sector employer in 1989, with nearly 34,000 people on the payroll. “We had a fair amount of manufacturing in the old mill,’’ said former Digital vice president Win Hindle. “We put an awful lot of components into circuit boards over the years, and that’s not a very high-skilled job.’’

Raymond McNulty, former director of corporate relations at GenRad Inc. in Westford, watched as Digital transformed his hometown of Acton from a region of apple farms into a manufacturing center. Digital “wasn’t a job generator for just PhDs or [electrical engineers]. It employed hundreds of good salesmen, janitors, secretaries, cafeteria workers, mechanics,’’ said McNulty, who today works as an adviser to US military forces in Iraq.

Even if Digital had continued to thrive, its impact on the local economy would be far different today, at a time when so much electronics manufacturing is outsourced to China. The trend dates back to Digital’s glory years, when “we had manufacturing plants in Singapore and Hong Kong,’’ Hindle recalled.

Digital veterans say the company’s most important legacy was its founder’s management style. “Ken hated hierarchy,’’ said Edgar Schein, professor emeritus at MIT’s Sloan School of Management.

Olsen created a company where employees were given considerable freedom to innovate and independent thought was encouraged. “His leadership allowed for the sense of a truly extended family,’’ said Dan Ross, former director of Digital’s belated effort to succeed in the personal computer business.

Peter Zotto, former vice president of Digital’s European operations, said that Digital’s success inspired future high-tech start-ups to embrace the same kind of easygoing management style. Olsen helped establish “a value system and culture that I think has spread throughout the industry,’’ Zotto said. “Digital was the Google of the ’70s and ’80s.’’

Yet Digital also developed a reputation as an insular company that rejected innovative ideas from beyond its borders. AnnaLee Saxenian, dean of the school of information at the University of California at Berkeley and author of a book on the Massachusetts high-tech sector, said that attitude would lead to disaster, and not just for Digital. According to Saxenian, Digital “developed a culture of secrecy and self-sufficiency’’ that was emulated by the state’s other computer firms.

“All these companies built walls around themselves and became isolated,’’ said Schein.

For example, when Digital executive Edson de Castro jumped ship to launch Data General, Olsen responded with a lawsuit. By contrast, hopping from one tech company to another was taken for granted in California. “The Silicon Valley open-door policy kept engineers moving back and forth among all these companies and kept that innovative spirit alive,’’ Schein said.

So while the personal computer was welcomed in places like Seattle and Silicon Valley, the minicomputer giants of Massachusetts would not embrace the new technology until it was far too late. Our state has lived with the consequences ever since.

Hiawatha Bray can be reached at