Tuesday, February 8, 2011

Ken Olsen–Founder of Digital Equipment Corporation is dead

The death took place last Sunday, 5th February ,of a man Ireland owes a great deal of gratitude to. Ken Olsen, was one of the two founders of Digital Equipment Corporation (DEC). His company became the second-largest computer company in the United States by inventing small but powerful computers, called minicomputers.

The Digital facility in Galway was the pioneering emblem of industrial development of its time until it closed in February 1993, with the loss of 780 jobs, having been in Galway for the previous 22 years.

Digital had been the economic fulcrum of Galway and the west of Ireland. It trained many of those who were to lead IDA client companies that subsequently came to our shores. It was at the cutting edge of human resource development and was most pro-active in fostering relations with Ireland’s universities. Many post-graduate students gleaned their first insight into a modern industrial facility at that site, where people were treated as a vital resource and great care was taken to integrate excellent talent into all facets of the business. Team working and innovation were hallmarks of DEC in Galway. It is ironic that the vacuum created by the loss of DEC in Galway was filled by another very progressive Massachusetts corporation, Boston Scientific.

Ken Olsen was 84 years old when died. He launched Digital in 1957 when he was 31 years old in a derelict wool mill in Maynard Massachusetts, north-west of Boston with $70,000 in venture capital and loans of $2 million. He, his partner, Harlan Anderson, and his brother Stanley Olsen were the company’s only employees in the early days.

But they created a new generation of the computer industry and at one time DEC was valued in excess of €11 billion and employed 140,000 people worldwide.

Digital achieved its breakthrough by offering a smaller, less- expensive and more user friendly alternative, known as PDP and VAX series, to the bulky IBM System 370 mainframes that dominated the computer industry.

Mainframes were usually run by specially-trained operators based in ultra clean rooms and were off-limits to everyone else. Users typically handed over their computing tasks to specialists, then waited for minutes or hours for the results. The old fashioned computers of the 1960’s co-existed with the telex, the telegram and a pint of Double Diamond!

But the minicomputers developed by Digital were cheap enough for businesses to be less cost conscious. They were also more powerful and companies could buy several and let the all interested employees use the computers directly.

Digital and Wang Laboratories from Lowell Massachusetts (which was based in Limerick for many years), along with their spinoffs, were widely credited with playing a large role in the ‘Massachusetts Miracle’, along the perimeter of Route 128 which circumnavigated Boston in the 1980s.

Despite his abundant prosperity, Ken Olsen resembled a hands-on engineer rather than a billionaire, preferring thick-soled work boots and driving an old Ford Falcon because he admired its design and found it easy to maintain.

Under his leadership, Digital endured financial hazards. It flourished in the mid-1980s and Fortune magazine published a cover story profile on Ken Olsen in 1986, calling him “arguably the most successful entrepreneur in the history of American business.’’

Allowing for inflation, Fortune said, Digital was bigger than Ford Motor Co. at the death of its founder, Henry Ford, and also larger than US Steel when Andrew Carnegie sold his company or Standard Oil when John D. Rockefeller retired.

Digital was second to IBM in the computer industry, though it was less than one-sixth of IBM’s size and 14 years younger.

Digital’s fortunes slumped when it was slow to enter the burgeoning personal computer market and its Apple Mackintosh counterpart. Digital had missed the tide of opportunity. Olsen resigned as president in 1992 and resigned from the board subsequently, cutting ties with the company. Digital was acquired by Compaq in 1998.

Ken Olsen regularly attended the Paulist Fathers Park Street church in Boston, as I did myself on many Sundays. He was a native of Bridgeport Connecticut. He started studying electrical engineering in the US Navy, which he joined in 1944, and continued his studies at the Massachusetts Institute of Technology. At MIT, he received a bachelor’s degree in 1950 and a master’sin 1952, in electrical engineering.

Afterward, he worked at the MIT Lincoln Laboratory until he launched Digital, getting seed money from the early venture capital firm American Research and Development Corp. That firm was founded in 1946 by a former Dean of the Harvard Business School and a former President of MIT. While Digital changed the computer industry it was this venture capital investment that redefined that business. The financial backers did not want the word computer in the company’s name, so Olsen settled on Digital Equipment Corp., or DEC.

The company had sales of $94,000 in its first year. Times are difficult in Ireland now but in 1971 they were in many ways worse. But Ken Olsen whose arrival in Ireland coincided with the demise of another great economic pioneer, Seán Lemass was a massive force for a change in our fortunes and self-belief. He taught us the meaning of the slogan ‘Oh yes, we can’.

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