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The encyclopedia · Software & IT · Strategic decision · 1999

Data General was a Pulitzer-winning story — then the PC killed the minicomputer

Data General's Nova minicomputer was a marvel of engineering — then the IBM PC commoditised computing and the company was sold for parts.

Data General

What happened

Data General was founded in 1968 by four engineers who had left DEC. Its Nova minicomputer was cheaper, faster and smaller than DEC's PDP-8, generating 20% annual growth and revenue of $100 million by 1975. The company's story was immortalised in Tracy Kidder's Pulitzer Prize-winning book The Soul of a New Machine, which followed the skunkworks team that built the Eclipse MV/8000.

The rise of the IBM PC from 1981 and the commoditisation of computing destroyed the minicomputer market. Data General's proprietary MV series sold well but too late. The company tried to pivot to Unix servers with the AViiON line, but bet on Motorola's 88000 RISC processor, which Motorola discontinued, forcing a costly pivot to x86. CLARiiON disk arrays became the only profitable division.

Data General was acquired by EMC in 1999 for $1.1 billion. EMC killed all Data General hardware lines except CLARiiON, which continued until January 2012. The domain dg.com was sold to Dollar General in October 2009.

Why it happened

  • The IBM PC commoditised computing from 1981, making Data General's proprietary minicomputer value proposition obsolete
  • The bet on Motorola's 88000 RISC processor backfired when Motorola discontinued the chip, forcing a costly and delayed pivot to x86
  • Internal delays on the 32-bit Fountainhead project let DEC's VAX dominate the market before Data General's Eclipse MV/8000 shipped
  • The proprietary hardware model could not compete with the open ecosystem of the PC and commodity Unix servers
What it cost>$1B revenue to $1.1B sale; proprietary lines killedcostly

The lesson

A proprietary hardware company that cannot become a platform company dies when the platform shifts — and the shift always comes faster than expected.

Sources

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