Q & A Repository

Subject: Re: Wang - 3

Posted By: Thomas Junker
Date: 1/11/98 at 7:40 p.m.

In Response To: Re: Wang (Thomas Junker)

Subject: Re: Wang - 3

Date: Sun, 11 Jan 1998 19:40:35 -0500

On 11 Jan 98 at 19:32, xxxx wrote:

> That was more info than I expected. Thanks.

You're welcome. I always assure myself that such writings will have wider value than the limited context in which I write them. Being a packrat, I save all such things.

> Now the 3 options that I have are:
>
> To come out focusing on hardware
> To come out as a software company
> To come out as a company that focuses on both.

I missed something. Are you trying to figure out what they did or what they should have done? What they did was a confused #2, eventually converting it to something not on your list: a services company. Wang is now a services company with a stepchild legacy hardware/software business that is shrinking at about 25% per year.

It's interesting that what really happened is not on the professor's list of options.

> Now reconize, that there is no one right answer. I think that the
> professor just us to leard how to analyze a problem, recommend a
> solution and be able to back up the solution.

Of course, but with professors there's no telling what axe they are grinding.

> Earlier today to leaned toward option3 and had almost finished my
> paper. Then I had the bright idea to call a friend of mine who
> works for Microsoft to get his opinion. This friend of mine has
> also taken a marketing class in Duke's MBA program. Needless to
> say, after talking to him I have changed my mind. I am now going
> with option 2. I think there is a better market for software and
> the earning potential is unlimited.

Yes, that's generally true. It's also true, though, that someone has to design and build the hardware after doing basic R&D that produces new technologies. For Wang to concentrate on software they would have to (and did) largely throw away an excellent track record and asset of in-house knowledge, records and other resources in developing world-shaping new technologies and successfully bringing them to market. Although the ground rules in the hardware market have shifted significantly, note that IBM, HP, DEC and others are still duking it out to build the fastest and most innovative new boxes. Then there are exotic niche markets like fault-tolerant systems, which draw on expertise and knowledge that basically don't exist at all in the rest of the marketplace.

> The hardware winners have already gotten the gold - HP, IBM, Dell,
> Compac.

Yes, but not as simply as that. IBM and DEC (among others) were badly bloodied in the fanatic rush to client/server systems. To survive they had had to reinvent the conceptual presentation of their high-end computing products to suit an imbecile management mentality that will shun anything called a "mainframe" or "minicomputer" and buy almost anything called a "server." IBM is doing well with its S/390 mainframe after renaming it an "Enterprise Server" and adding some open systems bells and whistles.

> My position is that Wang should partner with companies like Sun and
> Microsoft and forget about the people who use the outdated Wang
> computers.

What they have in fact done has been to partner with "best of class" companies among the vendors who sell things Wang can use and resell in their new "network services" business. Wang has relationships with Microsoft, Cisco, Cabletron and others. What Wang cannot and should not do is "forget about the people who use outdated Wang computers."

First, modern Wang computers are not outdated -- that's an urban legend. There are between 10,000 and 20,000 Wang VS computers in use around the world, with about 100 of those being "very large" sites using the latest and fastest of VS computers. The smaller sites are disappearing, while the large sites are holding, perhaps even growing slightly,worldwide. The VS16850 shipped in 1996 was 37 times faster than the first model shipped in 1977. The VS18000 we hope will be shipped in 1998 is already known to be 70 times faster than the first VS, and almost twice as fast as the VS16850 of 1996.

The VS is perhaps the only computer system in the world whose 1985 models can be upgraded in the field by changing out the CPU board to the latest model running about 10 times faster. The truly "old" VS sites (and there are many of them) are typically companies that have for whatever reason simply refused to upgrade any part of a VS system purchased in 1985, or 1987, or 1989. Like the VW Bug, the VS works almost too well, and Wang never quite caught on to the IBM methodology of carefully shepherding customers through an endless series of machine upgrades.

Second, Wang has contractual obligations to maintain many of the existing VS sytems, particularly those in government service. The GSA purchasing rules generally require that vendors continue to offer maintenance service, and continue to manufacture replacement parts for at least ten years after a system is sold to the government.

Thirdly, the legal PR liability of simply walking away from a customer base as large as the VS is huge. Some large customers would certainly bring suit on the basis that assurances and promises were made of continued service and future larger models to accomodate customer growth. Some large customers may even have such assurances in their contracts. The bitterness of customers left high and dry would also come back to haunt Wang in many, many ways and places. Managers and others burned by such an abandonment would vengefully avoid using any kind of product or service from Wang ever again, at any job where they carry any influence. Ten thousand sites means probably 50,000 or more people in the Information Systems industry who would be directly damaged by such an abandonment if you count managers and directors of IS and a few other key posts where people's fortunes rise and fall with the equipment they recommend or merely operate.

> Those people need to upgrade to a newer and better system.

Many of them *do* need to upgrade, but for most who have serious DP applications the cheapest, fastest, and easiest no-brainer is to upgrade their CPUs to more recent VS models and their disks and tapes to current, industry standard models. All those things result in lower operating costs (including maintenance), better performance and reliability, and happy users. No conversion of software, no reprogramming, no career-breaking, risky projects -- CPU upgrade is usually a one-hour field action. This is what is so incredibly *stupid* about much of the present situation, and a key revelation that lends visibility to IBM's long-standing technique of having very professional, very aggressive salespeople maintain frequent and close contact with the highest decision-makers they can reach in the customer organizations. Too many customers, if left entirely to their own devices, allow their systems to degrade over time. They apparently have to be pushed to do no-brainer maintenance and upgrades.

> If they won't, the tech. support service of Wang should be sold to
> an independant contractor. This will free the dead weight from
> Wang and they could then concentrate soley in the new software to
> be developed that would support the systems of the 1990's and
> beyond.

Well, this is another interesting bone of contention I have with modern "management," including Wang's. How is it that in today's business world a company is completely unable to run a division on its own merits, and has to "free the dead weight" of a $350-million/year business that virtually any smaller businessperson would kill to have? You're right that Wang should have split off the older VS side of the business, but they didn't want to -- the VS side of the business is what paid for everything they've done since bankruptcy. The logical thing to have done, once some semblance of order had been pulled together in their new direction, would have been to spin off the VS business along with the name, "Wang," and set out in whatever the new business was to be with a completely new name. I can't imagine that the name Wang buys them much in their new ventures, especially inasmuch as it is associated with a lot of negatives, true or not, not the least of which is the 1992 bankruptcy.

But even without splitting it off, what is so blinkety-blink difficult about segregating a division to stand on its own feet, as was common practice 20, 30, 40 years ago? Is the standard of intelligence and savvy in upper management these days that low that they can't help but mix everything up? I think it may be.

> This is just my sophmoric take on the situation. I am sure that I
> will be the only one in class to express such thoughts. Most
> people will probally pick option3. Any way thank for your help.

Actually, option 3 is the sophomoric view of what Wang actually did to pull its chestnuts out of the fire. The reality begins with the very unusual reorganization plan approved by the bankruptcy court, in which the creditors and stockholders were pretty much shafted so that Wang, the corporation, could emerge, Phoenix-like, from its own ashes as a strong, cash-rich company on the make, which is what happened. The reality continues with Wang servicing the existing VS customer base to milk it for cash all the way down to final dissolution. In all of Wang I think only the engineering people most closely associated with the VS actually wish to see the VS hang in there, and without the support of corporate management (who, almost to a man, wouldn't know a computer if it bit them in the ass), they can't in the long run make the VS continue to fly.

In fact, though, Wang's strategy has *not* been to focus on both hardware and software. It has not, in the end, been to focus on either. Wang briefly toyed with being a software company, but within a few years settled on neither hardware nor software, but rather service -- in an area that can only grow: networking. Smart, perhaps, but in my opinion deadly boring.

> I wish the made a spell check for e-mail!!!!!!!!!!!!!

They do. That's what you get for using brain-dead AOL. If you used a *real* Internet ISP you could use any Internet-standard mail client you wished, including free Pegasus mail (my choice), Eudora Pro or Light, or MS Outlook, all of which have spell checking. Only in the so-called "online services" such as AOL, Compu$erf, and Prodigy are you limited in the client software you can use, and the client software they provide to their customers is usually pretty brain dead compared to the many true Internet products floating around in the marketplace. Real ISP's give you "Internet dial tone" and generic server-based email, web space and USENET services. You're even free to pass over their own server services and use others, because any client you run can automatically connect to any Internet host computer anywhere in the world. That's part of the beauty of the Internet, a lot of which has been hidden from users of "on-line services."

Regards,

Thomas Junker

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