Digital has off-loaded its printing operation and could be setting up its networking business to suffer a similar fate as part of the company?s on-going struggle to focus on its core business.
The sale of the printer arm to US-based Genicom has caused debate among industry analysts about the future of Digital as a major player. It is the ninth sell-off since July 1994 in the firm?s effort to rid itself of operations it sees as peripheral to its strategy.
The move leaves Digital with only its PC and server business ? which includes Intel and Alpha chip-based systems running NT ? and services which include equipment maintenance.
Last month, in a move to bring down the administration costs of running its services arm, Digital appointed EDS to run the customer administration of its multivendor customer services.
According to observers, the mass sell-off has left the manufacturer increasingly dependent on Microsoft for NT and Compaq for multinational support and services, and more open to the threat of relentless competition from Compaq and Hewlett Packard in the NT server business.
The slimming down of the company has also raised questions as to whether Digital will now become even more vulnerable to a takeover bid. But one analyst dismissed this, saying: ?There?s a perception that Digital isn?t fully together and therefore not very attractive for takeover at the moment.?
The sell-offs follow Digital?s sustained substantial losses between 1991 and 1994, after which it proposed to undertake a regular restructuring programme.
Andrew Milroy, analyst at Input, said: ?Digital has been having financial problems, so it decided to focus on services. But the services sector has been under pressure, resulting in commoditisation ? particularly in equipment maintenance. Third-party firms like Granada have been taking market share, so Digital has had to reduce the price of its maintenance activities.?
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