Poor Alpha Sales Hit Digital Profit

Vendor takes steps to boost demand for Alpha systems after sales slump

Digital Equipment saw its Alpha sales drop for the first time since it introduced the technology four years ago, as the vendor announced its profit had dropped by 59 per cent.

Sales of Alpha machines ? which account for one-third of vendor?s revenue ? showed a 13 per cent decline.

In the quarter ended 29 March, Digital had a net income of $51 million and a total revenue of $3.31 billion.

Digital chief executive Robert Palmer said the manufacturer was prepared for the transition at the low-end of the workstation market from Unix to NT. He conceded that the revenue was not where Digital wanted it to be, but highlighted the company?s internet products and Windows NT systems as being strong earners.

Palmer said that he was confident that Digital would return to a revenue growth of five to nine per cent over the next few quarters.

The results came two weeks after the company anounced that it was folding its PC and Alpha units into one product division ? the Product Business Unit ? with a shared channel strategy. Palmer said the reshuffle was designed to help boost demand for Alpha systems.

James Stevenson, Systems Business Unit manager in the UK, said Digital was now focusing on growing its business quarter on quarter, and getting a much tighter rein on the company?s expenses.

Stevenson insisted that the restructure would not result in the loss of any distributors, despite the company?s single channel structure.

?We have absolutely no plans to change distributors, they will continue doing their job,? he said, adding that Digital needed distributors in volume markets as well as in value add and niche markets.