Digital Adds to Computer Line

By Andrew Pollack
The New York Times

April 4, 1984

The Digital Equipment Corporation yesterday introduced a new computer that will be the most powerful in its VAX line of superminicomputers.

The new machine, the VAX-11/785, offers a 50 percent to 70 percent improvement over the existing most powerful model, the VAX-11/780, and will sell for 15 percent to 35 percent more, Digital said.

Analysts described the new machine as a needed and expected ''mid- life kicker,'' as one put it, for the aging VAX line. The first models in the line were shipped in 1978.

But apparently, Wall Street had been expecting a more dramatic announcement, and Digital's stock fell $2, to $87.50, on the New York Stock Exchange. Some analysts had apparently expected a much more powerful VAX computer, code-named Venus, that the company has said will be introduced later this year.

25,000 Machines Since 1978

Digital, which has shipped 25,000 VAX machines since 1978, is the leader in the market for superminicomputers, which are one step less powerful and also less expensive than large mainframe computers.

But competitors such as the Data General Corporation and Prime Computer have been offering computers that are more powerful for a given price than the VAX. In addition, the American Telephone and Telegraph Company said last week that it would start selling its 3B series of minicomputers, which compete directly with the VAX line.

Nevertheless, VAX computers, the largest-selling superminicomputers, have been selling better than ever, partly because of the amount and quality of the software available for them.

The new product could allow Digital to stay one step ahead of A.T.&T. and hold customers until the Venus computer arrives. ''It'll convince their customers to go with them for another cycle,'' said Michael J. Geran, computer analyst with E.F. Hutton & Company.

Entry Price of $195,000

The new computer will have an entry price of $195,000, with full systems costing as much as $400,000. Initial shipments will begin in the autumn.

Digital also introduced new software to store and retrieve data on the computer, including a system that will allow users to set up an in-house electronic information service, known as videotex.

At the news conference introducing the products, Digital's president and chief executive, Kenneth H. Olsen, said that the company's business, over all, was improving from a severe slump last year, but that profit margins were not up to historical levels.

He added that the personal computer business was close to meeting targets but that, financially, Digital's personal computer business was not doing well. Peter Labe, an analyst with Smith Barney, Harris Upham & Company, said the company was still losing money on its personal computer line.