this event tonight and listen to your achievements — … · 2010-01-24 · #4529y draft #4 - f...

#4529YDRAFT #4 - F

TECHNICAL EXCELLENCE AWARD DINNERR. M. PRICE

JANUARY 27, 1984

I. INTRODUCTION

GOOD EVENING. IT'S PARTICULARLY SATISFYING FOR ME TO BE AT

THIS EVENT TONIGHT AND LISTEN TO YOUR ACHIEVEMENTS — EXAMPLES

OF THE TECHNICAL EXCELLENCE THAT CONTINUES TO BE THE HEART AND

SOUL OF CONTROL DATA'S SUCCESS. THE 50 OF YOU BEING RECOGNIZED

TONIGHT REPRESENT A CONTINUING TRADITION OF TECHNICAL

SUPERIORITY THAT NOW IS IN ITS 27TH YEAR. TWENTY-SIX YEARS

AGO, IN JANUARY OF 1958, CONTROL DATA WAS BARELY FOUR MONTHS

INTO ITS FIRST DEVELOPMENT — THAT OF THE 1604 COMPUTER.

DURING THE NEXT FIVE YEARS, WE SHIPPED SOME 81 1604 COMPUTERS,

BUT MORE IMPORTANT WE LAID THE FOUNDATION FOR THE DEVELOPMENT

OF A RANGE OF COMPUTER PRODUCTS AND SERVICES SECOND TO THAT OF

NO OTHER COMPANY. AND SO HERE WE ARE TOASTING YOUR

ACHIEVEMENTS IN EVERYTHING FROM VLSI TECHNOLOGY TO COMPLEX

ADVANCED APPLICATIONS, FROM RESUSCITATING ANCIENT OPERATING

SYSTEMS TO THE RELEASE OF NOS/VE FROM THIN FILM HEAD DESIGN TO

AUTOMATED TEST SYSTEMS WITH DISK COATING TECHNOLOGY, ADVANCED

ARCHITECTURE, DIAGNOSTICS, CONSULTING, CAD TOOLS, AND VARIOUS

SUPPORT SERVICES IN BETWEEN. THAT'S AN IMPRESSIVE LIST.

R M Price CDC speeches Charles Babbage Institute <www.cbi.umn.edu>

BUT THERE IS ONE TECHNICAL ACHIEVEMENT BEING HONORED HERE

TONIGHT THAT HAS SPECIAL SIGNIFICANCE TO ME PERSONALLY AND I

WOULD LIKE TO TAKE JUST A MINUTE OR TWO AND TELL YOU ITS

HISTORY.

THE STORY GOES BACK 11 YEARS TO 1973.

1973 SITUATION — MULTIPLE PRODUCT LINES

3000 X MSOS & MASTER

6000 X SCOPE/KRONOS

4 DISTINCTIVELY DIFFERENT, RESOURCE CONSUMING PRODUCT

LINES

DIVERSITY NO VIRTUE ~ THE MAJOR WEAKNESSES,

COST/PERFORMANCE AND VIRTUAL, LARGER MEMORIES —

BRIDGING/MIGRATION — FOUR BRIDGES COST/YEAR $5-$10 EACH

THE STRATEGY — FIRST HARDWARE THEN SOFTWARE. FIRST

3000 THEN 6000/CY70 FIRST COST/PERFORMANCE (170-700),

THEN ARCHITECTURE (170-800), THEN SOFTWARE (180). ALL

THIS WOULD TAKE AT LEAST EIGHT YEARS.

PITFALLS — FIRST A TOUGH MARKETING JOB TO HOLD THE

LINE. BUT MOST OF ALL BETTING ALL THE MARBLES ON A

TECHNICAL EVENT TO OCCUR 8-10 YEARS OUT.


KNOW THE RESULT. ANNOUNCEMENT THIS YEAR — BEST FIRST

RELEASE OF AN OPERATING SYSTEM IN CD'S HISTORY.

I BET ON YOU AND YOU WON. THANKS.

SO IT IS ESPECIALLY MEANINGFUL TO ME TO BE HERE TONIGHT AND

HONOR THOSE OF YOU WHO MADE IT HAPPEN. BUT BEYOND THAT IT IS

JUST GREAT TO BE ABLE TO OFFER MY PERSONAL CONGRATULATIONS TO

ALL OF YOU — IT'S GREAT TO HAVE YOU ON THE TEAM!

II. COMPANY STATUS

LET ME TURN FOR A FEW MINUTES TO A DISCUSSION OF HOW "THE TEAM"

IS DOING. AS YOU ARE NO DOUBT WELL AWARE,1983 — UNLIKE

1982 — WAS A YEAR OF IMPROVED FINANCIAL RESULTS. IN VIEW OF

SOME DIFFICULT PROBLEMS, 1983'S RESULTS ARE DEEPLY GRATIFYING.

JUST TO REVIEW QUICKLY SOME OF THE CHALLENGES WE FACED: IN THE

PERIPHERALS BUSINESS — PRE-TAX PROFIT DROPPED TO $59.6 MILLION

(DOWN FROM $147.7 MILLION IN 1981) ~ (AND FROM $83M IN 1982)

IN COMMERCIAL CREDIT — PRE-TAX PROFIT DOWN TO $23.9 MILLION

FROM A 1983 PLAN OF $80.4 MILLION AND 1982 ACTUAL OF

$64.5 MILLION, AND IN DATA SERVICES — PRE-TAX PROFIT OF

$10.0 MILLION ALSO BELOW BUDGET ($43.9 MILLION) AND 1982

($31.5 MILLION). IN SHORT, IN THESE MAJOR SEGMENTS OF THE

BUSINESS WE WERE SCRAMBLING VERY HARD ALL YEAR LONG. WITH THE

KIND OF PROFIT DROPS THEY EXPERIENCED, THERE WAS NO WAY TO MAKE

THE ORIGINAL BUDGET FOR 1983. BUT IN SPITE OF THAT, IT HAS

BEEN A YEAR OF SOLID FINANCIAL PERFORMANCE.


YOU CAN GET SOME FEEL FOR THAT FROM THE FACT THAT WE ACTUALLY

REDUCED DEBT DURING THE YEAR BY $30 MILLION. THAT WAS

ACCOMPLISHED IN SPITE OF THE FACT THAT WE AUTHORIZED A RECORD

AMOUNT (SOME $90 MILLION) FOR PLANT AND EQUIPMENT FOR

PERIPHERAL PRODUCTS — SOME $22.5 MILLION MORE THAN PLANS

ORIGINALLY CALLED FOR. THE CAREFUL MANAGEMENT OF WORKING

CAPITAL — I.E. RECEIVABLES AND INVENTORY ~ NOT ONLY ALLOWED

US TO MAKE THE ADDITIONAL INVESTMENT NECESSARY TO THE

PERIPHERALS BUSINESS, THE REDUCED DEBT CONTRIBUTED SOME

$32 MILLION IN REDUCED INTEREST COSTS FROM BUDGET — WHICH WAS

NO SMALL FACTOR IN ACHIEVING THE SATISFACTORY EARNINGS. ALL IN

ALL, THE COMPUTER BUSINESS HAD A RETURN ON INVESTED CAPITAL OF

ABOUT NINE (9) PERCENT — WHICH IS AN IMPROVEMENT OF MORE THAN

16 PERCENT FROM 1982.

III. TECHNOLOGY LEVERAGING

MUCH MORE WAS ACCOMPLISHED IN 1983, HOWEVER, THAN JUST IMPROVED

FINANCIAL RESULTS. DURING THE COURSE OF THE YEAR WE MADE

PROGRESS IN ADDRESSING MANY OF THE ISSUES THAT ARE FUNDAMENTAL

TO IMPROVED GROWTH AND PROFITABILITY OVER THE LONG TERM.

NOTHING — ABSOLUTELY NOTHING ~ HOWEVER IS MORE IMPORTANT THAN

TECHNOLOGY AND HOW WE DEAL WITH THAT SUBJECT.

DEFINITION OF TECHNOLOGY: TECHNOLOGY IS BROADER THAN

DEVELOPING PRODUCTS. INCLUDES MANUFACTURING BUSINESS

SYSTEMS.


TECHNOLOGY — WHAT'S THE FIRST THOUGHT THAT COMES TO MIND —

•RAPID CHANGE" — YES CERTAINLY — "REALLY CREATIVE IDEAS" —

YES — BUT ALMOST CERTAINLY THE THOUGHT "TECHNOLOGY" IS

FOLLOWED BY THE WORD "MONEY" IN ONE FORM OR ANOTHER. IF ONLY

THERE WERE THIS RESOURCE, THAT TOOL, THAT PERSON, MORE

BUDGET — WHATEVER. SO IT IS EASY TO SEE THEN THAT GETTING

MAXIMUM USE OF THE RESOURCES (MONEY AND PEOPLE) WE DO HAVE IS A

MAJOR TOP MANAGEMENT CONCERN, AND IT SHOULD COME AS NO

SURPRISE, THEN, THAT "TECHNOLOGICAL COOPERATION" AND "IMPROVING

DEVELOPMENT PROCESSES" WERE TWO OF 13 KEY ISSUES WHICH THE

MANAGEMENT COMMITTEE EXPLORED IN DEPTH LAST YEAR.

EXTERNAL TECHNOLOGY LEVERAGING

NOTHING IS MORE ESSENTIAL TO CONTROL DATA'S FUTURE HEALTH THAN

TECHNOLOGICAL COOPERATION. OVER THE YEARS WE HAVE HAD SOME

IMPRESSIVE ACCOMPLISHMENTS IN THAT REGARD AND 1983 WAS NO

EXCEPTION. STILL THERE IS MUCH, MUCH MORE TO DO.

TECHNICAL EFFORT EXPENDITURES WILL DOUBLE IN THE NEXT

FIVE YEARS TO NEARLY THREE-QUARTERS BILLION DOLLARS A YEAR AND

YET WE CAN BE CERTAIN THAT EVEN THOSE RESOURCES WILL NOT MATCH

OUR NEEDS. EACH SUCCESSIVE ADVANCE IN COMPUTER TECHNOLOGY

REQUIRES A GREATER COMMITMENT OF CAPITAL RESOURCES AND

INTELLECTUAL TALENT THAN DID THE LAST. AS A RESULT, WITHOUT

COOPERATION MOST COMPANIES — AND THAT INCLUDES CONTROL DATA —

ARE IN POSITION OF BEING FORCED TO PURSUE FEWER AND FEWER

TECHNOLOGY ALTERNATIVES ~ AND THAT BRINGS WITH IT HIGH RISK OF

BECOMING UNABLE TO COMPETE IN THE LONG TERM.


TECHNOLOGICAL COOPERATION HAS MANY DIFFERENT FLAVORS. IT

RANGES FROM JOINT VENTURES SUCH AS MPI AND THE PROPOSED

PARTICIPATION IN THE DEVELOPMENT OF ADVANCED NETWORK TECHNOLOGY

WITH UNITED TELECOMMUNICATIONS TO BASIC RESEARCH COOPERATIVES.

MCC (MICROELECTRONICS AND COMPUTER TECHNOLOGY CORPORATION) AND

SRC (THE SEMICONDUCTOR RESEARCH CORPORATION) ARE EXAMPLES OF

THE LATTER. FURTHER, COOPERATION INCLUDES R&D LIMITED

PARTNERSHIPS SUCH AS THE ONE LAUNCHED IN 1982 TO BUILD THE

S/O — A NEW COMPUTER AT THE LOWER END OF THE CYBER PRODUCT

LINE. PERHAPS MOST IMPORTANTLY IT INCLUDES TECHNOLOGY

COOPERATION WITH AFFILIATED COMPANIES WHICH CONTROL DATA IS

HELPING TO SPAWN. THE PRIME EXAMPLE OF THAT LAST APPROACH IS

ETA SYSTEMS.

ETA

THINGS ARE MOVING ALONG WELL AT ETA. DURING THE PAST

THREE MONTHS ETA HAS MADE PROGRESS ON BOTH THE TECHNOLOGY AND

MARKETING FRONTS. THE ARCHITECTURE FOR THE NEW SYSTEM IS NOW

FROZEN — ISSUES OF COMPATIBILITY WITH AND EXTENSION TO THE

CYBER 205 ARE RESOLVED. NATIONAL SEMICONDUCTOR HAS BEEN

ESTABLISHED AS THE INITIAL SUPPLIER OF THE BASIC LOGIC CHIP.

ETA MARKETING EFFORTS ARE BEING PRIMARILY DIRECTED TOWARD

GAINING EARLY COMMITMENTS FOR THE GF-10. SPECIFICALLY, THE


DEPARTMENT OF ENERGY AND DEPARTMENT OF DEFENSE ARE CONSIDERED

THE KEY CUSTOMERS FOR THE FIRST FEW UNITS. CLOSE WORKING

RELATIONSHIPS HAVE NOW BEEN ESTABLISHED WITH ALL THREE BRANCHES

OF THE FEDERAL GOVERNMENT.

THE SUPPORT THAT WE HAVE EXPERIENCED TO DATE TO RETAIN U.S.

LEADERSHIP IN SUPERCOMPUTERS IS MOST ENCOURAGING. THEREFORE,

ETA IS "CAUTIOUSLY OPTIMISTIC" THAT DURING THE FIRST HALF OF

1984 COMMITMENTS FOR AT LEAST FIVE ETA SYSTEMS WILL HAPPEN.

SOME, IF NOT ALL, OF THESE WILL INCLUDE A 205.

BUT LIKE I SAID YOU CAN'T TALK ABOUT TECHNOLOGY, WITHOUT

TALKING MONEY AND THAT'S JUST AS TRUE WITH ETA AS ANYTHING.

ETA'S FINANCING NEEDS TO THE POINT WHERE INITIAL PRODUCT

DELIVERIES ARE SCHEDULED APPROXIMATE $100 MILLION. THROUGH THE

FIRST QUARTER OF THIS YEAR THOSE NEEDS ARE BEING MET BY CONTROL

DATA'S INITIAL CAPITAL CONTRIBUTION TO ETA. BY ABOUT THE END

OF THE FIRST QUARTER WE EXPECT TO HAVE AN R&D LIMITED

PARTNERSHIP IN PLACE TO FUND AT LEAST ANOTHER YEAR'S

REQUIREMENTS. BEYOND THAT, A COMBINATION OF ADDITIONAL LIMITED

PARTNERSHIPS, EQUITY FUNDING, AND CUSTOMER ADVANCE PAYMENTS ARE

PLANNED. THIS CANNOT BE DONE WITHOUT PERFORMANCE ON THE PART

OF THE TECHNICAL PEOPLE IN ETA AND SOME VERY HARD WORK BY THE

EXECUTIVES AND FINANCIAL PEOPLE. BUT THE RESULT WILL BE THE


LEVERAGING OF CONTROL DATA'S TECHNICAL DOLLARS WITH THOSE OF

OTHERS TO PRODUCE MUCH GREATER RESULTS THAN WE COULD PRODUCE

ALONE.

MCC/SRC/MEIS

OTHER TECHNOLOGY LEVERAGING PROJECTS ALSO CONTINUE TO MAKE

PROGRESS. MANY OF YOU WILL RECALL THE $2M SEED GRANT MADE BY

CONTROL DATA FOR THE FORMATION OF MEIS. THAT GRANT WAS MADE IN

DECEMBER, 1979. FOR THE NEXT THREE YEARS MEIS WAS NOTHING BUT

A SOURCE OF FRUSTRATION AS MONTH AFTER MONTH PASSED WITH

FLURRIES OF ACTIVITY AND NO REAL ACTION. BUT IN 1983 THINGS

FINALLY BEGAN TO FALL INTO PLACE. THANKS IN NO SMALL PART TO

JOHN LACEY'S EFFORTS, MEIS BEGAN TO ORGANIZE ITSELF AROUND

RESEARCH IN THREE OR FOUR AREAS OF EXPERTISE — OR "PINNACLES"

AS IT CALLS THEM; THE FIRST TWO SIGNIFICANT GRANTS HAVE BEEN

MADE IN ARTIFICIAL INTELLIGENCE AND III-V SEMICONDUCTOR

MATERIALS AND HIGH SPEED DEVICES. MEIS FUNDS OF $1.7 MILLION

OVER THE NEXT THREE YEARS WILL BE LEVERAGED BY MATCHING FUNDS

TO MAKE POSSIBLE SIGNIFICANT RESEARCH IN THESE CRUCIAL AREAS.

SRC'S BUDGET FOR 1983 WAS $9 MILLION AND WILL GROW TO

$13 MILLION IN 1984. CONTROL DATA'S PORTION OF THAT

$13 MILLION, BY THE WAY, IS ONLY $350K. SO YOU CAN SEE THE

LEVERAGE THAT IS POSSIBLE THROUGH COOPERATION.


AT TIMES IN 1983 IT SEEMED THAT MCC'S ONLY REASON FOR EXISTENCE

WAS TO GENERATE REAMS OF PUBLICITY. STAFFING HAS BEEN SLOWER

THAN WE HAD HOPED — ALL-IN-ALL MCC IS ABOUT SIX MONTHS BEHIND

WHERE WE PLANNED AT THIS TIME LAST YEAR. IN RECENT WEEKS,

HOWEVER, THINGS HAVE PICKED UP AND THE PROJECTS ARE GETTING

LAUNCHED.

THE EXISTENCE OF MCC, SRC, MEIS AND THE FACT THAT THE LEVERAGED

DOLLARS THEY REPRESENT ARE BEGINNING TO PRODUCE RESULTS,

HOWEVER, AMOUNT TO NOTHING IF WE AREN'T GEARED UP TO USE THOSE

RESULTS. IN 1984 WE WILL BEGIN WORKING ON THE TECHNOLOGY

TRANSFER PROCESS SO WE'LL BE READY WHEN THE RESULTS BEGIN TO

FLOW FROM THESE COOPERATIVE PROGRAMS.

OS I

YET ANOTHER COOPERATION IN THE PERIPHERALS AREA — THE OPI/OMI

COMBINATION — BY MEANS OF WHICH WE ARE PURUSING OPTICAL DISK

TECHNOLOGY CAME TO FRUITION. BY THAT I MEAN ITS DEVELOPMENT

MILESTONES WERE MET AND THE FOLLOW-ON COOPERATIVE VENTURE TO

ACTUALLY MANUFACTURE AND MARKET OPTICAL DISK DEVICES WAS

ESTABLISHED.

ALL-IN-ALL, 1983 WAS AS SIGNIFICANT A YEAR AS I CAN REMEMBER

AND I COULD GO ON WITH MYRIAD OTHER ITEMS IN THIS AREA OF

TECHNOLOGY AND COOPERATION, BUT THESE EXAMPLES SOULD BE ENOUGH

TO GIVE YOU THE GENERAL IDEA OF WHAT CAN BE AND IS BEING

ACCOMPLISHED BY LEVERAGING OUR DOLLARS IN THIS WAY.


IMPROVING DEVELOPMENT PROCESS

NOW LET ME TURN TO THE OTHER FACTOR IN GETTING MORE TECHNOLOGY

"BANG FOR THE BUCK" — THAT OF GREATER EFFECTIVETY IN THE

DEVELOPMENT PROCESS.

THE DEVELOPMENT CYCLE IS BEING REDUCED IN THE FOLLOWING

MANNER:

O THE TECHNOLOGY DEVELOPMENT AND MANUFACTURING FUNCTIONS

ARE WORKING TOGETHER TO PROVIDE FOR THE QUICKER

TRANSITION OF A PRODUCT FROM RESEARCH TO DEVELOPMENT TO

MANUFACTURING.

O PROCESS FLOW ANALYSES HAVE AND ARE BEING COMPLETED

RELATIVE TO THE TECHNOLOGY DEVELOPMENT AND MANUFACTURING

PROCESSES. THESE ANALYSES HAVE RESULTED IN BETTER

PROCESSES WHICH REDUCE COST AND TIME.

O IN THE PAST THREE YEARS THE COMPANY HAS PLACED GREATER

EMPHASIS ON TECHNICAL TRAINING FOR MANAGERS, ENGINEERS

AND ANALYSTS. IN 1984 WE HAVE ESTABLISHED THE "INSTITUTE

FOR EMERGING TECHNOLOGIES" TO ENHANCE THIS PROCESS.

O IN 1984 EVERY MANAGER, CONSULTANT, ENGINEER, AND

ANALYST IS REQUIRED TO SUBMIT AND HAVE AN APPROVED

DEVELOPMENT PLAN BASED ON THE INDIVIDUAL'S NEEDS TO

MAINTAIN AND IMPROVE CURRENT PERFORMANCE AND TO PREPARE

FOR FUTURE POSITIONS.


O AN ENGINEERING SYMPOSIUM WILL BE HELD AT THE MARRIOTT

HOTEL IN BLOOMINGTON ON FEBRUARY 28 AND 29 THAT WILL

PLACE SPECIAL EMPHASIS ON THE CHANGING TECHNOLOGY IN THE

MARKETPLACE. THE THEME FOR THE SYMPOSIUM WILL BE "THE

TIME FOR CHANGE IS NOW."

O COURSES IN ADVANCED TECHNOLOGY HAVE BEEN DEVELOPED AND

ARE GIVEN ON SITE FOR THE CONVENIENCE OF TECHNICAL

PEOPLE. SOME EXAMPLES OF THESE COURSES ARE

MICROPROCESSORS, ENGINEERING COMPUTER AIDED DESIGN, VLSI,

AND MATERIALS. AND THAT'S ONLY A SMALL SAMPLE.

O THE PRIMARY RESPONSIBILITY TO MAINTAIN SKILLS WITH

REGARD TO THE LATEST STATE-OF-THE-ART TECHNOLOGY REMAINS

WITH THE INDIVIDUAL. YOU MUST PROVIDE THE LEADERSHIP AND

ENCOURAGEMENT TO YOUR FELLOW TECHNOLOGISTS IN THEIR

KEEPING AHEAD OF THE MANY ADVANCES IN TECHNOLOGY THAT

WILL OCCUR IN THE COMING YEARS.

IV. SUMMARY

IN A HALF CENTURY OF RAPID CHANGE THIS PARTICULAR DECADE HAS

THUS FAR BEEN THE MOST TURBULENT OF ALL. THE ECONOMIC SWINGS

SINCE JANUARY 1980 HAVE BEEN THE LARGEST IN A HALF CENTURY.

MOREOVER, THEY HAVE SERVED TO ACCELERATE AND REINFORCE AN


ALREADY AWESOME RATE OF TECHNOLOGICAL CHANGE. JUST STOP FOR A

MOMENT AND REFLECT ON ANY ASPECT OF CONTROL DATA'S BUSINESS —

TECHNOLOGY, COMPETITION, WHATEVER — OR ANY AREA OF THE

BUSINESS — PERIPHERALS, FINANCIAL SERVICES, COMPUTER SERVICES

AND COMPUTER SYSTEMS — ANYWHERE YOU LOOK AND ANYWAY YOU LOOK

AT IT THE CHANGES SINCE 1979 HAVE BEEN ENORMOUS.

WE HAVE HAD TO RUN HARDER AND HARDER DURING THE PAST FOUR YEARS

IN THE FACE OF ECONOMIC ADVERSITY, TECHNOLOGICAL CHANGE AND

INCREASING COMPETITION. ONCE AGAIN, THEN, IN THAT LIGHT THE

RESULTS FOR 1983 LOOK VERY GOOD. THAT IS LIKEWISE TRUE OF THE

PLAN FOR 1984.

AND NUMBERS REALLY DON'T TELL THE WHOLE STORY. FOR NOT ONLY

HAVE WE ENDURED, SO TO SPEAK, WE HAVE MADE GREAT PROGRESS IN

IMPLEMENTING OUR BASIC BUSINESS STRATEGIES AND ADAPTING THEM TO

THE CHANGE WHICH SWIRLS AROUND US. SO IN MORE THAN A

CHRONOLOGICAL SENSE, 1984 MUST BE A WATERSHED YEAR FOR THIS

DECADE. OUR PLAN CALLS FOR A YEAR OF HIGH GROWTH — SOME

15 PERCENT — AND RECORD EARNINGS. BUT BEYOND THAT IT CALLS

FOR US TO ESTABLISH A PLATFORM OF PERFORMANCE WHICH WILL ASSURE

CONTINUED GROWTH IN PROFITABILITY THROUGHOUT THE REMAINDER OF

THE DECADE. TECHNICAL EXCELLENCE IS THE CORNERSTONE OF THAT

PLATFORM.


this event tonight and listen to your achievements — … · 2010-01-24 · #4529y draft #4 - f...

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