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| Smart Computing® Encyclopedia |
| Kenneth H. Olsen | ||
| In 1986, Fortune magazine called Ken Olsen the “‘most successful
entrepreneur in the history of American business.” He co-founded and helmed
Digital Equipment Corporation for 35 years and helped the company almost
single-handedly found the minicomputer product category. Born in Stratford, Conn., Olsen spent several of his boyhood summers working in a machine shop and repairing radios in his home. During World War II, he served three years with the Navy, then studied at the Massachusetts Institute of Technology for his bacheleor’s (1950) and master of arts (1952) degrees in electrical engineering. During this time, Olsen led a project to build the world’s first transistorized research computer. By 1957, Olsen and schoolmate Harlan Anderson were engineers in MIT’s Lincoln Laboratory, working on large mainframe systems. Part of Olsen’s duties entailed running communications between MIT and IBM. Olsen and Anderson thought they could build better computers than IBM, but both also realized that they lacked the knowledge to run a better company. The two turned to Georges Doriot, head of venture capital firm American Research and Development. ARD loaned Olsen and Anderson the $70,000 they needed in trade for a 70% interest in the company. Olsen wanted to name the new company Digital Computer Corporation, but Doriot prevailed on the two to keep a low profile and instead go with the more innocuous Digital Equipment Corporation. At first, Digital produced circuit logic modules for electronics testing. By 1960, though, Digital released its first minicomputer, again inconspicuously titled the Programmed Data Processor, or PDP-1. The PDP-1 was considerably smaller than any million-dollar mainframe of the day, featured a CRT (cathode-ray tube) monitor, and sold for only $120,000. Although PDP-1 sales were sluggish, Olsen was smart enough to donate one unit to MIT so students could begin learning how to operate the machine. The PDP-1 was an instant hit in academic circles, and soon schools everywhere were ordering them. In 1965, Digital released the PDP-8, the world’s first mass-produced minicomputer, and the PDP-11 in 1970. Amazingly, the PDP-11 sold so well that it was not discontinued until 1997. Olsen was responsible for implementing a new management style called matrix management during the mid-1960s. In this system, every product line was run like a minicompany within DEC, although all divisions shared certain resources. Matrix management proved extremely effective, and by the 1970s, DEC was second only to IBM in the computer industry. As early as 1972, some voices within DEC were pushing for the company to make a single-user, desktop style of computer. Unfortunately, Olsen was dead-set against the idea. In one of the most famous of all computer industry quotations, Olsen stated at the 1977 World Future Society meeting in Boston (according to an 1982 interview with David Ahl): “There is no reason for any individual to have a computer in their home.” DEC remained aloof from the PC market throughout Olsen’s reign. Although the company remained successful at the high end of computing, serious trouble arrived in the late ‘80s when Sun Microsystems struck gold with its Unix-based workstations. DEC seemed unable to catch any of the new waves washing through the computing world, and by 1992 the company was more than $2 billion in debt. Massive changes and cutbacks were necessary, but Olsen, always a people person in so many ways, simply could not do it. The DEC board asked Olsen to resign, and he retired shortly thereafter. | ||
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