Remarks from Keynote Address to Industry Analysts...

DIGITAL CHAIRMAN ROBERT B. PALMER SAYS 'CONNECTIVITY' IS DIGITAL'S STRATEGY
FOR THE FUTURE

NEWPORT, R.I. -- September 7, 1995 -- Digital Equipment Corporation's
Chairman Robert B. Palmer today outlined a bold new corporate strategy
that positions the company as a strategic player in the emerging
"connectivity" market that could top $100 billion early in the next
century. Digital will address this worldwide market by providing networked
systems and services that connect users to other users within enterprises,
connect users to vital data and information, and connect enterprises to
suppliers, partners, and customers.

Palmer outlined the strategy at the opening session of a two-day meeting of
Digital executives and industry analysts, here.

"The centerpiece of our efforts and direction is a commitment of our
resources to solving the connectivity problems of our customers. We will
focus a significant portion of our investments, our resources and our
partnerships on providing the critical integrated components -- network
hardware, software, and services -- that will enable this connectivity."

Palmer said Digital is now strategically organized to compete in an
information technology environment that offers "more choices, more
efficiencies, increased opportunities and additional challenges for both
customers and suppliers." He noted that the computer industry has gone
through a wrenching transition from an environment characterized by
vertically integrated companies that essentially designed all elements of
the computing solution internally, to a disaggregated environment
characterized by horizontal competitors. This trend toward a disaggregated
market has created an enormous increase in complexity for the customer.

"For most companies to realize the benefits of internetworked commerce,
they have a greater need than ever before to develop the capability to
integrate or to buy an integrated system that will connect users to other
users within the enterprise; connect users to vital data and information;
and connect the enterprise to suppliers, partners and customers. For many
customers, client/server computing is the first concrete step for moving
toward this kind of connectivity."

Palmer identified three important elements of Digital's strategy for growth
in this context. "First, we have chosen certain horizontal segments of the
marketplace in which to focus our efforts to compete aggressively by
market rules. Digital's strategy is to compete in four well-defined
segments: components, system platforms, connectivity software, and
client/server services. Digital will seek a leadership position within
each of these segments.

"Our business model allows us to compete effectively and enables our
customers to acquire our products and services through the most
appropriate channel of distribution.

"The second major element addresses the increasing complexity inherent in a
segmented marketplace. Because the various components of the information
infrastructure are designed by a wide spectrum of different companies, the
challenge of getting all of the components to work together seamlessly has
increased exponentially. Customers need integration across segments.
Digital's strategy for meeting this need includes focusing our systems
integration capability on large customers in targeted industries --
financial services, telecommunications and manufacturing -- through our
Accounts Business Unit."

Palmer added that Digital will complement its direct efforts by working in
cooperation with value-added and systems integration partners to deliver
integration capability for customers and prospects worldwide. Its partners
also will provide customers with the products and services from those
horizontal segments of the market in which Digital will not compete, such
as software applications or business process consulting. Therefore,
Digital will compete in focused segments of the market, and together with
partners will provide integration capability across those segments.

The Digital chairman maintained that by the turn of the century, 95 percent
of enterprise information technology customers will be dealing with a
combination of three environments -- UNIX, Windows NT and proprietary
systems -- as they integrate their enterprises. Palmer noted that Digital
is the only major computer vendor well- positioned to address all three
environments.

The third major element of Digital's strategy is to solve the connectivity
problems of its customers. Digital will aggressively pursue
customer-driven growth opportunities, based on its competitive
differentiation and competencies. Digital will provide directly and
through partners what customers need to implement high-performance
enterprise applications on UNIX; implement Windows NT across the
enterprise, which may include integration and co-existence with Digital's
own OpenVMS, as well as other mission-critical operating systems; and,
implement and enable connectivity within and across enterprises.

"Digital's global presence as a vendor of leading-edge information and
networking technology, our leadership in multivendor services and systems
integration, and our renewed strengths in partner alliances and indirect
channels all add up to a unique capability for providing true enterprise
connectivity," Palmer said.

Palmer also said Digital will align the company's software portfolio with
business segments: platform software with the company's Systems Business
Unit, and systems integration software with the systems integration
business in the Accounts Business Unit. He said the company also would
form a new business unit, the Connectivity Software Business Unit, which
would be responsible for the enterprise client/server and internetworking
software required for the emerging connectivity market.

"We know that to succeed in software, we must compete by the appropriate
market rules," Palmer stated. "Formation of the Connectivity Software
Business Unit is a critical step in ensuring successful implementation of
Digital's connectivity strategy. The new unit's charter is to develop,
market and sell software that enables customers to connect with and
exploit information assets that are critical to running their business and
satisfying their customers."

"Digital is positioned to take advantage of the connectivity opportunity --
the cornerstone of our strategic differentiation -- by providing the
critical components and services necessary to make it work," Palmer
concluded. "Our mission -- the mission of Digital working with partners --
is to make reliable, transparent, secure, affordable and flexible
connectivity a reality for our customers and prospects around the world."

Digital Equipment Corporation is the world's leader in open client/server
solutions from personal computers to integrated worldwide informations
systems. Digital's Intel and Alpha platforms, storage, networking,
software and services, together with industry- focused solutions from
business partners, help organizations compete and win in today's global
marketplace.

Additional information on Digital and its corporate strategy is available
on the Internet, and can be accessed through the Digital home page:
http://www.digital.com/.
 
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