It was the state’s last digital champion, the last great high-tech company born and bred in Massachusetts. But soon, EMC Corp. will join the roster of major local tech companies absorbed by nimbler firms from out of state.
EMC’s $67 billion acquisition by Texas-based Dell Inc. is a done deal. Dell Inc. founder Michael Dell said on Monday that his company will make EMC’s Hopkinton campus the center of his company’s huge enterprise computing operation.
What is it about Massachusetts? Our world-class universities produce thousands of superbly trained electrical engineers and software designers. But our state’s business community seems unable to sustain a single top-tier tech company.
“Nowhere in the world can match the intellectual community we have around Boston,” said Michael Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management. “It’s like an R&D lab for the world.”
But a bad bet on an obsolete computing technology killed off the first great wave of local computer companies. And a failure to capitalize on the Internet’s extraordinary potential completed the rout.
Decades ago, Massachusetts spawned a host of computer companies with global clout, including Digital Equipment Corp., Data General, and Wang Laboratories. But these giants, famously headquartered in the suburbs along Route 128, were built on a shaky foundation. They made minicomputers, refrigerator-size machines that were seen as cheaper, more versatile alternatives to the giant mainframes built by companies like IBM Corp.
Faith in the “mini” was well-placed, and Massachusetts’ computer companies prospered well into the 1980s. For a time, Digital was the second-biggest computer company on earth, after IBM. But years of success led these companies to dismiss as irrelevant the development of personal computers. The early desktop machines were no match for minis. But as PCs became more potent and were joined together in networks, they undercut minis in price while matching them in performance.
By the early 1990s, the great minicomputer companies were dying. EMC bought Data General in 1999, but Wang was scooped up that same year by a Dutch company, Getronics. The mightiest of them, Digital, was acquired by the Houston computer maker Compaq in 1998. Compaq was bought by Hewlett-Packard Co. in 2002.
The loss of so many high-profile companies made Greater Boston a less attractive place for top tech graduates. They might go to school at MIT or Harvard, but they’d go to work out West, where they’d find dozens of major tech companies that had boomed by embracing the personal computer — Microsoft, Hewlett-Packard, Apple, and more.
“That’s where the activity is,” said Willy Shih, a Harvard Business School professor. “People who want to work in that industry go there. That’s why it’s hard to be in Massachusetts.”
In addition, Cusumano said, it’s hard to find Boston-area venture investors who’ll back the kind of risky consumer-focused Internet companies that have become the tech giants of the 21st century. Facebook, for instance, was born in a Harvard University dorm but moved to Silicon Valley, where the funding was easy.
“It’s been very hard for a company like Facebook to get funding in Boston, so they move to California, where the investors are more sophisticated and willing to take risks,” Cusumano said. So even though Massachusetts scientists and businesses, like Bolt Beranek and Newman of Cambridge, played major roles in building the Internet, hardly any high-profile Internet companies are based here.
The state has plenty of smaller yet significant tech companies. The Internet data-delivery and security firm Akamai Technologies Inc. says it delivers up to 30 percent of all global traffic on the World Wide Web. In Burlington, there’s Nuance Communications Inc., the world’s top maker of speech-recognition software. Bedford-based iRobot Corp. made consumers fall in love with Roomba automated vacuum cleaners and is a significant defense contractor.
But it’s not likely that any of them will become a global titan like Digital or EMC. And Shih thinks there’s no chance Massachusetts will ever again rival Silicon Valley. “I’d look forward. I wouldn’t look backward,” he said. “That ship sailed in the late ’90s.”
Instead, Shih said, Massachusetts should focus on its strengths. It’s a global leader in medical technology, a rising power in robotics, and a significant player in the Internet of Things — the effort to connect practically all devices to computer networks.
Shih said that massive long-term investments in each of these promising fields makes a lot more sense than pining over the lost glories of Route 128.