The company was founded in 1957 by Ken Olsen, a Massachusetts engineer. By the late 1980s, at its peak, DEC was the second-largest computer company in the world, and employed over 100,000 employees worldwide. Many of the company's products played an important role in the development of the computer industry. In particular, DEC played an important role in the development of minicomputers during the 1960s, 1970s, and 1980s; these smaller computers represented an alternative to the more powerful mainframe systems, which were dominated in market share by rival computer maker IBM.
The first versions of the C programming language and the UNIX system ran on DEC PDP computers, which were the first commercially viable minicomputers. DEC also produced the popular VAX computer family, the Alpha (AXP) microprocessor (the first commercially available 64-bit microprocessor), and some commercially unsuccessful personal computers including the DEC One, the first laptop computer and the first MS-DOS computer to use the now standard 3 1/2" floppy disks.
DEC was the first commercial business connected to the Internet, "digital.com" being the first of the now ubiquitous ".com" domains.
DEC began to run into financial difficulties in the late 1980s, as it failed to successfully address the growing market in PCs. Soon thereafter DEC issued the first layoffs in the company's history. Ken Olsen was replaced by Robert Palmer as the company's CEO, but Palmer was unable to stave the tide of red ink and more rounds of layoffs ensued. Its database product was sold to Oracle, its chip business was sold to Intel, and eventually the company itself was sold to Compaq in 1998.