He inherited a giant company that was about to erase itself because of too much fume-breathing. They were on their way to being the next Wang. They were a precursor to Apple. Palmer steps up to the plate and starts running it like a business. Swallow the bitter pill.
Pride counts for nothing.
Withdraw from businesses that are dead-ends no matter how painful it is. He clearly had just one shot at turning it around. Palmer did what his predecessor, Ken Olson, never could. DEC was in denial, they didn't understood how basically the world had changed, and how unprepared for that change the company was. When Palmer stepped in, that's all he could see, how much the vision of the company had departed from reality.