Data Communications: Emergence 1956-1968
Modems and Multiplexers
1.5 Codex and Milgo: Needing Money 1967-1968
In June 1967, Jerry Holsinger, now working for Codex,
began the challenge of converting his prototype 9600 bps lease-line modem
into a shippable product. A year later, in May 1968, Codex introduced the
AE-96, the world's first 9600 bps modem. It weighed approximately 125 pounds,
and consisted of sixty-six printed circuit boards of RTL semiconductor
logic. When installed, every pair of modems needed to be manually "tuned" to
the telephone circuit, and when the line characteristics changed, as they
invariably did, the modems had to be re-tuned in order to work. Re-tuning
was more than simply an inconvenience, it required qualified personnel
to make adjustments to the modems at both ends of the telephone circuit
at the same time - a serious problem given many early customers wanted
to use the modems on expensive international circuits. As was true for
many early electronic products using RTL logic, the AE-96 generated so
much heat that keeping it cool presented a problem. Since each end of the
circuit required an AE-96, the total cost for a customer was $46,000.
Codex management and the Board of Directors knew they
needed to hire personnel with commercial experience if they were going
to be successful. Jim Cryer, President of Codex, felt the most pressure
to find someone to head sales and marketing.
Art Carr needed little persuading. He recently had completed
an assessment of the opportunities in data communications for Computer
Control Corporation (or 3C, as it was fondly known) and recommended that
the minicomputer manufacturer make data communications a strategic focus.
No stranger to this new field, one of 3C’s best customers was the time-sharing
operations of GE. Only Honeywell now owned 3C and, for reasons long forgotten,
Carr's recommendations were not adopted. The timing could not have been
better for Codex. Carr, convinced of the emerging opportunities in data
communications was ready to leave 3C. In his enthusiasm for data communications,
he was even willing to overlook the fact that Codex lacked any commercial
experience, telling himself that maybe their lack of experience meant freedom
to run his own 'show,' the opportunity he really sought.
Quickly coming to terms, the outwardly calm, yet intensely
competitive, Carr joined Codex as Vice President of Marketing in July.
Decades later, he still remembered his first day with the company:
"Jim Cryer, the founding president of Codex,
was a fine man, but he was the world's greatest optimist. It's just beyond
my ability to describe it to you, but I can give you an example. I started
at the end of July at Codex. All of the orders that had ever been received
in Codex in its corporate history, which then was about six years, were
on three or four typed sheets of paper. They were strictly in the military
business, some years you would get an order, and some years you wouldn't.
He had a memorandum waiting for me the day I started
that was about four or five pages long that added up to six or seven million
dollars of business that was about to close, and the very first thing --
now this is a company that had just done a million dollars, OK, the very
first thing I did was take a two week vacation. I said to him: 'If you've
got all this business lined up, I was going to go down to the Cape this
year. ' And he said: 'Oh, yeah, no problem.'"
Cryer then recruited James Storey as Vice President of
Administration. Soon the increased costs began straining Codex's financial
resources. Without more money, all their efforts at self-transformation
would mean little more than accelerated death as bankruptcy. The good news
was that the prospects of the AE-96 had investors and investment banks
claiming they easily could raise the money Codex needed. The phenomenal
success of the IBM System/360, the promise of time-sharing and the growth
of service bureaus, all contributed to an excitement for computers - and
technology in general. And that kept investors salivating for the next
great product opportunity. With the prospect that the stranglehold AT&T
had on connecting to the telephone network might be ending, what would
be a more perfect product than the highest speed modem?