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Entrepreneurial Capitalism and Innovation:
A History of Computer Communications 1968-1988
By James Pelkey

Entrepreneurial Capitalism & Innovation:
History of Computer Communications
1968 -1988
By James Pelkey

This history is organized by three co-evolving market sectors and also standards making.
An overview of the schema is presented in the Introduction.

Ch. 1: Emergence
Ch. 3: Competition
Ch. 5: Market Order
Ch. 11: Adaptation

Ch. 2: Vision
Ch. 4: Arpanet
Ch. 6: Diffusion
Ch. 7: Emergence
Ch 8: Completion
Ch. 10: Market Order

Ch. 9: Creation

Ch. 12: Emergence



Chapter 10
Networking: LANs 1983 – 1986
LANs Over Data PBX


10.0     Overview

The introduction of the IBM PC in August 1981 forever changed the fortunes of the Networking companies. For once every corporate desktop became the likely home of a personal computer, a flood of innovative software and hardware drove the demand for higher communication speeds among computing devices. Both the PBX and dataPBX, designed for the slower speeds of computer terminals, could not meet customers’ needs. But that would not be obvious until the mid-1980s. Until then, the various incarnations of PBXs muddled customer decision-making and slowed market growth.

Nevertheless, the explosive growth in sales of IBM PCs, and those of the quick-to-form swarm of clones, proved decisive for LANs. Yet what LAN technology was best would not be clear until standards were resolved and vendors offered standards-compliant products at affordable prices. Then, and only then, did corporate buyers feel like they were not risking their careers or their firms computing futures. When buying accelerated, LAN sales skyrocketed from $63 million in 1982 to nearly $1 billion in 1986. IBM missed out on the bonanza they had triggered. For it was not until 1986 that they began shipping their long anticipated token ring LAN. The winning technology would be the one LAN that worked and kept getting cheaper every year: Ethernet.

Exploding LAN sales did not guarantee every competitor, or even every Ethernet supplier, success. Each firm had to make decisions as to: What LAN to sell: Ethernet, token ring, token bus, or anyone of hundreds of alternatives; What LAN protocol to support: XNS, TCP/IP, OSI, MAP/TOP, or some proprietary incarnation; Which market to focus on: the office, the factory or those needing high performance computing; What prized customers to target: IBM, AT&T, General Motors, General Electric, Xerox, etc; and What people to hire and promote or how to organize their enterprises.

This chapter observes how the firms of Data Communications and Networking fared. The focus will remain on Codex, Micom, 3Com, Ungermann-Bass, and Sytek. The years 1983-1986 were ones the management of these companies and their competitors will never forget.

We begin with firms presenting at an Alex. Brown & Sons investment conference in March 1983, observe firm behavior during 1983-1984, pause for an industry overview for 1985-1986, and finish with firm behavior for the same two years. The next chapter will explore how networks of the day were not just computer networks, but voice and data networks, or wide-area network (WANs), setting the stage for the last chapter: the coming together of LANs and WANs and the emergence of Internetworking.