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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

10.14    Codex

In early 1983, Murray Bolt joined Codex, assuming responsibility for three new product directions for Codex: a PBX, teleconferencing and LANs. John Pugh remembers:

“We got him in to head up the LAN business, and he was also heading up the PBX business and a couple of other ideas. What he essentially brought to Codex at that time was IBM thinking. And he had been high enough up in IBM so he knew all the things that IBM had been thinking about and was spending some money on. So he was pushing essentially three things: the LAN, which we had already signed up to, and that's what we hired him in for, teleconferencing, and PBX. And Motorola really felt they wanted to be in the PBX business.”

Bolt began staffing his organization and learning his way around Codex. The PBX opportunity seemed a sure bet given Motorola’s encouragement and all the preparatory work that had been done. Pugh remembers the decision of Art Carr, the Motorola VP responsible for Codex and once its president:

“After we'd gone through all of these massive studies on it [the PBX business], and even lined up potential deals with Nixdorf and a couple of other companies, Carr said: "No way. We will not do that. I will not bring Codex into that business."  And Motorola didn't push him.  Motorola said: "Okay. Then we won't do it." Which was one of our better decisions, obviously.”

The emphasis shifted to entering the LAN business. But to do so required hiring the right people. Again Pugh recalls:

“Bolt came in and he had to build up fast. He was staffing up fast. So he went to all parts of the company, and he pulled people in. And these people had no expertise in the LAN business. He had hired a few outside people from the engineering standpoint that did have some experience in the LAN, but it was pretty hard to find anybody who had LAN experience. In marketing, he had no people that had LAN experience.”

The growing organizational costs were soon became a concern. Carr remembers his meetings with Jim Storey, Codex’s president:

“I used to have Story give me rundowns, a quarterly thing, and I was looking at his budget one day and I said: "Geez, Jim, if you look at all of these lines and you look at the operating cost as a percent of revenue, then you look at the LAN business," and the LAN business was called an independent business unit, which was supposed to be a technique to have a lean, entrepreneurial type shop inside of a bureaucracy, his budget was bigger, and his organization chart was more elaborate, and Jim said:  "Well, these are my Codex organizations, and this is my IBM organization." I said:  "What are you doing about that?" He said: "Well, I got to give him time. I got to give him a chance."

Under pressure to begin generating revenues and with no internally developed products on the horizon, Bolt turned to the strategy of OEMing LAN products from the firm he knew best: Ungermann-Bass. Charlie Bass remembers:

“Murray really liked us. We had done a great job for him, and he wanted to deliver Codex into the 20th century. And he came up with this great strategy of being an OEM of pretty much everything we made.”

In mid-1984, Codex began selling repackaged LANs from UB.