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

Entrepreneurial Capitalism & Innovation:
A
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.

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

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

STANDARDS
Ch. 9: Creation

INTERNETWORKING
Ch. 12: Emergence

 

 

Chapter 8
Networking: Turbulence 1981-1982
The PBX, the IBM PC and the Chaos of Competition

8.35     In Perspective

1981-1982 witnessed the early uncertainties and confusion of a forming market. Given sufficient economic potential in a perceived market, a large number of firms, both existing and new, will attempt to compete successfully for market share. In Networking, up to 200 firms announced products. In another common feature of emerging markets, the largest of firms often have the most difficulty competing. AT&T once meant communications and was on their way to becoming an also ran. AT&T was willing to disband to have the freedom to compete in the computer market, and they will, and they will fail. IBM had unsuspectingly introduced creative destruction with their PC, and yet had a hard time making sense of it. They got into the PBX business, and will get out in the future. They shadowboxed the LAN market into early paralysis, contributing more than their share to mass confusion. Or as DataPro, a respected research firm, wrote in December 1982:

Local area networking is one of the hottest topics on today's communications market. At exhibitions, conferences, and seminars, in trade magazines, newspapers, and newsletters, over lunch and at meetings, LAN has been the talk of the town. As a commercial offering, LAN is still so much in its infancy that no one yet knows all the questions. Let alone having all the answers.

The marketplace itself has not yet jelled. No vendor involved in data processing, office automation, or communications wants to be left out, and every vendor seems to have a different solution to the LAN "problem."

No wonder customers were reluctant to do more than experiment until the plethora of choices made buying more certain: that even if their vendor did not survive, and who could pick the winner, the technology would not be obsolete but could be continued to be used and improved upon. Given the wide assortment of alternatives, it was not clear the best design would emerge from the unknowable market competition. So customers, particularly government agencies and universities, motivated the creation of standards making bodies to come to impartial recommendations. The making of standards is common to communications, whether it is languages or protocols, and the same would be true for Networking - the story of the next chapter. The following chapter picks up where this chapter ends, and takes it to 1986 when the market becomes orderly and some of the firms in this chapter come to dominate.


APPENDIX 8.0

NETWORKING SALES 1981-1982 ($ Thousands)

 
1979
1980
1981
1982
UNGERMANN-BASS  
Fnd
Revenue
436
3,842
11,316
Net Income
-196
-1,215
-321
308
Growth Rate
781%
195%
Net Income %
-279%
-8%
3%
 
3COM
Fnd
Revenue
281
506
1,810
Net Income
10
-124
-690
Growth Rate
80%
258%
Net Income %
4%
-25%
-38%
 
BRIDGE COMMUNICATIONS
Fnd
Revenue
15
Net Income
-1,224
 
EXCELAN
Fnd
Revenue
Net Income
-249
 
PROTEON
Revenue
Net Income
 
Revenues of Public Firms
717
4,348
13,141
Net Income of Public Firms
-196
-1,205
-445
-1,855
Growth Rate
506%
202%
 
Revenues of Private Firms
Sytek
Fnd
1,200
3,100
7,000
Interlan
Fnd
Concord Data Systems
Fnd
Communication Machinery Corporation
Fnd
130
 
Total Networking Revenues
$63,000
Source of Data: Public Firms – Prospectuses; Total Revenues - Dataquest