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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



0.7     Personal Comments

Not being an educated historian, or a professional writer, I decided to organize this book around two concepts: excerpts from eighty interviews I would conduct and transcribe, and a hypertext format that would enable one to read the book in a way he or she found most interesting, and that might not be the time-stamp format I have imprinted on the material. I hope this book eventually becomes a high level index into the larger database this history rests upon: interviews; company information including business plans, IPO documents, financials, public information; market research, especially Dataquest, Datapro and Yankee Group; and trade and financial press reports. Every individual, corporation, social organization, and technology would then be a “link” into a larger set of data. Such an extension could also permit other individuals with the companies I write about, companies I do not mention, market researchers, academics, policy makers, anyone to add data, or views, and make for an even vastly richer explorations of this very important time in human history. A list of those interviewed is in Exhibit I.1

What do I mean by hypertext? I have subdivided this history into roughly two-page “hypertext” increments covering a specified timeframe and addressing an idea, an individual or a firm. These hypertext increments are then aggregated into chapters representing a larger time period for one or more sectors of computer communications: Data Communications, Networking, or Internetworking. Since the sector histories overlap in time, each chapter reconstructs one sector history for a certain number of years before the next chapter jumps back in time to bring another sector history roughly to the same year. This structure gives you the freedom to read the story of one firm, for instance, from beginning to end by selecting the appropriately labeled hypertext increments. Using Codex Corporation by way of example, three hypertext increments in Chapter 1 cover 1956-1968, four increments in Chapter 3 cover 1969-1972, four increments in Chapter 5 cover 1973-1978, and so on. In addition to each chapter being subdivided into hypertext increments, chapters begin with one-page Overviews and ending summaries labeled In Perspective. A flow of the chapters by sector is in Exhibit I.2

This historical reconstruction can also be read at any of five levels of observation: macro conditions, ideas or technology, individuals, firms, or populations of firms. The following table gives examples of some of the possible reads for each level:


Macro Conditions Impact of Military spending
Impact of digital technology
Government regulation
Corporate capital investment
Ideas or Technology Packet Switching
Network Protocols
Individuals Dr. J.C.R. Licklider
Paul Baran
Dr. Lawrence (Larry) Roberts
Art Carr
Dr. Robert Metcalfe
Paul Severino
Firms Codex
Network Equipment Technologies
Populations of Firms Data Communications

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The book sets 1968 as the year computer communications begins, although since every history builds on all that has come before it, it will be necessary to look back to the 1950’s for the beginnings of certain stories. Nevertheless 1968 was the crucial year for a number of reasons, the most important being: the Carterfone Decision, funding of ARPANET, the introduction of the first 9600 bps modem and time-division multiplexer, the rush of minicomputer start-ups, a hot IPO market, and funding of Intel Corporation.

The book ends in 1988 for two good reasons and one arbitrary reason. In 1988, the Enterprise Networking Event and Interop successfully demonstrated internetworking software. Computers from different vendors running different operating systems could share data over a wide variety of communication networks. What had been the goal for nearly two decades had been accomplished. The arbitrary reason is that I started interviewing people in 1988 and was interested in a history book, not a predictive book. I wanted those interviewed to know that I was only interested in the past. Most of the people I interviewed have a role in this history and all had a role in educating me how that history unfolded.


Three decades have passed since those restless night when I tried to make sense of the dynamics of technological innovation, to now, unable to ever thank all the people who have helped me along the way to bring this project to a conclusion. Nevertheless, I would be doing many people a disservice if I did not mention them by name. First and foremost, heartfelt thanks to all those who made their time available in 1988 to sit with me and share memories still recent enough to be less guarded, or in the need of, the interpretive filters that success all too often invites. A few interviewees continued to be of help over the decades, and to them I shall be forever grateful: Paul Baran, John Day, Bruce Smith, Dan Lynch, and Art Carr.

When I had the great fortune to become associated with the Santa Fe Institute, there were a number of scientists who were interested in the historical data I had collected and how it might inform their studies of technological innovation. I know that I gained much more than they did and I shall never forget the long conversations continuing into so many late summer evenings. While some of these individuals have left the study of innovation to others, David Lane, Walter Fontana, John Padgett, and Chuck Sable have unknowingly had a lasting impact on this work.

I am sure I would not have persisted for as long as I did without the unwavering support and encouragement of Martin Shubik, Stuart Greenfield, Harold Shattuck, John Day, and Andy Russell. There is no way I can thank each of you enough for your friendship and help, other than to say, finally, here it is, an economic history of the first two decades of the “plumbing” of the global economy, reconstructed using the “voices of some of the key participants. For the reader, the voices can be experienced through the liberal use of excerpts in the text, or by reading the transcriptions, or, in the future, listening to the interviews. I hope I have honored each and every one of you, as well as all of you who I did not have the time or insight to interview, in this brief reconstruction.

Last, but not least, are those individuals to whom this online book would not be possible without their sacrifice and help. First and foremost is Verona Fonte, who crafted my sketchy ideas into a website that, at the time, was thought impossibly hard to do. But Verona would not be discouraged, and even though it took her far afield of her own creative accomplishments, she willed herself through long hours and her indefatigable constitution to accomplish the impossible. She was a dear friend who I will always honor. Kyle Roth and Mike Connor whom never balked at whatever I asked of them and thus we have transcribed interviews --and much more-- and I was able to retain some of my sanity. Marc Weber and Jennifer De La Cruz of the Computer History Museum provided help, enthusiasm and boosts of energy I sorely needed to bring this project to a conclusion. They will also be the guardians of all the primary research the CHM has graciously agreed to store and make available, and the on-line book the Museum will maintain for an indefinite future. Thank you. Edward Lau has my eternal gratitude for saying yes and coding the last chapter so that I can say it is finished. Finally, I have the joy of acknowledging the help Bob Stearns gave me whenever I called, without ever hesitating, and of thanking Dorothea Smith, whom I shall love forever, for gracing my life and always believing in me.

I would be remiss if I did not thank you, the reader, for sensing the importance of these events and people, and wanting to learn more of the history of how the vision of the giant of the evolution of the information revolution, J.C.R. Licklider, whose fantastic idea – the Intergalactic Computer Network – became a global communication network that has changed everyone’s idea of not only the future, but their futures.

James Pelkey

25 Huina Place
Kula, HI 96790

October 2013

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