Bill Norred and Art Wilkes started American Data Systems (ADS) in the spring of 1968 in Art Wilkes’ garage in Woodland Hills. Norred and his new bride had moved from Texas to help engineer Wilkes’ idea for a product. When Norred arrived, Wilkes told him the financing had fallen through, so Norred and his wife moved in to Wilkes’ den. Over the course of six months, they built a prototype of the 660, a time division multiplexer (TDM), a significant improvement on the Frequency Division Multiplexers in use at the time. In their first year of business they did over $1 Million in sales, and $5 million their second year. While at ADS, Norred was in charge of engineering and manufacturing and saw the 660, one of the first TDMs for data communication, quickly become a hot selling product. Within 18 months ADS would have over 400 employees. Its popularity was due in large part to the rise of timesharing, in which many slow speed terminals could share a phone line to connect to a remote computer.
As the fortunes of ADS grew, they felt they needed to sell a high-speed modem in addition to their multiplexer. An agreement was made with Rockwell International, which had designed a 4800 bps automatically equalized modem, for the rights to build the modem in exchange for a controlling interest in ADS. The modem didn’t work, however, and by the time they had it working, they had lost market share to competitors Codex and Milgo. ADS hit financial troubles in 1973 and was put into Chapter 10 bankruptcy by Rockwell. Norred attributed the downfall to three main causes: problems with the Rockwell modem, mismanagement, and the downturn in the economy. As the company was being liquidated, Norred took one of the remaining orders for a new version of the ADS multiplexer, the 670, and started Micom. He was soon joined by Roger Evans who had worked for CASE, the client in England that had made the order for the 670’s.
In 1978, Micom introduced a statistical multiplexer, a new evolution of multiplexer that used integrated circuits to control data flow on a shared line. Norred remembers removing enough chips from their original design to bring the unit’s price down to $2,000. The Micro800 Data Concentrator was an instant hit and made a name for Micom as ‘the orange juice’ company, a name taken from the glossy color photo pamphlets and ads that showed the unit next to a can of frozen orange juice concentrate.
As Norred’s responsibilities of running the company overshadowed his ability to spend time on engineering, Norred and Evans hired Steve Frankel to take over management of product development in 1980. The addition of a line of data PBX products to compliment their data concentrators helped them achieve a successful IPO and a market capitalization of nearly $190 million in June of 1981 (compared to their original financing of $220,000 in 1976). By 1985, the market for data PBX’s was loosing customers to the growing LAN business. Though Norred and Evans had prided themselves with being a simple, product based company, the demands of higher bandwidth networking required companies to offer systems based solutions, which included software, not just hardware. They acquired Interlan in 1985 in an attempt to enter the LAN business, but they struggled to integrate the two companies. Micom’s sales continued to flag and Norred wanted out. His attempt to sell his shares, led to a leveraged buyout of Micom in 1987.
In this interview, Norred describes critical management decisions of ADS and Micom as they navigated the early days of the data communications market. His approach was, as Evans described of them both, “conservative”. He managed to innovate and take advantage of a lean, low cost strategy that proved a winner for almost two decades.
Keywords: American Data Systems (ADS); Frequency Division multiplexer; Time Division Multiplexer; Rockwell; Micom; Statistical multiplexer; Micro800 Data Concentrator
Keywords: American Data Systems (ADS), Micom, Micro800 Data Concentrator,