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Chapter 10 - Networking: Market Competition 1981-1983

10.22 Does IBM Need Both LANs and PBXs?

IBM had toyed with the idea of entering the PBX market, even having introduced a PBX in Europe in the late 1970’s called the 1750. [20] Then in 1982, IBM signed a development agreement with Mitel for a CBX IBM would market. Dissatisfied with Mitel’s progress, in the summer of 1983 IBM abandoned its relationship and by then a $370 million investment. IBM next purchased 15% of Rolm for $300 million. [21] During these same years IBM reportedly spent $100 million trying to develop its own third-generation PBX. IBM appeared as intent on being in the PBX business as AT&T was in the computer business.

IBM’s designs to enter the LAN business had become equally complicated. Their token ring LAN was not expected to be ready until 1984 and, in fact, would slid to late 1985. The Entry Systems Division, responsible for the PC, and planning to introduce an upgraded PC in 1984, would select yet another LAN, arguing that they needed to have a LAN to compete in the marketplace. (This story will to be told in the next chapter).

With all the confusion between PBXs and LANs, in December 1983, IBM convened yet another task force to explore whether they needed both. The conclusion must have been yes for in 1984, IBM both bought the rest of Rolm for $1.5 billion and introduced its maverick PC-LAN.