Chapter 13 - Data Communications: Adaptation 1979-1986
13.29 In Perspective
In the short span of four years, from the beginning of 1984 to the end of 1987, the sales of T-1 multiplexers skyrocketed by a factor of ten: $30 million to $300 million. The Data Communication firms that once thought themselves heir to “their” multiplexer market would, by 1987, be pushed aside by an entrepreneurial start-up – NET – and an encroaching computer giant - Unisys (Timeplex). During these same years, sales of their former engine of growth, statistical multiplexers, had peaked and were shrinking fast. In 1988 sales of statistical multiplexers would total less than $200 million, a far cry form the $900 million predicted in 1985.
The transition from analog to digital transmission, and the consequent demand for T-1 multiplexers, represented a much more profound shift than the firms of Data Communications had in mind. For once corporations had invested in T-1 multiplexers and tasted the cost savings and their many strategic advantages; they began demanding products with capabilities that they once looked to AT&T for. Products providing adaptive routing, dynamic bandwidth management, and automatic backup for example. These new capabilities far exceeded the concepts of network management that had evolved for the point-to-point data networks constructed using modems and statistical multiplexers.
Yet as much of an advance as the new networking T-1 multiplexers were, with one sole exception, they were based on circuit switching. This may have made sense in the beginning, but as these WANs were expected to interconnect LANs, circuit switching began to exhibit the same problems that had motivated the creation of the first computer network: the Arpanet. Computer and LAN traffic was burst-like in nature and did not fit ideally within the confines of fixed circuits, no matter how fast they could be switched. As of mid-1987, these problems were beginning to be recognized and the T-1 multiplexer firms started reacting. Only they would not be fast enough, a story that fills the last chapter of this history: Internetworking. Again entrepreneurs without the baggage of existing customers innovated the products that at first seemed to co-exist with T-1 multiplexers. And then began absorbing T-1 as simply the physical layer protocol it had always been.
T-1 Multiplexer Market 1981 1989 ($ Millions)
| 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | |
|---|---|---|---|---|---|---|---|---|---|
| Point-to-Point | 30.0 | 45.9 | 85.0 | 96.3 | 100.0 | 100.8 | 85.0 | ||
| Networking | 15.0 | 72.9 | 144.5 | 208.8 | 283.2 | 324.4 | |||
| Total | 30.0 | 60.9 | 157.9 | 240.8 | 308.8 | 383.2 | 409.4 |
T-1 Multiplexer Growth Rates (%)
| 1981 | 1982 | 1983 | 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | |
|---|---|---|---|---|---|---|---|---|---|
| Point-to-Point | 53 | 85 | 13 | 4 | 0 | (16) | |||
| Networking | 386 | 98 | 44 | 36 | 15 | ||||
| Total | 103 | 159 | 53 | 28 | 24 | 7 |
Source: Dataquest June 1986, May 1991.
T-1 Multiplexer Market Shares 1981 1989 ($ Millions)
| 1984 | 1985 | 1986 | 1987 | 1988 | 1989 | |
|---|---|---|---|---|---|---|
| Timeplex | 11.3 | 48.0 | 80.0 | 95.0 | 87.8 | |
| Network Equipment Technologies | 10.0 | 26.0 | 91.6 | 116.7 | ||
| Cohesive / DCA / Milgo | 0.2 | 1.5 | 4.0 | 15.0 | 31.0 | 21.0 |
| General DataCom (GDC) | 24.0 | 38.2 | 35.0 | 30.0 | 24.4 | 24.2 |
| Infotron | 19.8 | 16.8 | ||||
| Datatel / CASE / Dowty | 19.0 | 19.4 | ||||
| Stratacom | 18.6 | 23.9 | ||||
| Others | ||||||
| Total | 63.3 | 157.9 | 240.8 | 308.8 | 388.0 | 445.5 |
Source: 1984: Yankee Group, July 1984, 1985: Dataquest, June 1986, 1988: Dataquest, August 1989, 1989: Dataquest, May 1991.