Chapter 14 - Internetworking: Emergence 1985-1988
14.20 DEC, Excelan, Sytek, and CMC
Digital Equipment Corporation (DEC)
While large corporations played seminal roles in the early history of computer communications, they were far from the only, or most important, entities. In 1965, the economics of computer communications were essential controlled by AT&T, IBM, the FCC and the body politic. One entrepreneurial start-up of the time was without peer: Digital Equipment Corporation (DEC). Kenneth Olsen and Harlan Anderson founded DEC in 1957, with venture capital from American Research & Development calculated using a post-money valuation of $100,000. DEC launched and led the minicomputer market for many years. In 1979, Robert Metcalfe, the father of Ethernet, called on Gordon Bell of DEC to gain DEC’s support to work with Xerox and Intel to lobby for Ethernet to become a LAN standard. By 1986, a year representing the emergence of Internetworking, DEC was the leading LAN vendor controlling 20% of the market for LAN adapters and 35% of Ethernet adapter shipments. No corporation had more incentive to innovate products to interconnect LANs than did DEC and, in 1984, DEC launched the first successful Ethernet bridge, the LAN Bridge 100. To provide a remote bridge, DEC partnered with Vitalink (See Vitalink) resulting in the TransLAN products. In July 1985, DEC entered the gateway market with its External Document Exchange gateway providing services between DEC’s All-In-1 environments and IBM’s DISOSS nodes. Finally, DEC entered the router market with a series of products (TransPath) partnered with Vitalink.
When the announced merger between Excelan and NET collapsed on June 28, 1987, other companies interested in Excelan probably saw Excelan as a company “in play.” But not Kanwal Rekhi, who became President immediately after the failed merger. He preferred to focus on building a significant company than making money through “financial engineering.” The revenue results for the two years ending December 1987 and 1988 – $39 million and $66 million – certainly justified his assessment and leadership.
The token ring announcement by IBM on October 15, 1985 changed the fate of Sytek. It was not until the second quarter of 1988 that they again attained profitability. The question still remained if they could survive as an independent company?
Communication Machinery Corporation (CMC)
In July 1988, Rockwell International bought CMC for an estimated $40 million and renamed it Rockwell Network Systems.