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Chapter 5 - Data Communications: Market Competition 1969-1972

5.7 ADS Hits a Wall: 1970

For ADS, 1970 qualified as a nightmare. Coming off a spectacular 1969, when revenues were $5 million, everyone expected 1970 to be a gangbuster year and geared up accordingly. However, products were late, the market for timesharing stalled – it seemed everyone who could use a TDM multiplexer owned one – and the modem chips from Rockwell for the “killer” 4800 bps modem did not yet work. Sales were down, not up, while expenses continued to grow. In September, the Board elected a Rockwell executive to replace Wilkes.

Norred remembers:

I remember the third year because I used to keep a forecast of around $32 million pinned on my wall, and I think we ultimately did about three or four or something. But that was 1970 when the world came to a screeching halt. One of the reasons was the modem. We actually shipped somewhere close to between 200 and 400 modems to the field, these automatically equalized modems, to find out that it had flaws we didn’t understand. It did not behave well in the presence of frequency translation and phase jitter. Those were two of the parameters that, not having a lot of knowledge in the modem world, we failed to adequately understand. We shipped a lot to the field and got a lot back. We were shipping to customers who were trying it saying: “Boy, we have a big requirement,” and unfortunately the modem just didn’t work well.

Phase jitter haunted ADS, just as it had buffaloed Codex, and as it would challenge every firm trying to innovate a high-speed modem. Few succeeded, having to wait for the solution to become public knowledge, before they could introduce competitive products.

Had ADS fatally over-reached or would it right itself?