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Entrepreneurial Capitalism and Innovation:
A History of Computer Communications 1968-1988
By James Pelkey

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Entrepreneurial Capitalism & Innovation:
History of Computer Communications
1968 -1988
By James Pelkey

This history is organized by three co-evolving market sectors and also standards making.
An overview of the schema is presented in the Introduction.

Ch. 1: Emergence
Ch. 3: Competition
Ch. 5: Market Order
Ch. 11: Adaptation

Ch. 2: Vision
Ch. 4: Arpanet
Ch. 6: Diffusion
Ch. 7: Emergence
Ch 8: Completion
Ch. 10: Market Order

Ch. 9: Creation

Ch. 12: Emergence



Chapter 11
Data Communications: WANs 1979-1986
Data Networks Become Wide Area Network


11.16     Network Switching Systems

In November 1983, Alan Zucchino, resigned as manager of private networks for Tymnet and founded Network Switching Systems (NSS), the third T-1 Multiplexer company founded by former Tymnet employees. NSS also targeted the product opportunity for a high-end networking multiplexer and although NSS held the advantage of better market data, it also bore the huge disadvantage of being later to initiate product development. NSS management believed they held an ace up their sleeve, however, for their product would combine the benefits of both circuit and packet switching. Zucchino remembers:

“I realized that we [Tymnet] needed circuit switched capability as well as the packet switch – to handle [IBM’s Systems Network Architecture] SNA, for example. There wasn’t a product to switch a complex network.”[14]  

In February 1984, NSS closed a $2.8 million first round of venture capital and then in April 1985 closed a second round of $9.3 million, with a post-money valuation of $15 million.[15]   In addition to venture capitalists, Infotron invested $3 million for 20% of NSS. Infotron also intended to become an OEM and to integrate NSS’s advanced technology into its own Infostream 1500/2000 T-1 multiplexer that it had announced in December 1984. NSS projected it would begin shipping beta units of their N16 high capacity digital switch in the third quarter of 1985. [16]

[14]   “Napkins and Needs: How the super T1-mux makers took off,” Data Communications, March 1985, p. 89
[15]   “Network Switching,” The Yankee Group, Dec. 1985, p. 91
[16]   Network Switching Systems, Venture Capital Journal, July 1985, p. 38