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

Entrepreneurial Capitalism & Innovation:
A
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.

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

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

STANDARDS
Ch. 9: Creation

INTERNETWORKING
Ch. 12: Emergence

 

 

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

 

11.31     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, Shaded areas Author Estimates

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

.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),
Shade areas Author Estimates