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A HISTORY OF COMPUTER COMMUNICATIONS: 1968 -1988

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 DOMINANT DESIGN EXAMPLES

Four examples of the emergence of dominant design will be described. In each case, once the dominant design is decided, product sales growth rates accelerated and prices declined.

Case 1.   Dominant design decided by technology competition: local area networks Vs data PBX's.
Between the years 1982-1986, existing data communication companies responded to first the terminal interconnection then computer interconnection Buying Demand with data PBX's. Start-ups emerged to sell and innovate local area networks. By 1986, the competition was over. Local area networks had won. Source of data: Dataquest.

 

Product
Category

1982

1983

1984

1985

1986

1987

1988

cagr

Data PBX

45

77

119

143

86

82

80

10.1%

LAN

63

152

326

593

913

1675

2820

88.4%


 

Case 2.   Dominant design decided by marketing and sales competition: PC modem Vs dial-up modems.
In 1978, Hayes Microcomputer Products introduced a low speed dial-up modem designed for use with a personal computer to be sold through computer retail stores. Even though the opportunity was open to all existing manufacturers, Hayes acted first, establishing its name as a brand name synonymous with personal computer modems. All subsequent entrants had to conform to the modem commands and software innovated by Hayes. By 1986, Hayes had become the fourth largest modem manufacturer with sales of $120 million, and a 43% market share in the fastest growing modem market.

Product
Category

1982

1983

1984

1985

1986

1987

1988

cagr

Data Modems

675

791

866

934

962

993

873

4.4%

PC
Modems

96

127

182

233

281

307

389

26.3%


 

Case 3.   Dominant design decided by a standards body: V.32 Vs proprietary modems
After the success of the v.22 and v.22bis CCITT modem standards, existing vendors were motivated to  adopt a 9600 baud dial-up modem standard to jointly solve remaining difficult technical problems and to accelerate market acceptance.

Exhibit Dominant Design Page 2

Although the CCITT v.32 standard was approved in 1985, it wasn't until 1987-1988 that competitive v.32 modems entered the market to compete with proprietary modems then capable of communicating at speeds twice that of V.32. By 1990, V.32 was forcing proprietary products out of the market.

V.32 Vs Proprietary Modem Modulations: 1987-1990

Product
Category

1987

1988

1989

1990

cagr

v.32

30

67

110

211

92%

Proprietary

49

65

62

88

22%


Case 4.   Dominant design decided by vendor selection: token ring by IBM.
From the beginning of the effort to establish first one, and then three, local area networking standards, IBM was a reluctant, yet powerful, participant. When they finally introduced their token ring network in 1986, token ring quickly gained market share.

Local Area Networking Technology Market share
and Units Shipped Growth Rates: 1986-1988

LAN Technology

1986

1987

1988

cagr

Ethernet

59.0

59.8

59.3

85%

Token Ring

4.5

11.3

15.5

242%

Other

36.5

28.9

25.1

52%

Total

100%

100%

100%

84%


Source of data: Dataquest.

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