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Entrepreneurial Capitalism & Innovation: 
A History of Computer Communications from the Development of the Modem to the Early Years of the Internet.

By James Pelkey


    “That’s why I say the strong companies of the ‘70’s became the also-rans of the ‘80’s because they ended up spending so much of their time preserving their position in what they thought was the market, when, in fact, the market was evolving… In this case [the Personal Computer], there was a revolution, not an evolution… and every one of those companies was protecting what they thought was an evolving market. It was not. It was a revolutionary market.”

    -Steve Frankel, Micom


The primary sources for this history are 84 interviews of industry and government leaders, conducted by the author in 1988. Readers of this site are invited to read the history as a linear narrative, or to explore by market sector, or by reading transcripts of the interviews.



Welcome to the early history of Computer Communications...

It is hard to imagine, but as recent as 1965, computer scientists were uncertain how best to interconnect even two computers. The notion that within a few decades the challenge would be how to interconnect millions of computers around the globe was too farfetched to even contemplate. Yet by 1988 that is precisely what was happening. The products and protocols through which they communicated would look crude and incomplete by standards of today, but they worked well enough to demonstrate the latent productivity in sharing information electronically between computers and application programs of potentially every kind. How did such revolutionary innovation occur? Why were the two dominant corporations in communications and computers, American Telephone & Telegraph and International Business Machines, the two corporations expected to control the future of computer communications and the models of corporate innovation, left surviving as marginal market participants? How had entrepreneurs seized market leadership?

Such were the questions that perplexed me in 1987. To find answers I began interviewing scientists and entrepreneurs. My intention was to write a history of Computer Communications for the years 1968 to 1988 based on the insights I gained from those interviewed. Only I quickly learned that there was no one history that could do justice to the revolutionary changes that had and were occurring. I then began compiling the stories that had been shared with me into a historical narrative, hoping to capture the inspirations and unending challenges of those who created many of the leading companies and dominant technologies, while remaining faithful to the “facts” of what had happened. To recreate a sense of the uncertainty each person or organization faced, as well as to give the reader the freedom to explore the history as fit one’s interest, the reconstruction assumed the form of a series of overlapping hypertext blocks organized within time. While this format provides a rich context for reader exploration, it does not lend itself to being published as a traditional book. Thus this website. I invite you to explore and come to your own conclusions as to what happened and why.

The reader is directed to the Introduction for a fuller discussion of the book organization but, briefly, this historical reconstruction views the evolution of Computer Communications from 1968 to 1988 as the emergence of three unique market sectors: Data Communications, Networking and Internetworking. Data Communications emerged between 1968 and 1972 after the Carterfone decision of the Federal Communication Commission in 1968 and is defined by two major technologies and product categories: modems and multiplexers. Networking emerged between 1979 and 1982 when firms introduced local area networks (LANs) and dataPBXs in response to the needs of corporations to interconnect their growing base of computers and peripherals. The need of corporations to interconnect their LANs into wide area networks (WANs) prompted the emergence of Internetworking between 1984 and 1988. A principal focus of interest will be why did the hundreds of companies that entered each market self-organize into oligopolies selling dominant designs? And why did new firms, venture capital-backed entrepreneurial start-ups, come to dominant each new market sector? The schema of market evolution is presented broadly as: (1) the time of Visionaries, (2) reducing an idea to a working proof, (3) technological diffusion, (4) market emergence, (5) market competition, (6) the emergence of market order and (7) market adaption and co-evolution. The Networking market is observed through the whole cycle in the most detail from the idea of packet switching to the Arpanet and onto LANs. The reader can quickly access the book by each market sector’s stage using the right-side panel of accordions.

Within time and market sector, the roughly three hundred hypertext blocks are additionally indexed by one or more of the following topics: institutional activity, organization, technology, product and or individual. For example, within Networking between 1979-1981 is the block Robert Metcalfe and the Founding of 3Com. By using the index of links, this block can be found through Networking (a market sector), 3Com (an organization) and/or Ethernet (a technology or product). By using the Search Engine, it can also be found by searching for Robert Metcalfe.

In addition to the book, this site also consists of much of the source material, including the 85 interviews that are being donated to the Computer History Museum in Mountain View, California.

You have three choices as to how to access the material:

  1. Read the book, either as presented or by jumping to blocks of interest. The book can be accessed by using links on either the left, right or bottom panels.

  2. Explore the book or source material by a topic of interest by using the hypertext links found on the left panel.

  3. By using the Search Engine.

I hope you enjoy the stories of some of the many heroes of this history. This work would not be possible without the generous time those I interviewed gave me in 1988 or their willingness to make their interviews public now.

Thank you, James L. Pelkey 2007

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