051 – Getting connected – 1977

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I can’t understand why people are frightened of new ideas.
I’m frightened of the old ones.”  John Cage

Dennis Hayes worked for the National Data Corporation; it handled credit card authorisations and electronic funds transfer,   Hayes investigated offering its clients a modem but found none that were fully automatic. 

1977 He produced a series of hobbyist 300 bps modems for just $299.  He and a colleague, Dale Heatherington, quit their jobs to form D C Hayes Associates.

1979 They launched Micromodem 100 for S-100-bus PCs and Micromodem II for the Apple II; each had an integrated autodialler, serial and parallel interface, plus an FCC-registered coupler.

1981 Smartmodem was released as an external modem to connect via an RS-232C serial port.  Working with pulse and touch-tone phones, it was cross platform.

Smartmodem had a data mode and a command mode.  Heatherington defined the command string ‘+++ ’ (three plus symbols and a pause) to alert the modem to switch modes.  Hayes patented this approach in 1985 and charged other manufacturers $1 per modem for its use (aka the ‘modem tax’).

At $279 Smartmodem gave the PC complete control of the phone line and as bulletin board services grew sales took off.

Competition drove prices down and, preoccupied with meeting deliveries, Hayes was slow to launch faster modems; this left the door open to others.

1976 US Robotics had beenfounded; the name from Isaac Asimov stories.   Starting with just $200 capital it achieved $50,000 turnover in its first year and soon became a threat to Hayes. 

USR developed its own high-speed transfer protocol, a 9600 baud service; this was later expanded to 14.4k and 16.8k and then the first 56k modem.  By 1984 USR had an 8% share of the total modem business, but 50% of higher-speed modems.  It had a 25% share of the USA market when it was acquired by 3Com in 1997.

Telebit was founded by Paul Baran, co-inventor of packet switching.  In 1985 its Trailblazer modem was first to achieve better than 9600 bps.  The Trailblazer was expensive because it had an on-board MPU but was well used by the UUCP/bulletin board community.  In 1996 Cisco Systems acquired Telebit for $200m.

Bill Yeager obtained his degree and masters in mathematics then pursued software engineering for his doctorate.  In 1981 he developed the first multiple-protocol router while at Stanford’s Knowledge Systems Laboratory. A router directs data packets between networks; reading the address in the packet it passes it on to its destination.

Len Bosack and Sandy Lerner, a married couple, worked in computer operations at Stanford.  They licensed Yeager’s software and founded Cisco Systems, the name derived from San Francisco. 

Cisco was the first organisation to sell multiple network protocol routers; in February 1990 the company was quoted on NASDAQ valued at $224m.  Clever design allowed its products to be software updated, giving the hardware a longer life.  Cisco acquired several Ethernet switching companies to broaden its base.

Founded by ex-PARC Pradeep Sindhu, Juniper Networks entered the router business in 1966.  By 2000 it had taken a 30% market share of the router market.  It sbattle with Cisco known as ‘core wars’. As Internet protocol grew in importance multiple-protocol routers became less important, but Cisco maintained leadership.  By 2000 it was rated among the world’s most valuable companies at $500bn.

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