Market Order: Data Communications, 1973–1979

Abstract

own success selling products that connected computers using existing technolo­ gies. Their customers couldn’t get enough of these devices. For the nearly 100 modem and multiplexer start-ups, the market for communications products was growing rapidly. For some companies, the competitive phase of the marketstructure would become fatal if they were unable to generate sufficient profits to sustain growth. For a few—some on the brink of collapse—the right combination of engineering, luck, and a keen eye for realizing opportunity would propel them to positions of market leadership. In this increasingly competitive stage of the data communications marketstructure, the government continued to influence market dynamics, both through antitrust litigation against both AT&T and IBM as well as through changes in telecommunications policy. The FCC further defined the separation between voice and data services over the telephone network. These new regulations had sig­ nificant impact on AT&T especially, restricting them from competing in the data services markets unless as separate subsidiaries. Entering 1973, industry analysts expected the robust growth of data commu­ nication revenues to continue at 40–50% per year. Lower prices and increased competition, especially in the high-speed modem category where AT&T had finally introduced products, drove demand. But by 1974, a sagging economy and merciless competition had firms struggling to break even. Sales of modems were projected to be flat. No one imagined that just a few years after its announcement in November 1971, the microprocessor would energize unprecedented opportunities. Market Order: Data Communications, 1973–1979