Short case history - standards - speech by 3Com Corp. VP Robert M. Metcalfe on Ethernet

RELease 1.0, Annual, 1990 by Robert M. Metcalfe

Moving ahead to 1982, and the reason I've chosen 82 is because it was at this conference, I guess it was still called the Rosen Conference - Dyson: It was the PC Forum. Metcalfe: The PC Forum in 1982, excuse me. That was the year I had the pleasure of declaring 1982 the year of the LAN.

Dyson: The first of many times.

[Laughter]

Metcalfe: In 82 Xerox entered the workstation market using Ethernet. Ungermann-Bass entered what we then called the general-purpose LAN business, connecting terminals to hosts using Ethernet. DEC entered the Ethernet market networking minicomputers, and 3Com entered the market, connecting pcs with Ethernet.

More than one winner

Now we jump to 1990. The strategy of introducing this intellectual property into the marketplace, that is giving it away, seems to have worked. Ethernet in large degree created, if I may say so myself, the LAN marketplace and is number one today.

Who were the winners and who were the losers? It's very complicated because the LAN is only one of the dimensions in which business was conducted. There were many other factors affecting who the winners and losers were and are.

Clearly the biggest winner was DEC, which today is the largest LAN supplier of all kinds. DEC also has sold a lot of VAXes in the meantime.

DEC's vitality, particularly between '83 and '88, is attributed to its early and enthusiastic exploitation of LAN technology, particularly Ethernet technology, in the minicomputer marketplace.

Another big winner would be Sun Microsystems, which introduced their products sometime after 1983, using Ethernet and a number of other standards. Then there are companies like 3Com and Novell which are both $400-million companies today. In fact 3Com has installed 1.4 million Ethernets; we ship about 50,000 to 60,000 per month.

It's actually the connection to Ethernet, rather than Ethernet itself. This is one of the secrets of leveraging free intellectual property. Our business is not based on selling only Ethernet connections but selling many other aspects of the networking system based on that, repeaters and servers and bridges and routers and network management and so on.

The biggest winner were the customers. The decision to put the Ethernet intellectual property in the public domain created the LAN industry. It generated fierce competition which is accelerating today, bringing the cost of Ethernet connection from $5000 in about 1981 to $300 today. That's at list price, and it's not counting the Ethernets built into computers by Sun, DEC, 3Com and others.

The costs have come down for the customers. Plus the ability to mix and match products or multiple vendors has been a great benefit to all of our customers.

Yes, there were losers

Probably the most famous loser - once again I concede this is a complicated subject - from a LAN dimension would be DataPoint, whose ArcNet in 1982 was the only LAN appreciably installed. DataPoint decided to keep ArcNet proprietary and I think missed an opportunity.

Another loser - again losing is relative - was Apollo which lost in a small way to Sun because Apollo got started before Ethernet was standardized. Sun then adopted Ethernet as a standard and has prospered using it.