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IBM Takes Wraps Off Its Data-Sharing Network

October 16, 1985

NEW YORK (AP) _ International Business Machines Corp. has come out with a network that enables computers to ″talk″ to their neighbors, but some analysts say the product announcement was less than they expected from the world’s largest computer maker.

IBM said its Token-Ring network at first will connect just its family of Personal Computers, although it can be connected by gateways to other pieces of equipment and sources of information.

Industry analysts had hoped IBM’s network would link the company’s personal computers with larger machines, including the System 36 minicomputer that the company has billed as the cornerstone of its office system.

IBM executives turned away questions about when its network might be upgraded to bring in larger computers.

″It was less than the industry expected. We’ll have to wait and see how the consumers react,″ said Karen Mulvany, technology analyst for L.F. Rothschild, Unterberg, Towbin in San Francisco.

Local area networks like IBM’s Token-Ring work like electronic mailrooms, shuffling data from place to place, and are intended to make offices more efficient by making it easier for people to send information between computers, printers and other devices.

The failure of computers and peripheral equipment to communicate easily with each other is a major hindrance to the automation of the modern office, analysts say.

As an example of its Token-Ring’s capability, IBM said, members of an accounting department using the network could use different computers to add data to a single base, such as the company’s accounts receivable.

The market for the local area networks is in the middle of an explosion, with worldwide sales jumping by more than 50 percent this year alone to around $900 million, Ms. Mulvany said.

IBM’s network communicates with its previously introduced PC Network, which it said is intended for smaller offices. It can also connect with outside data bases over phone lines through a digital switchboard manufactured by Rolm Corp. of Santa Clara, Calif., an IBM subsidiary.

The network will be available sometime in the first three months of 1986, IBM said.

IBM’s network can communicate with a mainframe computer, but so far it can only do so over a relatively slow speed line, which can handle only a fraction of the 4 million bits of data per second that the network itself is capable of handling. That is like trying to connect a water main to a straw.

″Clearly it’s technically feasible″ to bring more powerful computers into the network, but IBM will not say anything about its plans in that direction, company spokesman Dan Udell said.

″We expected a more comprehensive announcement than what we got,″ said Rick Martin, a securities analyst for Sanford C. Bernstein & Co. Joel Levy of Wohl Associates in Bala Cynwyd, Pa., said, ″It’s a piecemeal announcement. I would have to say we are a little disappointed.″

In spite of some other analysts’ disappointment, IBM has the power to become a major force in the networking business, said senior consultant Martin Pyykkonen of Arthur D. Little Inc. in Burlington, Mass. He said the large companies that are likely to buy the system are moving gradually themselves, so they do not need a full-blown network from IBM right away.

″IBM is not lagging, I don’t think,″ Pyykkonen said.

IBM took a step toward making its network the industry standard - the same as it did with its PC family - by giving other companies the information necessary to develop software and hardware that works on the Token-Ring network.

IBM also said that Texas Instruments Inc. will sell adapters that will enable other manufacturers’ equipment to be attached to the network.

IBM’s helpfulness to other vendors and the relatively low cost of attaching a PC to the network - $695 compared to the roughly $900 predicted by some analysts - are both strong points in IBM’s favor, said Martin of Sanford C. Bernstein.

And in a move to make its network popular with smaller users, IBM said Token-Ring can be used as an option with standard, existing telephone lines, although with a slight loss in quality of transmission from the data-grade cables.

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