You've Come a Long Way, Baby

By Alexander L. Taylor III

AT&T jumps into the market for linking up computers

American Telephone & Telegraph Co.'s long-awaited subsidiary, Baby Bell, came into the world last week. Some baby. The company, which will be known as American Bell, immediately had 1,000 employees and $59 million in assets from its corporate parent. Unlike AT&T, the offspring will be free of federal regulation and will thus be able to venture into the growing fields of information processing and computers.

American Bell's first offering will thrust it into the thick of one of the newest and fiercest slugging matches in U.S. business. Using its experience in transmitting human voices long distances over telephone lines, the company wants to do the same thing with business data between computers. It will sell a service called Advanced Information Systems/Net 1 that will, for example, allow a department store's computer to talk back and forth with another machine in a distant supplier's warehouse. The two machines can even be different kinds of equipment. Said AT&T Chairman Charles Brown last week: "The new service will do for data transmission what the switchboard did for telephones."

American Bell's main competitors in the market will be IBM and General Telephone & Electronics. IBM already has a service named Information Network that makes possible the high-speed transfer of computer data. GTE's subsidiary Telenet has about 700 customers for a similar system.

At the dawn of the computer era in the 1950s, nobody worried much about getting information from one computer to another. The earliest machines were housed in air-conditioned rooms, and operators had to work close by in order to use them. The proliferation of remote terminals in the 1970s, though, allowed people to use the computer from locations scattered around an office. But the terminals usually had to be made by the same manufacturer and could not operate independently of the central unit.

A host of companies is now trying to enter the market with products that will permit one computer to talk to another, whether it is across the country or across the room. While American Bell is concentrating on long-distance operations, other firms are trying to develop so-called local networking systems that would be used to link together individual offices in the future.

Businesses may soon have an information outlet in the wall just as they now have outlets for electricity and the telephone. This new one would be connected to a cable that ties together, for example, the personal computer in an executive's office with computers of other managers, his secretary's word processor and centralized files or duplication services. A businessman could thus call up information for a report, write it out, send it to duplication and then to the company files with the push of a few buttons. Experts predict that the equipment to tie these various machines together will be a $1 billion-a-year business in 1985.

Xerox was one of the first companies to develop a local network system, Ethernet, which was announced in 1979 after six years of research. The firm has been hurt in recent years by slumping copier sales, but it hopes that Ethernet will help it regain its prominent position in office equipment. Xerox encouraged Digital Equipment Corp. to make computers that can run on its system, and has sold licenses for a nominal $1,000 to some 100 other companies to build compatible equipment. Says John Shoch, deputy general manager of office systems: "We don't sell Ethernet. We sell office systems, and Ethernet is part of the office system." The big drawback of Ethernet is that it can send only one message at a time, albeit at a very high speed--about 300 pages a second.

One year ago, Wang Laboratories in Lowell, Mass., announced its network, called Wangnet. It has three separate channels: one for Wang's computers, another to join its machines with those of other manufacturers and a third for video transmissions. That may be more extensive than many companies need. Wang says it is already drawing up plans for more than 80 Wangnet installations.

In addition to those two companies, there is also a multitude of other firms offering various programs to hook up offices of the future. Says Industry Analyst Jean Yates in San Francisco: "There are a zillion different networking systems. Every company out there will gladly sell you two." The company that develops the system that becomes the industry-wide standard will clearly have a giant jump on its competitors.

So far, though, there seems to be mainly confusion in the market. Says Consultant Brian Jeffery of Strategic Inc., a California research firm: "It's amateur night at the networks. Half the time we don't know what the hell is going on." As a result, many companies are holding back on their big investments, waiting for one networking system to become dominant.

Firms that have already gone into the field report that networks can quickly change office style. Atlantic Richfield Co. has installed a pilot project that links 50 employees on the 21st floor of its Los Angeles corporate headquarters. Says Deanna Bengston, the director of Arco's office support program: "People are collaborating more on documents; it's affected the working style." At the nearby Transamerica Corp. offices, some 200 employees on three floors are connected by a network. Says Transamerica Consultant Zara Haimo: "We're looking for improved quality in the way people work." So far, she admits, results have been hard to measure.

One obvious form of office networking, though, might already be installed. It is the telephone line. Says one industry source: "Most companies already have a good network in place. The wiring is in the wall." Telephone equipment manufacturers like the Rolm Corp. are beginning to make small devices that cost as little as $600 and can connect a desktop terminal to other office equipment like word processors over existing phone lines.

Such networks carry less information and operate more slowly than Xerox's or Wang's, but are easier for small companies to install and operate. Those telephone-based networks would provide another market opportunity for AT&T's new baby, which seems determined to get American computers to reach out and touch each other. --ByAlexander L. Taylor III. Reported by Michael Moritz/San Francisco and Bruce van Voorst/New York

With reporting by Michael Moritz, BRUCE VAN VOORST

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