We are celebrating the 50th anniversary of Ethernet. Bob Metcalfe is considered the inventor of Ethernet, which happened at Xerox Research Center in Palo Alto in the 70s. It was there that Metcalfe wrote a memo describing Ethernet. At that time, many competing technologies intended to connect computers in the same physical space. The concept was called Local Area Network or LAN. 

The birth of a Standard

Metcalfe wanted to make Ethernet an industry standard and knew he must involve other companies. So, around 1980, he sought out Gordon Bell, the head of engineering at Digital Equipment Corporation, which was the second largest computer company after IBM. Gordon thought it was a great idea, and then these two companies brought Intel into the mix. The three companies collaborated to create an industry standard a few years later. In the meant time, Metcalfe left Xerox to start a network company called 3Com which would make ethernet products for the personal computer industry.  

Interestingly, neither Xerox, Digital Equipment, nor Intel benefited directly through selling ethernet products. Still, of course, LANs played a significant role in the growth of personal computers, and of these three, Intel was the primary beneficiary. 

First Ethernet Products

I got involved 1981 when I was leading Digital’s efforts to develop a personal computer focused on knowledge workers called the Professional 350. Gordon Bell, who at that time was more or less my boss, asked me to add Ethernet as a capability. We did not build it but added a special connector to the packaging. We contracted with 3Com to provide us with ethernet cards. I believe this was the first significant order they got, but Metcalfe never mentioned it and chose to focus on delivering add-in cards for the IBM PC, but that came later.

The initial design of Ethernet used a coaxial cable which was, for some reason, yellow. You used a clamp to hold and penetrate it if you wanted to connect to it. One day, Ken Olsen, Digital Equipment Corp.’s founder and CEO, walked into Gordon’s office when he and I met. Ken held the yellow coax cable in one hand and some telephone wires in the other, saying, “Maybe your university friends want this yellow cable, but my friends want telephone cables. Gordon got angry and told Ken that he could probably get a job as an engineer at Data General (Digital’s main competitor at that time) to develop that idea. Ken turned out to be correct.

Sadly, the Professional 350 was not a commercial success and did not impact the development of the personal computer industry or local area networking.

In 1984, I joined Intel as Director of Business Development and was promoted to Vice President a few years later. I started what became Intel Capital in 1988, although we marked the official start as 1991 when Les Vadasz, my boss, and I established Intel Capital.

Intel Enters the Ethernet Board Business

Intel had a division called PCEO which sold PC enhancement products. Around 1989, they wanted to sell ethernet boards retail. I strongly believe in the importance of networking and put my weight behind it. Unfortunately, Intel did not have a competitive ethernet chip offering. So we went to an early-stage company called Broadcom and made a significant investment. PCEO began selling ethernet cards for the PC and directly competed with 3COM.  

At the same time, I was looking to get into the networking business and had gotten the Intel board to support this idea. I brought the idea of acquiring Cisco to Andy Grove, the CEO. At approximately $100 million, Andy told me it was too expensive. Then I considered 3COM, which would have been a lot cheaper. Andy said that the company was a pile of crap. I responded, “I get it. We can’t afford anything we would want, and we don’t want anything we can afford.”

Intel Capital Invests in Networking Companies

Instead, I started making minority investments in early-stage networking companies. One of these was Kalpana Networks which made an ethernet switch. It was acquired a few years later by Cisco.

We increased our investment in Broadcom. By that time, I was leading Intel’s broadband efforts in developing cable modems and ADSL for the telephone network.  

Residential Broadband and Home Networking

In 1992, I started working on using the cable infrastructure to connect home personal computers to the internet. Broadcom and General Instruments were developing chips for digital television at that time. One chip did video decompression, and the other handled the networking. Looking at the Broadcom product, I recognized it, too, was a packet network similar to Ethernet. So, we developed a cable modem demonstrated in 1993 at a major cable industry conference. Eventually, the Cable Industry would develop DOCSIS, the cable modem standard incorporating much of our earlier work. The first cable modems were external and connected to personal computers via Ethernet, which was the only connection that was fast enough at that time. Later USB would be used for this purpose. Eventually, one computer per home was insufficient, so we began to see the development of home LANs. At first, these used ethernet cables, but ultimately, Wifi was developed and became the primary way computers and other devices communicated in the home.

Ethernet a great Success Story

Ethernet is a great success story and shows the power of standard. It has been able to evolve over the years from 10 mbits/sec to 10Gbps for instance.

There is a lot more about all this in my book, The Flight of a Wild Duck.