Thousand Oaks, CA--The idea came to electrical engineers Dirk Gates and J. Kirk Mathews when they shopped for office equipment at a computer store seven years ago. Fed up and frustrated with internal corporate politics while working for a subsidiary of a billion and half dollar organization, they decided to strike out on their own.
With the lease prepaid for office space, and willing to live off their savings, Gates and Mathews were ready for a one-year commitment. The problem? They had no idea what they were going to design.
Users of portable computers, they had shared the frustrations of trying to get onto a network. "We were waiting for our office equipment to be wheeled out of the back room and noticed a software program that advertised the ability to transfer data from machine to machine via a parallel port," says Gates, who topped a recent Forbes magazine list of CEO "whiz kids" of the best small companies in America. "Just earlier we had been talking about ways to simplify LAN connections, in particular portables. Suddenly, it dawned on us: Hey, we can make a LAN connection through the parallel port."
Seven years later, that idea continues to strike a resounding chord in the rapidly expanding portable computer industry that is widely accepted as part of the corporate mainstream. And, as a result, Xircom, Inc., named after Kirk, Dirk, and communications, is soaring.
By catering to PCs and LANs, the company had a 236.4% annual growth rate in its first five years, according to Hoover's 1995 Handbook of Emerging Companies. By 1993, the company controlled 74% of the worldwide market in external LAN adapters and 53% of the PCMCIA LAN adapter market. Revenue forecasts for 1996 are expected to top $180 million.
Quick response and simplicity. Employing over 450 people worldwide--most with engineering backgrounds--management stresses the need for innovation, a quick response towards mobility and portability trends, and an appreciation of design simplicity. "We look for a unique breed of engineer who is not only enamored with the technology, but has a good product marketing sense," says Gates. "That's opposed to just an appreciation for the technical complexity of the design problem."
Gates attributes that mix of marketing savvy with engineering to his own experience in getting an MBA at night school when starting up the company. "Looking back it sounds suicidal, but the program turned out to be a great benefit for the company," he explains. "Rather than focusing on engineering a product, we give the same amount of attention to other areas of the business. I used the marketing, manufacturing, and strategic plans done in night class with fellow students as Xircom's business plan." The result: a documented three-year plan for the business that ultimately allowed Gates to land a couple of million dollars in venture capital.
Moreover, Gates values engineers who appreciate the difficulties involved in designing a product that is simple to use. "It is important to keep simplicity and the customer's reaction in mind throughout the entire design process, from the moment that you start thinking about the product to when you are designing it to how it's packaged."
Ease of use, a tactile response to the product, and what Gates refers to as a "good out-of-the-box experience" are all considered valuable product design characteristics. "Engineers need to put themselves in the user's shoes to really understand what they want," he emphasizes. "That even includes how easily you can rip the shrinkwrap off when you want to get it up and running."
Innovative products. The quality investment seems to be paying off. In 1993, the company launched Netwave, a wireless LAN connectivity product that supports 20 mobile PC users within a 150-foot radius. In 1994, after technical delays, the product received FCC clearance, and Xircom's sales rose from $82 million to $131 million. Today, Xircom offers a range of pocket and desktop connectivity products, including parallel-port LAN adapters, PCMCIA credit-card LAN adapters, and parallel-port multiplexers.
Among the flurry of new product introductions this year is Netaccess, a series of intelligent remote-access products that can be integrated into industry-standard PC platforms and networking operating systems to create open-system, remote-access servers that are said to be scalable, reliable, and more easily managed. The first product in the series, the Netaccess Multiport Modem Card, integrates multiple V.34 modems on single ISA bus cards, eliminating the bulky mass problem of serial cards, connectors, multiple external modems, and cables common to many systems.
Other products include the CreditCard Modem 28.8, a modem-only PC card, the CreditCard Ethernet+Modem (CEM) 28.8 that combines a high-speed V.34 data/fax modem with a full-duplex PC card Ethernet adapter, and second-generation wireless LAN software. Netwave Release 2.5 offers seamless roaming and is said to increase data throughput up to 50%, depending on the environment.
Xircom has also lowered its price for the wireless Netwave CreditCard adapter, from $599 to $399. "Wireless LANs are gaining acceptance in vertical applications, but pricing has been a barrier to broad-scale adoption in the horizontal business market," explains Phil Belanger, vice president of wireless product development. "To drive market development, we seized the initiative and eliminated the price barrier."
Strategy savvy. One of the company's latest strategic moves will zero in on two initiatives to strengthen and expand its remote LAN access solutions. It has acquired Primary Rate Inc., (PRI), Salem, NH, a leading supplier of standards- based ISDN products and plans to offer a line of PCMCIA modems.
The PRI acquisition should bring the company ISDN software and hardware solutions much more quickly than if the company had undertaken development internally. Xircom expects to target organizations and individuals that want high-speed, remote access for such applications as telecommuting and Internet access. ISDN is also a major component for cellular infrastructure and video-on-demand delivery systems.
Xircom's plans for PCMCIA modems should further support its strategy in providing a suite of connectivity solutions for the mobile user. "We led the industry a year ago with the first PCMCIA product to combine a LAN adapter and high-speed modem on a single card," says Gates. "Now, we're responding to market needs for a total remote-access solution with a new line of PCMCIA modem-only products. This is a natural product extension."