Hayes Microcomputer Products

Hayes Microcomputer Products

Company type	Private
Industry	Modem manufacturing
Founded	1977
Founder	Dennis C. Hayes, Dale Heatherington
Defunct	1999
Fate	Dissolved; brand acquired by Zoom Telephonics
Headquarters	United States
Area served	Worldwide
Key people	Dennis C. Hayes (founder), Dale Heatherington (co-founder), Glenn Sirkis (marketing manager)
Products	Modems, including the Smartmodem series

Hayes Microcomputer Products was an American modem manufacturer renowned for creating the Smartmodem, which introduced a command language enabling modem control through the serial interface, eliminating the need for manual front-panel adjustments. This breakthrough automated modem operations and laid the groundwork for the widely recognized Hayes AT command set.

From the debut of its original 300 bit/s Smartmodem in 1981, Hayes held a commanding position in the modem industry throughout the 1980s by consistently releasing models with increased data rates. Its principal rivals included USRobotics and Telebit, while other companies concentrated on specialized or budget market segments.

In the early 1990s, competitors launched affordable, high-speed modems such as the SupraFAXModem 14400 (1992), which eroded Hayes' market dominance and pricing power. The mid-1990s introduction of ADSL and cable modem technologies further intensified competition, resulting in several Chapter 11 bankruptcy filings for Hayes and ultimately its dissolution in 1999. Subsequently, the Hayes brand was acquired by Zoom Telephonics.

Before Hayes

Dennis C. Hayes, a graduate of Georgia Institute of Technology, began his professional journey at National Data Corporation, overseeing modem connections used for electronic transactions. He later joined Financial Data Sciences, where he gained valuable experience identifying niche markets that larger companies tended to overlook.

As an avid computer user, Hayes perceived a significant opportunity in developing affordable and user-friendly modems tailored to emerging 8-bit home computers—a sector largely ignored by major manufacturers such as IBM. This insight heavily influenced Hayes Microcomputer Products’ strategic direction and product focus.

Early Hayes products

At that time, modems were either external acoustic couplers that required manual dialing or internal modems designed for mainframes that automated dialing and disconnection. Internal modems managed connection sequences via the computer bus but were not available for microcomputers. Hayes sought to bring this level of automation to the microcomputer market.

In April 1977, Hayes and co-founder Dale Heatherington started producing the 80-103A, a 300 bit/s modem compatible with Bell 103 standards intended for S-100 bus systems. Due to regulatory restrictions, it connected through Bell’s leased Data Access Arrangement (DAA). To support their operations financially, they also took on electronics assembly projects.

By January 1978, Hayes and Heatherington had left National Data to establish D.C. Hayes Associates, which achieved $125,000 in sales during its first year ().

Sales surged in early 1979 following the release of the Micromodem 100 for S-100 computers and the Micromodem II designed for Apple II systems. After Bell lost legal battles restricting third-party devices, Hayes introduced an FCC-approved "microcoupler," an external device connecting via ribbon cable to internal modem cards that functioned like a DAA box—ensuring regulatory compliance while broadening their market reach.

The company rebranded as Hayes Microcomputer Products in 1980.

The Smartmodem

Although internal modems offered strong performance, they were commercially impractical because each computer bus—such as Apple II or TRS-80—required unique hardware designs and specialized drivers. Increasing demand called for a universal solution using the RS-232 serial port common to many computers. The challenge was transmitting commands over the same line used for data communication.

Hayes collaborated with marketing manager Glenn Sirkis and founder Dennis C. Heatherington to create an external modem controlled by commands. Heatherington proposed two distinct operational modes: data mode, which transmitted information normally, and command mode, which interpreted input as configuration instructions like dialing or disconnecting. The modem would initiate in command mode.

To enable switching between modes without relying on unreliable RS-232 control pins, Heatherington devised an innovative escape sequence bracketed by one-second pauses ("guard time") to differentiate deliberate commands from regular data transmission. This approach ensured broad compatibility across diverse systems.

After initial unsuccessful trials using a low-cost 1 MHz PIC microcontroller, Heatherington insisted on employing a more powerful 8 MHz Zilog Z8 processor, resulting in a functional prototype within six months. Additionally, Hayes required automatic detection of the host computer’s serial port speed at startup by prefixing commands with an "attention" sequence ().

Unveiled in April 1981, the Smartmodem integrated full telephone line control within a compact extruded aluminum enclosure designed to stack alongside other devices. Hayes envisioned a product ecosystem called the Hayes Stack, which included peripherals like the Stack Chronograph (a real-time clock) and Transet 1000 (printer buffer/email interface), although these extensions experienced limited commercial success.

Initially underestimated by competitors due to the small size of the modem market, the Smartmodem gained momentum as hobbyists paired it with software to create early bulletin board systems (BBSes), fueling rapid expansion of demand. By 1982, annual sales had reached 140,000 units generating $12 million in revenue.

Heatherington retired from Hayes in 1984 after guiding its growth into a leading industry force.

Competition

During the 1970s, the modem industry was relatively static and straightforward, with typical prices around US$1 per baud. Hayes differentiated itself by introducing the original 300 baud modem at a premium price of US$299, marketing it as the "Cadillac of modems" due to its superior components and unique design. As the market expanded, competitors imitated Hayes’ command set and aesthetic but often compromised on quality by using cheaper, less dependable parts. Hayes quickly earned a reputation for reliability, securing approximately half of the market share for a period.

In 1982, Hayes unveiled the Smartmodem 1200, the first practical all-in-one modem compatible with Bell 212 standards at 1200 bit/s, priced at $699. This product showcased Hayes’ technical expertise and strategic vision to lead modem innovation. Nevertheless, rival companies soon introduced comparable 1200 bit/s models. The 1200 bit/s segment was brief; in 1984, the CCITT established the V.22bis standard for 2400 bit/s modems, which Hayes adopted with its Smartmodem 2400 in 1985, retailing at $549. By 1987, clone modems were available for roughly $250, transforming modems into commoditized goods and heightening competitive pressures.

Hayes '302

In June 1983, Hayes encountered patent licensing demands from BizComp, a smaller modem producer holding intellectual property on an escape sequence technique used to toggle between command and data modes—a fundamental feature of the Smartmodem. BizComp proposed licenses ranging from $500,000 plus royalties per unit to a $2 million buyout. Ultimately, Hayes opted for the $2 million license.

Hayes then enhanced its own patent filing by incorporating a "guard time" feature absent from BizComp’s claim and was granted US Patent 4,549,302 in October 1985 for this refined escape sequence technology. Utilizing this patent, Hayes began imposing a 2% royalty fee on retail prices from other manufacturers employing its system, including retroactive charges on previous sales. This move triggered legal disputes and counter-litigation from competitors asserting prior use of similar technology. However, patent reviews upheld Hayes’ claim in 1986.

Following this, Hayes received judicial authorization to pursue infringement lawsuits and initiated actions against major players such as Everex and Prometheus Products. Rival firms derided these royalties as a "modem tax" and developed alternative methods like the Time Independent Escape Sequence (TIES), but these substitutes lacked durability and failed to gain significant adoption.

This situation underscores Hayes’ tactical use of intellectual property rights to safeguard its market position and generate licensing revenue—a critical element of its business strategy amid industry expansion and consolidation.

Higher speeds and increased competition

Compared to rivals such as USRobotics (USR) and Telebit, Hayes was slower to introduce modems exceeding 2400 bit/s, allowing those companies to seize market share with faster offerings. Telebit led with speeds approaching ~18,500 bit/s, excelling on noisy telephone lines and targeting professional users—particularly Unix-based minicomputer systems utilizing UUCP protocols. USR provided simpler 9,600 bit/s models but gained traction by heavily discounting units to system operators.

In 1987, Hayes released the Hayes Express 96 protocol operating at 9600 bit/s, nicknamed "Ping-Pong" due to its rapid channel switching without renegotiation. However, it lacked error correction capabilities and arrived later than competing products, diminishing its competitiveness and signaling a decline in Hayes’ innovation leadership within the modem sector.

Hayes’ delayed entry into high-speed markets led to fragmentation of modem command sets. Initially, new commands prefixed by were introduced with the Smartmodem 2400 and widely adopted by others. Yet with the Smartmodem 9600 release, competitors created incompatible command syntaxes: USR employed a distinct , Microcom used , while Telebit relied on register configurations. These differing protocols persisted into the early 1990s.

By the late 1980s, international standards began to take shape. The CCITT introduced V.32, enabling full-duplex communication at 9600 bit/s—an advancement over earlier asymmetric protocols. In 1988, Hayes discontinued Express 96 in favor of V.32 support and integrated MNP error correction within the US$1199 Hayes V-series Smartmodem 9600. Two years later, in 1990, Hayes launched the Smartmodem Ultra 96, which added V.42bis error correction and compression alongside MNP support while accommodating both V.32 and Express 96 protocols. Despite these improvements, V.32 modems remained expensive; third-party devices were priced near US$600 as of 1990.

V.32bis

After the release of V.32, the CCITT rapidly formalized a faster 14,400 bit/s version known as V.32bis. Unlike earlier speed enhancements primarily driven by firms such as Hayes and USR, Rockwell (previously Conexant) was the first to introduce an affordable chipset supporting V.32bis, as well as V.32 and V.22bis (2400 bit/s), incorporating protocols like MNP, V.42bis, and optional 9600 bit/s V.29 fax functionality. This chipset powered the commercially successful SupraFAXModem 14400, which triggered a surge of similar products and compelled competitors to develop analogous chipsets.

During this time, Hayes found it difficult to reclaim its market dominance. In late 1991, they introduced the US$799 Smartmodem Ultra 144 featuring Express 96 support, but faced a market saturated with less expensive alternatives. Hayes divided its product line into Accura (budget-friendly) and Optima series, although the differences in features were minor. To better compete with firms like Supra Corporation and Zoom Telephonics, Hayes acquired rivals Practical Peripherals and Cardinal Technologies, using these brands for lower-cost offerings.

With the emergence of V.34 and V.90 standards, Hayes increasingly trailed industry innovation instead of leading it. By the mid-1990s, their modems predominantly utilized Rockwell chipsets, offering limited uniqueness. Notably, Rockwell’s chipset reinstated the original high-speed command sets developed by Hayes, which subsequently became an industry standard again as other manufacturers adopted similar command protocols.

Decline and fall

Foreseeing the gradual obsolescence of traditional modems due to changing telephone network infrastructures, Hayes invested early in consumer-ready ISDN "modems," anticipating widespread ISDN adoption—a cornerstone of their early 1990s strategy. However, ISDN failed to gain significant traction in the U.S. consumer market because of infrastructure limitations and modest speeds (56 or 64 kbit/s).

The Internet boom of the mid-1990s shifted user demand away from point-to-point communications toward high-speed connections through local ISPs, reducing the importance of long-distance data calls. Bell companies favored ADSL, which provided higher speeds over existing phone lines without interrupting voice service and often bundled ISP access to maintain customer loyalty.

Having committed heavily to ISDN technology that never achieved commercial success, Hayes found itself without competitive new products. In 1991, it acquired Waterloo Microsystems Inc assets to enter the network operating system market with LANstep for small offices but abandoned this initiative by 1994 due to strong competition from Novell NetWare. Efforts to penetrate ADSL and cable modem markets were delayed while rivals such as USR dominated the high-end modem segment.

Financial difficulties culminated in Hayes filing for Chapter 11 bankruptcy protection in November 1994; it emerged in October 1995 after selling a 49% stake to Nortel and a Singapore-based venture capital firm. In 1997, Hayes merged with Access Beyond, a manufacturer of ISP modems and terminal servers, rebranding as Hayes Communications. This merger aimed at facilitating an initial public offering; however, stock prices collapsed from approximately US$12 in early 1998 to mere cents by October when the company filed for Chapter 11 bankruptcy again. Unable to obtain new financing, Hayes proceeded with asset liquidation in 1999.

The Hayes trademark was purchased by former competitor Zoom Telephonics in July 1999, which continues to utilize the brand on selected products today.

See also

• Popcom, an early rival to the Hayes Smartmodem with partial compatibility

External links

• Hayes Photo Collection
• Hayes Marketing Materials
• The Modem King: Rise and Decline
• Overview of Hayes Corporation History