Modem Pioneer Hayes Closes Up Shop

Modem pioneer Hayes shut its doors and began liquidating this week after an unsuccessful bid to emerge from its second bankruptcy. The company could not be reached for comment.

Dennis Hayes, founder of the company, is credited with inventing the AT command interface that lets PC devices and modems recognize each other, analysts said.

"It really made modems invisible to PC users," said Lisa Pelgrim, senior analyst at Dataquest, in San Jose, Calif.

Hayes was the leading modem maker for many years. "They were a leader. The future looked absolutely golden," said Sam Alunni, vice president of networking at Sterling Research.

But Hayes began to lose market share to the likes of U.S. Robotics and other modem manufacturers, Pelgrim said. By then, modems had become commodity products and vendors had to compete on volume, she said.

Other hurdles to Hayes' full recovery included the unexpected surge in sales of 28.8-kilobit-per-second modems, manufacturing troubles, the advent of PC makers buying modems directly from vendors, and a late entry into the remote-access server market, Pelgrim said.

By 1997, Hayes held 3.1 percent of the worldwide modem market, while 3Com, through its acquisition of U.S. Robotics, had 34.9 percent of the market, she said. "That really demonstrates how important volume is in this market."

Hayes filed for Chapter 11 bankruptcy the first time in 1996 and again last October. Hayes recently was forced to liquidate after lenders of interim financing refused to provide more funding.