Although he owned three Apple II microcomputers to speed up billing and record keeping, San Jose Clinic Pharmacy owner and pharmacist Frederick Howe was wasting a good part of his day running up and down stairs to check on his files. His bookkeeper, located in the business office downstairs, would update the files on her computer. Howe would then either look at figtires on her machine or bring the disks upstairs to read on his own Apple before returning them to the bookkeeper for new entries. He could have saved time and shoe leather by using a telephone adapter (mo dem) to transmit data over the telephone, but that would have tied up the line every time he needed information.

The answer to his problem was a local-area network, sometimes referred to as an LAN, a relatively new development that promises to speed internal communications and eliminate paperwork for large and small businesses alike. Networking of large computers -- linking them to remote users via high-speed transmission lines -- has long been a mainstay of data processing. Now local-area networking, as its name implies, allows computerized equipment (including personal computers, word processors, centralized data storage devices, and electronic printers) to transfer information quickly and economically within a limited area, typically on the premises of a single enterprise or between a company's office and factory facilities.

A local-area network consists of the devices it links the wire or cable used to carry data among them, and special circuitry (often on a board that plugs into these devices) that allows each station on the line to transmit and receive information in the encoding system ("protocol") common to the network. With growing competition among networking schemes and resulting price breaks, even modest enterprises like Howe's five-employee pharmacy in San Jose, Calif., can afford the technology.

Now, when Howe's bookkeeper enters data on her Apple, they are stored on a high-capacity hard disk that is shared by the other two Apples. And all three computers can communicate directly, eliminating the need to exchange information by physically transferring floppy disks. With a few keyboard entries, Howe can call up billing information on his computer upstairs from the hatboxsize, hard-disk device, gaining access to the same file his bookkeeper may have added to just moments before at the computer downstairs. The Corvus Omninet networking system Howe chose interconnects Apples and hard-disk memory via twisted-pair wires -- resembling standard electronic wiring -- and index card-size circuit boards, known as "transporters," plugged into a slot inside each Apple.

"We first got interested in networking when we considered sharing information stored on a hard disk," explains Howe. "We priced networking schemes, and they were all too expensive for us, except for Corvus's Omninet. This entire system, including the Apples, cost us $17,000. The hard disk came to $6,500, while the cost of each plug-in card for the Apples was $650. The system turned out to be extemely reliable."

The only major problem Howe has encountered is a common one for local-area network users: After only seven months he has used up all of the network's shared disk-storage capacity. "The hard disk can hold up to 20,000 of our prescription records and it's filled to capacity. We have to buy another hard disk. In the meantime, we can get by with dumping a month's worth of records at a time onto the video cassette we use for backup." Howe's Omninet system is connected by means of a $900 shoe box -- size Corvus Mirror circuit to an ordinary VHS video cassette recorder, permitting rapid copying of valuable data from disk to cassette.

Like many local-area network users, Howe has found the system to be more powerful than the sum of its parts. Having placed all billing functions on the network (with an off-the-shelf accounting program from Great Plains Software Inc., of Fargo, N.Dak., which is designed for use with the Corvus hard disk system), he is developing his own customized program for filling prescriptions and reporting. "We've been using a data management program called the Data Machine [from Pascal Systems Inc., of Menlo Park, Calif.] to consolidate all the information we need," says Howe. "When we have our application completely worked out, we'll be able to have anyone on the network instantly call up prescription files, type up labels, print out bills and reports for third-party billing, and provide data for planning and inventory. The system will also print out a client's allergy listings and multiple-drug prescriptions to warn against contraindications and possible drug interactions. When you realize how many footsteps we can save in a day, it's amazing we ever got by without a local-area network. "

As computerized office equipment appears in more and more businesses of all sizes, local-area networks are solving a variety of office problems. By substituting a speedy flow of electrons for footsteps and slow-moving paper, growing companies no longer need worry about snail-paced interoffice mail, securing stacks of sensitive documents, or tracking down those files that always seem to be circulating when they should be on someone's desk. A local-area network, for example, can be used to implement interoffice electronic mail, including password security for sensitive tiles. And by providing rapid data transmission it saves time and effort in creating documents, filling orders, accounting, and other business functions.

Although hardly new in theory, local-area networks became practical only with the development of low-cost computer systems. As the cost of computing power diminished faster than that of large-capacity memory devices or sophisticated printers, there was an economic incentive to interconnect the relatively inexpensive, stand-alone computer equipment in order to share peripheral devices and data.

Datapoint Corp. of San Antonio, Tex., introduced local-area networking in 1977 with the ARC (Attached Resource Computer) system for interconnecting its own minicomputers and terminals. To connect devices from different manufacturers, however, would require a standard method of communicating. In May 1980, industry giants Xerox, Digital Equipment, and Intel (the chip manufacturer) jointly announced the Ethernet networking system, which they hoped would serve as a standard. But dozens of manufacturers, from industry leaders to garage-based up-starts, have come up with their own systems of wiring and data encoding to link "smart" devices. Ethernet, therefore, has not become a universal standard, although it has proven popular with many other makers (see box, page 54).

The profusion of local-area network designs has led to a range of choices in installations and prices and some confusion for prospective users. Manufacturers tend to design systems first for linking their own equipment and then perhaps to accommodate a few rival brands of machines. Data is transmitted in a form particular to each network, and even the kinds of wires connecting these devices vary, limiting each network's applicability to only a few different makes of equipment.

Local-area networks range in price. An installed system can run from several thousand dollars to a few hundred thousand dollars, depending on the area covered, the number of attached devices, and the technology employed. For example, over half a dozen types of cable are used by competing local-area network schemes, with cost ranging from a few cents to $3 per foot. More expensive wiring may transmit signals more rapidly from scattered workstations or even transmit several signals simultaneously, including voice and video communications. But cheaper wiring may be the only choice for linking devices from specific manufacturers. For instance, an Ethernet system cannot be used with Apple computers.

Cost will also vary, depending on whether you are buying computers from the manufacturer who sells the network or buying a network to link computers you already own. The price of interface circuits that plug into the chassis of popular microcomputer systems can be as low as a few hundred dollars per station, but sophisticated electronics assuring error-free data transmission can raise the cost to several thousand dollars per workstation. Despite the incompatibility of rival networking systems, the choice of systems for every budget is one reason local-area networks are expected to grow from a few thousand computerized office devices connected in 1982 to more than 5 million by 1992.

At the Houston-based law firm of Andrews & Kurth, a 130-attorney office on five floors of the tallest building in the Southwest, a local-area network speeds the flow of draft documents and pays for itself with typeset-quality printing of corporate reports, prospectuses, and other legal papers. Savings in typesetting costs alone have justified the relatively expensive Ethernet system -- in this case with connecting cable and applications programs bought outright and the Xerox workstations leased as a hedge against equipment obsolescence.

According to Dennis McGuire, the firm's director of administration, the decision to use a local-area network was prompted by an impending move to the Texas Commerce Tower, a newly completed 75-story office skyscraper. "We knew it would be a lot easier to install the cable before the ceiling went in, so we started to survey the possibilities. We chose Ethernet because it was compatible with the Xerox word processing equipment we were already using.

"With legal documents going through 3 to 10 revisions, revising drafts used to take days of circulating and retyping," he recalls. "We would have to walk documents from office to office for editing and approval, wasting valuable time for everyone concerned. And then you'd have to wait for a typesetter outside the office to do the final composition. We felt there had to be a better way of doing things."

Last January, Andrews & Kurth moved into its new quarters, complete with conveniently located Ethernet cables. Adding office equipment to the network can be as easy as plugging a jack into the nearest receptacle. The computerized workstations on this local-area network include five Xerox 860 word processors and six top-of-the-line Xerox 8010 Star professional workstations. A file cabinet-size Xerox 8031 File Server hard-disk memory device has enough capacity to store the equivalent of 4,500 typewritten pages. The electronic Xerox 8044 Print Server laser printer cari produce 12 typeset-quality pages per minute.

"Now we can draft and print documents in hours, instead of days," says McGuire. "First drafts are usually edited on our stand-alone Xerox 850 secretarial word processors with one-line displays. When documents are ready for final editing, they can be transferred on standard 8 1/4-inch diskettes to our 860s." The 860 word processors' full-page displays allow on-screen formatting of documents, to see how they will look when printed out. The 860s can also directly transmit text via Ethernet to the more expensive Star workstations, where lawyers and assistants can decide on different typefaces and final layout before sending the document electronically to the high-speed printer. Designed to take full advantage of Ethernet's easily learned command structure, the Star workstation features picture-coded option menus illustrating the terminology used on the network. "The system is so flexible that we have hardly had to change any of our office procedures," adds McGuire.

From entering orders and controlling inventory to selecting suppliers and scheduling personnel, a local-area network integrates all aspects of resource planning at Triple-A Specialty Co., a Chicago-based company specializing in making battery chargers and booster cables. The network is a Datapoint ARC system, connecting a Datapoint 5500 minicomputer purchased in 1976 to 15 additional Datapoint workstation/processors employed as desktop computers or word processors, installed as needed in the several attached buildings that serve as Triple-A's main plant and headquarters.

"Use of the network cuts across the entire company, from executives to clerks," says executive vice-president Gary Raymond. "It has helped us economize on personnel in some areas. We used to need seven employees for order entry and seven more for billing. Now we have eight people handling the same work in a combined department. But our biggest savings have come from better resource planning, saving us a quarter of a million dollars a year in interest charges for excess inventory and almost $1 million in capital freed up for use elsewhere."

Such economies for a company with $15 million in annual sales can justify the sizable investment in this extended system over the years. "All the hardware and software on the network total about $800,000, but you might buy the same computing power today for $250,000," says Raymond. Installing the network was at first a way to avoid buying a larger minicomputer, while preserving the company's investment in the one it already owned. With the local-area network, Triple-A could put off adding processing power while prices came down, Raymond recalls. "Whenever the system's response time started to slow down, we would add more processors to handle the data flow. It ended up costing us much less than trying to upgrade our minicomputer," he says.

As an added dividend, the integration of data from far-flung departments results in fewer errors in office functions. For example, when inventory receipts are being entered, the application program on the network can get into files and check purchase order numbers, inventory levels, and work orders to make sure that all records are accurate and current, within seconds. As soon as an entry is made by one department, all other departments have access to the information, within limits. "Software on the network creates a system of security password clearances to limit data access," says Raymond. "Each manager creates a security profile of those employees who should have access to different types of records and files."

Unlike Andrews & Kurtz's Ethernet network, which relies on software supplied by Xerox, Triple-A's network uses programs supplied by an independent computer consulting company. The company, InfoPro Inc., based in Franklin Park, Ill., also sold Triple-A the ARC network. Security protection software is one of nearly 600 programs written or modified to Triple-A's needs by consultants who are always on call. "There are always two people from lnfoPro on the premises working on new programs and enhancing existing ones," Raymond explains. He stresses the reliability of both hardware and software.

The ARC network system and Ethernet both use coaxial cable similar to TV cable to connect devices, but there the resemblance ends. The ARC cable actually is of a different design, allowing information to be sent along greater network distances. Ethernet will reach a maximum network length of two miles, but ARC can be extended up to four miles by adding a $1,200 repeater for each 2,000-foot extension.

A less-costly alternative to the ARC network, Digital Microsystems Inc.'s HiNet local-area network (about $28,000), was chosen to deliver interoffice mail electronically at G. H. Hastings Advertising. The ad agency, Berkeley, Calif., handles high-tech advertising and marketing for medical, scientific, and computer software companies. Memos and ad copy that used to be walked around to various desks in the 16-employee company now travel by HiNet.

When a copywriter, for example, pushes the appropriate key, the monitor screen displays any waiting messages. Sending a message is as simple as typing in the recipient and message and completing on-screen instructions. "We have done away with a lot of paper -- only layouts still have to be walked around," says Greg Hastings, the company's owner and president.

Hastings almost chose an ARC network: "We wanted a system that would give us stand-alone word processing and accounting while allowing us to pool data for marketing reports, statistical analyses, and other database applications. The HiNet seems to give us the same capabilities as an ARC network, at one-third the price."

This HiNet installation links a Digital Microsystems hard-disk memory device with seven Digital personal computers, distributed throughout the company's 5,000-square-foot offices, and a pair of letter-quality printers. The HiNet system communicates at only one-twentieth the speed of Ethernet, but for a small (up to 30 stations) network, this is hardly a problem. "If the system has to do something particularly time-consuming, like sorting through a mailing-list file with thousands of labels on the hard disk," says Hastings, "it may take five seconds to come back with the information, but usually the response is almost instantaneous. "

According to Hastings, the HiNet system's advantages include its compatibility with the CP/M operating system used by many popular business-oriented personal computer programs. "For our first use, word processing, all we needed was CP/Mbased software bought straight off the shelf of the computer store where we bought the network," he says. The software chosen was the best-selling WordStar word processing program, published by MicroPro International Corp. in San Rafael, Calif. For data management, Selector V software from Micro-Ap Inc., of Dublin, Calif., was put to use. "We built up a database that gives us a competitive edge in reporting industry trends," says Hastings. "We can evaluate industry advertising expenditures, market shares, and marketing strategies. We can provide clients with weekly tabulations of activity in their markets, including dollar amounts spent on advertising by rivals and the number of inquiries registered from magazine ads. We can budget campaigns much more effectively by consolidating the information we have at our disposal."

Through a "gateway" circuit, which allows communication outside the network, Hastings can link the HiNet system by telephone to his terminal at home, 20 miles away. "I can access the database or use a word processing file at any time," he says. "I can even run the printer at the office from home, so hard copy is ready for me at the office first thing in the morning. Communication with other networks or computer systems can further broaden the network's reach. Hastings expects soon to "conduct branch banking through the network -- for electronic funds transfer and keeping tabs of balances in our bank accounts. We're also starting to make use of commercial databases like CompuServe and Dialog to add to our database. A local-area network gives you the flexibility to expand as your needs and expertise expand."