Hayes Microcomputer Products

At the time, modems generally came in two versions, external modems using an acoustic coupler for connection, and direct-connection modems used with minicomputers or mainframes. Acoustic couplers were entirely manual; the user picked up the phone's handset, dialed manually, and then pressed the handset into the coupler if a carrier frequency was heard. Disconnecting at the end of the session was also manual, with the user lifting the handset out of the coupler and hanging it up on the phone body in order to depress the hook switch and return the phone to the on-hook state and end the call. This was a straightforward and thus a popular solution; the Novation CAT was a popular modem of this type.

Internal modems had the advantage that they could use the computer bus not only to exchange data between the computer and the modem, but command and status information as well. This allowed them to control the entire connection cycle, dialing the phone to start, and hanging up at the end. Such systems were available for large machines, especially the mainframes used by banks which had to automatically dial their branches for end-of-day updates. None of these systems were available for microcomputers, and Hayes' initial concept was to offer similar products into this market.

Hayes started producing such a system in his kitchen in April 1977 with his friend and co-worker, Dale Heatherington. Their first product was the 80-103A, a 300 bit/s Bell 103-compatible design for S-100 bus machines. At this time, it was illegal to connect any non-Bell hardware to the telephone network, so the 80-103A was designed to connect to a Bell-supplied Data Access Arrangement (DAA) which the user rented for a monthly fee. To fill in dead-times in the modem sales, they also took on part work doing electronics assembly for other companies.

Business picked up quickly, and by January 1978 they had quit their jobs at National Data to form their own company, D.C. Hayes Associates. In its first year, the new company sold $125,000 worth of product (equivalent to $617,028 in 2025).