Ethernet was originally based on the idea of computers communicating over a shared coaxial cable acting as a broadcast transmission medium. The methods used show some similarities to radio systems, although there are fundamental differences, such as the fact that it is much easier to detect collisions in a cable broadcast system than a radio broadcast. The common cable providing the communication channel was likened to the ether and it was from this reference that the name "Ethernet" was derived.

From this early and comparatively simple concept, Ethernet evolved into the complex networking technology that today underlies most LAN. The coaxial cable was replaced with point-to-point links connected by Ethernet switches to reduce installation costs, increase reliability, and enable point-to-point management and troubleshooting. Star LAN was the first step in the evolution of Ethernet from a coaxial cable bus to a switch-managed, twisted-pair network. The advent of twisted-pair wiring dramatically lowered installation costs relative to competing technologies, including the older Ethernet technologies.

Above the physical layer, Ethernet stations communicate by sending each other data packets, blocks of data that are individually sent and delivered. As with other IEEE 802 LAN, each Ethernet station is given a single MAC address, which is used to specify both the destination and the source of each data packet. Network interface cards generally come programmed with a global unique address, but this can be overridden, either to avoid an address change when an interface card is replaced, or to use locally administered addresses.

Despite the significant changes in Ethernet from a thick coaxial cable bus running at 10 Mbit/s to point-to-point links running at 1 Gbit/s and beyond, all generations of Ethernet share the same frame formats (and hence the same interface for higher layers) and can be readily interconnected.

Due to the ubiquity of Ethernet, the ever-decreasing cost of the hardware needed to support it, and the reduced panel space needed by twisted pair Ethernet, most manufacturers now build the Ethernet cards directly imbibed into PC motherboards, eliminating the need for installation of a separate network card.

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