Ethernet is a broadcast network, and that means a certain number of packets don't make it to their intended target due to collisions with other packets. Although some collisions, typically up to 1% of all network traffic, are to be expected and tolerated, as your network gets larger and traffic gets heavier collision rates can dramatically reduce your perceived throughput. Good network management includes monitoring network collisions and taking actions to minimize them. You might get excessive packet collisions for a number of reasons, ranging from a faulty network card that isn't listening for its packets to a faulty connection.
One way to get an idea of your collision rate is to look at the lights of your network hub. One of the lights on most hubs indicates the collisions, and if that light is on continuously you may have a problem. Using network-monitoring software, you should also find out what your network utilization rate it. If you are over 40% utilization, it's probably a good idea to start segmenting your network. You can use SNMP and RMON probes to collect statistical data that will help you figure out how to localize the segments that experience high collision rates.
By the way, when purchasing a hub or switch, you can use the Telnet management sessions they often support to determine collision data. Many hubs and switches, even inexpensive hubs and switches, have management features you can access through a Telnet session. But not all do, so check before you buy them.
Barrie Sosinsky is president of consulting company Sosinsky and Associates (Medfield MA). He has written extensively on a variety of computer topics. His company specializes in custom software (database and Web related), training and technical documentation.