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Prodigy Communications, L.P.
Type Defunct (Part of AT&T)
Founded 1984
Headquarters White Plains, New York, USA (earlier)
Austin, Texas, USA
Industry Telecommunications
Products Telephone, Internet, Television

Prodigy Communications Corporation (Prodigy Services Corp., Prodigy Services Co., Trintex) was an online service that offered its subscribers access to a broad range of networked services, including news, weather, shopping, bulletin boards, games, polls, expert columns, banking, stocks, travel, and a variety of other features.

Initially subscribers using personal computers accessed the Prodigy service by means of POTS or X.25 dialup. For its initial roll-out, Prodigy supported 1200 bps modems. In an effort to provide faster service and to stabilize the diverse modem market, Prodigy offered low-cost 2400 bps internal modems to subscribers at a discount. Soon, Prodigy offered 56K modems instead. In 1990–1991 LAN and cable modem access were enabled.

The company claimed it was the first consumer online service, citing its graphical user interface and basic architecture as differentiation from CompuServe, which started in 1979 and used a command line interface.

By 1990 it was the second-largest online service provider, with 465,000 subscribers trailing only CompuServe's 600,000.[1] At first its headquarters were in White Plains, New York, while the headquarters at a later point moved to Austin, Texas.

Contents

Early history

The roots of Prodigy date to 1980 when broadcaster CBS and telecommunications firm AT&T formed a joint venture named Venture One in Fair Lawn, New Jersey. The company conducted a market test of 100 homes in Ridgewood, NJ to gauge consumer interest in a Videotex-based TV set-top device that would allow consumers to shop at home and receive news, sports and weather. After concluding the market test, CBS and AT&T took the data and went their separate ways in pursuit of developing and profiting from this market demand.

Prodigy was founded on February 13, 1984 as Trintex, a joint venture between CBS, computer manufacturer IBM, and retailer Sears, Roebuck and Company. The company was headed by Theodore Papes, a career IBM executive, until his retirement in 1992. CBS left the venture in 1986 when CBS CEO Tom Wyman was divesting of properties outside of CBS's core broadcasting business. The company's service was launched regionally in 1988 in Atlanta, Hartford, and San Francisco under the name Prodigy. The marketing roll-out plan closely followed IBM's SNA network backbone. A nationwide launch developed by ad agency J. Walter Thompson and sister company JWT Direct (New York) followed on September 6, 1990.

Thanks to an aggressive marketing campaign in the media, bundling with various consumer-oriented computers such as IBM's PS/1 and PS/2, as well as various clones and Hayes modems, the Prodigy service soon had more than a million subscribers. To handle that traffic, Prodigy built a national network of POP (points-of-presence) sites that made local access numbers available for most homes in the U.S. This was a major factor in the expansion of the service since subscribers did not have to dial long distance to access the service. The subscriber only paid for the local call (usually free), while Prodigy paid for the long distance call to its national data center in Yorktown, New York.

Development

Under the guidance of editor Jim Bellows, Prodigy developed a fully staffed 24x7 newsroom with editors, writers and graphic artists intent on building the world's first true online medium. The initial result was that Prodigy pioneered Internet portals - a single site offering news, weather, sports, communication with other members, and shopping for goods and services such as groceries, general merchandise, brokerage services, and airline reservations. The service provided a number of lifestyle features, including popular syndicated columnists, Zagat restaurant surveys, Consumer Reports articles and test reports, games for kids and adults, in-depth original features called "Timely Topics," bulletin boards moderated by subject matter experts, movie reviews and e-mail. Additionally, Prodigy was also the service that launched ESPN's online presence.

The service was presented using a graphical user interface. The Data Object Architecture wrapped vector and incremental point graphics, encoded as per the North American Presentation Level Protocol Syntax NAPLPS, along with interpretative programs written in the proprietary languages TBOL [Trintex Basic Object Language] and PAL [Prodigy Application Language]. The initial emphasis was on DOS and later Microsoft Windows. Apple Macintosh was also supported, but the Prodigy screens were not always configured to the Mac standard, resulting in wasted space or cut-off graphics.

Prodigy's initial business model relied more on advertising and online shopping for cash flow than monthly subscriptions. Subscribers were charged a flat monthly fee that provided limited access. A monthly rate was charged for a set usage time, and any time spent connected to Prodigy exceeding that set usage time was charged to the customer. Prodigy's shopping applications initially underperformed relative to expectations. Reasons for difficulty in online shopping for Prodigy included users' initial doubts and concerns about online purchasing[citation needed] - a new service whose security and reliability was largely unknown, even with regard to established and trusted merchants. Additionally, another reason for poor online merchandising was the nature of the graphics presented. Using the early NAPLPS graphic standard, it was not possible to render realistic images of products. As such, while commercial clients with presence on the Prodigy Service might have realized a measure of success with an electronic order blank supporting a print catalog, it was otherwise difficult and challenging for online merchants to market products.

Despite these challenges, Prodigy was largely responsible for helping merchants such as PC Flowers become some of the earliest e-commerce success stories. However, revenue from advertising was limited.

Price increases

Two of Prodigy's most popular services turned out to be its message boards and email. Because Prodigy's business model depended on rapidly growing advertising and online shopping revenue, email was developed primarily to aid shopping, not for general communication between users, which in practice is what it became. The message boards resulted in users being connected to the service far longer than projected. This resulted in higher than expected expenses, adversely affecting the service's cash flow and profitability.

In an attempt to control costs and raise revenue, Prodigy undertook two separate actions. First, Prodigy modified their basic subscriber plans by allowing only thirty e-mail messages free each month, while charging 10 cents for each additional e-mail message - a policy that was later rescinded. Then, in the summer of 1993, it began charging hourly rates for several of its most popular features, including its most popular feature, the message boards - another policy that was later rescinded, but not before tens of thousands of members left the service.

Prodigy was slow to adopt features that made its rival AOL appealing, such as anonymous handles, real-time chat, and unmoderated bulletin boards. Unlike AOL and other similar services, Prodigy was designed primarily for information services, shopping and advertising, as opposed to communication and entertainment. Even so, Prodigy missed important opportunities by failing to envision the enormous potential of online commerce. Short-sighted statements such as "who in their right mind would use a computer to buy books?" were attributed to the executive team by company staffers.

Despite losing subscribers, Prodigy stuck with its graphical interface, its proprietary content, and its traditional policies while other services embraced open standards and grew faster. Eventually, the emergence of the Internet and the World Wide Web threatened to leave Prodigy behind.

Conversion to a true ISP

In 1994, Prodigy became the first of the early-generation dialup services to offer full access to the World Wide Web and to offer Web page hosting to its members. Since Prodigy was not a true Internet service provider, programs that needed an Internet connection, such as Internet Explorer and Quake multiplayer, could not be used with the service. Prodigy developed its own web browser, but it compared poorly to other mainstream browsers in features.

In 1995 Prodigy hired Bill Day, Scott Danielson and Oleg Vishnepolsky, one of the Internet pioneers. This troika led the transformation of Prodigy from proprietary service into Internet standard based ISP. Under their leadership in 1995 through 1996 Prodigy unveiled several Internet related products. Access to USENET Newsgroups was made available to Prodigy members via the Prodigy interface software. Also, Prodigy's first web presence, called Astranet, was released shortly thereafter. Astranet was to be a web-based news and information service and supported in part by advertising, though the site was considered experimental and never fully worked out its offering or business model. Another innovation was Skimmer - a market trial ISP service which became the base for the Prodigy Internet.

In 1996, the company retooled itself as a true Internet service provider, making its main offering Internet access branded as Prodigy Internet. Amazingly this new service featured personalized web content, news alerts to pagers, java chat - all in early 1996, ahead of its time. At the same time Prodigy de-emphasized its antiquated proprietary interface and its own editorial content, which were rebadged as Prodigy Classic. Prodigy Classic was discontinued in November, 1999 with the official explanation that its aging software was not Y2K compliant. The service had 209,000 members when it was discontinued.

A public company

In 1996, Prodigy was acquired by the former founders of Boston Technology and their new firm International Wireless, with Mexican businessman Carlos Slim Helú, a principal owner of Telmex, as a minority investor. IBM and Sears sold their interests to this group for $200 million. It was estimated that IBM and Sears had invested more than $1 billion in the service since its founding.[2]

Prodigy continued to operate as before, while Telmex provided Internet access under the Prodigy brand in Mexico and other parts of Latin America, with some services being provided by Prodigy Communications in the United States.

Prodigy went public in 1999, trading on the NASDAQ under the symbol PRGY. Later that year, Prodigy entered a strategic partnership with SBC Communications wherein Prodigy would provide Internet services and SBC would provide exclusive sales opportunities and network, particularly DSL, facilities. The strategic partnership also gave SBC a 43% ownership interest in Prodigy.

On November 6, 2001, SBC purchased 100% interest in Prodigy and brought it private. On November 14, 2001, SBC and Yahoo! announced the strategic alliance to create the co-branded SBC Yahoo!. Sometime thereafter, SBC ceased offering new Prodigy accounts, and customers were encouraged to migrate to the SBC Yahoo! product line to the sbc.yahoo.com internet portal, while being able to keep their {username}@Prodigy.net email addresses.

Headquarters

Prodigy originally had its headquarters in White Plains Plaza in White Plains, New York.[3] Prodigy announced that it will renew its lease in the White Plains Plaza in August 1992, occupying all 340,000 square feet (32,000 m2) of space in the building.[4][5] In 1992 the facility had 1,000 employees.[4]

In 2000 the company announced that it will move its headquarters to Austin, Texas so it can more closely work with SBC Communications.[6] During that year Prodigy leased 112,000 square feet (10,400 m2) of space in the River Place Pointe building in northwest Austin; the building, then under construction, was scheduled to be completed in 2001.[7] Prodigy moved its headquarters in December 2000.[8]

Pioneering and unusual aspects

Prodigy pioneered the concept of Online Communities. A Content Department was responsible for creating and developing different Content Areas for specific topics. Each Content Area had a Prodigy Producer who gave contracts to Prodigy subscribers to assist in running the communities in exchange for a small stipend. Each community consisted of a Website, a Chat Area with different rooms, and a Bulletin Board.

Unlike many other competing services, Prodigy started out with flat-rate pricing. When Prodigy moved to per-hour charging for its most popular services in June 1993, it resulted in tens of thousands of users leaving the service.

Prodigy was also one of the first to offer a user-friendly GUI when competing services, such as CompuServe and GEnie, were still text-based. Prodigy used this graphical capability to deploy advertising, which it expected would result in a significant revenue stream.

In fact, Prodigy was the first to offer online banking, stock trading, advertising and online shopping - before even the advent of the World Wide Web. Prodigy was unable to capitalize on any of these first mover advantages.

Prodigy was a forerunner in caching data on end users' computers to minimize networking and server expenses while improving the experience for end users. [9]

Prodigy's legacy architecture was novel at the time and anticipated much of current web browser technology. It leveraged the power of the subscriber's PC to maintain session state, handle the user interface, and process applications formed from data and interpretative program objects which were largely pulled from the network when needed. At a time when in the state of the art, distributed objects were handled by RPC equivalents (remote function calls to well known servers in which final results were returned to the caller), Prodigy pioneered the concept of actually returning interpretable, "platform independent" objects to the caller for subsequent processing.[10][11] This approach anticipated such things as Java applets and Javascript.[10][12] Prodigy also helped pioneer true distributed object-oriented client-server implementations as well as incidental innovations such as the equivalent of HTML Frames, pre-fetch, etc.[10][11][13] Prodigy patented its implementation (US 5,347,632 et al.) and these patents are, as of this entry, among the most highly cited of all software patents.

Current status

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In the United States

By 1994, Prodigy became a pioneer in selling "dial-up" connections to the World-Wide Web, and sold hosting services for Web publishers.

In 1999 the company, now led by a cadre of ex-MCI executives with the goal of turning the brand around, became Prodigy Internet, marketing a full range of services, applications and content, including dial-up and DSL for consumers and small businesses, instant messaging, e-mail, and communities.

In 2000, with subscriber growth exploding and brand attributes at an all time high, Prodigy explored a number of partnership deals including what would have been an unprecedented three-way merger between Earthlink, Mindspring, and the company. Ultimately, SBC bought a 43% interest in the company, and Prodigy became the exclusive provider to SBC's 77 million high-speed Internet customers. More than a year later after the launch of Prodigy Broadband (conceived and led by Chris Spanos), SBC bought controlling interest for $465 million when Prodigy was the fourth-largest Internet service provider behind America Online, Microsoft's MSN, and EarthLink. Prodigy in 2000 was reported to have 3.1 million subscribers of its own, of which 1.3 million were DSL customers.

AT&T no longer actively markets Prodigy services. However, a fair number of customers still use the Prodigy services that were available at the time of the acquisition.

Attempts by SBC to sell the Prodigy brand became public knowledge on December 9, 2005. [1] The brand has yet to find a buyer.

In late 2006, SBC purchased AT&T and re-branded itself as AT&T. As of early 2007, there remained within AT&T's Internet operations a small group of former Prodigy employees located in AT&T's Austin, Texas and White Plains, New York facilities. What had started 27 years earlier as an AT&T online experiment had come full circle.

As of 2009, the domain www.prodigy.net redirects to my.att.net, which appears to be a Yahoo!-based content and search portal linking mostly to other online services.

In Mexico

In Mexico, Prodigy Internet is the main ISP with an estimated 92% of market share. It is also the leader in WiFi (hotspots) and broadband (DSL) access. The broadband service is called Prodigy Infinitum and is available in speeds of 512kbits/s, 1024 kbit/s, 2048 kbit/s, and 4096 kbit/s. The installation and DSL modem are free and it is no longer necessary to sign a 2-year service contract. Prodigy Internet in Mexico is part of Telmex (Teléfonos de México) and its sister company Telnor (Teléfonos del Noroeste).

See also


References

  1. ^ Shapiro, Eben. "THE MEDIA BUSINESS; New Features Are Planned By Prodigy", The New York Times, September 6, 1990. Accessed February 4, 2008. "Prodigy has become the second-largest and fastest-growing computer-information company since it was introduced in 1988. It has 465,000 subscribers, compared with more than 600,000 for Compuserve Information Services, a unit of H & R Block Inc."
  2. ^ Lewis, Peter H. "Sears, I.B.M. Near a Deal To Sell Prodigy", The New York Times, May 8, 1996. Accessed November 13, 2007. "A person familiar with the agreement said I.B.M. and Sears had agreed to accept as little as $100 million for Prodigy, in effect writing off more than $1 billion they had invested in the on-line venture during the last decade."
  3. ^ "Aerosmith to appear on PRODIGY in Chat Stadium; legendary band promotes "cyber-rights"." Business Wire. November 22, 1994. Retrieved on January 11, 2010. "White Plains Plaza is Prodigy's headquarters and houses..."
  4. ^ a b "Article: Prodigy takes 340,000 sf at White Plains Plaza. (Prodigy Services Co. renews lease of commercial space in White Plains, New York)." Real Estate Weekly. August 19, 1992. Retrieved on January 11, 2010.
  5. ^ "MetLife to renovate at White Plains Plaza. (Metropolitan Life Insurance Co. plans renovation of office complex in White Plains, New York)." Real Estate Weekly. March 11, 1992. Retrieved on January 11, 2010. "Prodigy has renewed its lease at White Plains Plaza, taking the entire 340000."
  6. ^ Nowlin, Sanford. "Prodigy to move to Austin." San Antonio Express News. June 24, 2000. Business 1D. Retrieved on January 11, 2010.
  7. ^ Hudgins, Matt. "Prodigy leases building at River Place." Austin Business Journal. August 3, 2000. Retrieved on January 11, 2010.
  8. ^ Ladendorf, Kirk. "Prodigy reports losses for quarter and year." Austin American-Statesman. February 28, 2001. C1. Retrieved on January 11, 2010.
  9. ^ U.S. Patent 5,594,910
  10. ^ a b c U.S. Patent 6,199,100
  11. ^ a b U.S. Patent 5,347,632
  12. ^ Riordan, Teresa. "Patents;Prodigy's patent is being debated as a possible threat to Sun Microsystems' Java language.", The New York Times, February 5, 1996. Accessed November 28, 2007.
  13. ^ U.S. patent 6,275,852

External links


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