Prodigy (online service)

:"This article refers to the now defunct Prodigy Communications Corporation that was purchased by SBC Communications, Inc. in 2001. For information on SBC's current status, see AT&T."

Infobox_Company
company_name = Prodigy Communications, L.P.
company_
company_type = Defunct (Part of AT&T)
company_slogan = Discover a New World of People and Ideas.
foundation = 1984
location = Austin, Texas, USA
industry = Telecommunications
products = Telephone, Internet, Television

Prodigy Communications Corporation (Prodigy Services Corp., Prodigy Services Co., Trintex) was an online service which 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 dialup or X.25 dialup. In the 1990 - 1991 timeframe, LAN and cable modem access were enabled. The company claimed it was the first consumer online service, differentiating itself from CompuServe, which started in 1979, because of its graphical interface rather than command line interface, as well as in its basic architecture.

By 1990 it was the second largest online service provider, with its 465,000 subscribers trailing only CompuServe's 600,000. [Shapiro, Eben. [http://query.nytimes.com/gst/fullpage.html?res=9C0CE5DB1138F935A3575AC0A966958260&scp=1&sq=prodigy+second-largest&st=nyt "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."]

Early history

The roots of Prodigy date back to 1980 when broadcaster CBS and telecommunications firm AT&T formed a joint venture named "Venture One" in Ridgewood, New Jersey. The company conducted a market test of 100 homes in nearby Ridgewood 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 profiteering 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. 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 simple moniker, "Prodigy." A nationwide launch 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 unlimited access.

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 - 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, because marketers had yet to recognize the power of this new medium, revenue from advertising was limited. Brand advertising sites on Prodigy were often seen as experimental by marketers and were often funded by research and development budgets, as opposed to advertising budgets.

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. Additionally, the Prodigy message boards turned out to be extremely popular as well, resulting in users being connected to the service far longer than originally 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, in its attempt to ration email, 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, in a similar attempt to offset usage costs, it began charging hourly rates for several of its most popular features, including its most popular feature, the message boards. Many regular message board users were not fully aware of the impact of this price change until they received significantly higher invoices for the previous month's activity, in place of the fixed monthly prices for unlimited usage. As a result, tens of thousands of members left the service, resulting in a downward slide that Prodigy was never able to recover from, even though it would later rescind the hourly rates for message boards.

Prodigy was slow to adopt features that made its rival AOL appealing -- features 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. Cutting-edge and robust communications tools were in demand by early users, and it would not be until the late 1990's that online shopping and similar services became more accepted in the marketplace.

Despite losing subscribers, Prodigy stuck with its graphical interface, its proprietary content, and its traditional policies while other services, notably AOL, embraced open standards, took more risks and grew faster. Eventually, the emergence of the Internet and the World Wide Web threatened to leave Prodigy behind, despite its high ranking in consumer satisfaction and reliability surveys.

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 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.

In 1997, the company retooled itself as a true Internet service provider, making its main offering Internet access branded as "Prodigy Internet". 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 billionaire 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. [Lewis, Peter H. [http://query.nytimes.com/gst/fullpage.html?res=9B00E2DD1539F93BA35756C0A960958260 "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."]

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 " [http://finance.google.com/finance?cid=663014 PRGY] ". Later that year, Prodigy entered a [http://att.sbc.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=7168 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! [http://docs.yahoo.com/docs/pr/release863.html 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, while being able to keep their {username}@Prodigy.net email addresses.

Criticisms

Spyware-like behavior

Prodigy was accused in late 1990 and early 1991 of spying on its users. The evidence offered was bits and pieces of user data showing up in two files created by the software installed on subscribers' PCs: STAGE.DAT and CACHE.DAT. Prodigy's response was that the data was never transmitted; in fact, their software was preallocating disk space but not zeroing it before use -- a conscious choice intended to reduce startup time on slow home computers. The unzeroed storage contained fragments of data from deleted user files. Some users claimed user data appeared even on freshly formatted disks that had Prodigy installed on them, although real evidence of this was never presented. Despite Prodigy demonstrating positively that none of the data was ever transmitted, rumors persisted. In an attempt to mitigate the bad publicity, Prodigy sent users on request a floppy disk labeled "Prodigy Stage/Cache Utility Software" which contained a program to zero out the STAGE.DAT and CACHE.DAT files, eliminating the data.

Content Control

Being the forerunner in this new medium, there was little case law and Prodigy was also the leader in litigation and censorship claims. While some claimed that Prodigy was an editorial entity such as a newspaper or radio station whose content was subject to legal statutes such as defamation, slander and the like, Prodigy argued that it was a communications entity such as a telephone company whose "content" (i.e. telephone conversations) they were not responsible for. They were simply the medium across which these communications occurred.

Claims of censorship included users of public forums who were forbidden to mention other users by name. The most infamous example of this was a coin collector's message, banned because it contained the phrase "Roosevelt dime" - there was, as it happened, a Prodigy subscriber named "Roosevelt Dime." A wildlife discussion group found that the word "beaver" was forbidden; they had to call the animal by its scientific name. Moderators on boards dedicated to computer games would delete posts based on the games' storylines rather than gameplay. Criticisms of the Prodigy service in its public forums were often deleted. Users tried to work around Prodigy's various strictures. For instance, to beat the thirty-message email limit, some users set up "undergrounds" -- shared accounts where they communicated by sending messages back to the same account. When they became popular, even typing the abbreviation "UG" (Under/Ground) could get a message automatically deleted.

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. Fact|date=June 2007

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.

Prodigy was also a forerunner in caching data on end users' computers to minimize its own long distance expenses while improving the experience for end users.

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. U.S. Patent 5,347,632 [http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=14&f=G&l=50&co1=AND&d=PTXT&s1=filepp.INNM.&OS=IN/filepp&RS=IN/filepp] ] This approach anticipated such things as Java applets and Javascript. [Riordan, Teresa. [http://query.nytimes.com/gst/fullpage.html?res=9500E1DD1439F936A35751C0A960958260 "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.] U.S. Patent 6,199,100 [http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=7&f=G&l=50&co1=AND&d=PTXT&s1=filepp.INNM.&OS=IN/filepp&RS=IN/filepp] ] 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. U.S. patent 6,275,852 [http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=6&f=G&l=50&co1=AND&d=PTXT&s1=filepp.INNM.&OS=IN/filepp&RS=IN/filepp] ] 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.

Downfall

Prodigy was frequently hurt by poor management decisions, such as offering unlimited chat and then eliminating it when they realized some people were spending 14 hours a day in chat, which resulted in significant numbers of users leaving the service.

Prodigy's leadership failed to understand the developing online medium as well as the sensitivity of its users' demand for Prodigy's most popular services. Instead of staying with the service and paying higher rates for services than they had become accustomed to, many subscribers quit and signed on with rival providers, many of whom provided the same or better services that Prodigy had provided. Consequently, Prodigy was starved of resources and eventually became insignificant against the vast background of the World Wide Web.

Current status

In the United States

By 1994, Prodigy became a pioneer in selling "dial-up" connections to the Web, the graphical interface for the Internet, 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. [http://news.com.com/Prodigy+up+for+sale/2100-1036_3-5989754.html?part=rss&tag=5989754&subj=news] The brand hasn't been sold yet.

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 2008, the domain www.prodigy.net redirects to my.att.net, which appears to be a content and search portal linking mostly to other online services.

In Mexico

In Mexico, Prodigy Internet is the main ISP with an estimated of 92% of the 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's 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).

References

ee also

*AT&T Yahoo! - formerly SBC Yahoo!
*Stratton Oakmont, Inc. v. Prodigy Services Co.

External links

* [http://www.prodigy.net/ My AT&T portal (former Prodigy Internet website, redirects to my.att.net (USA)]
* [http://www.prodigy.com.mx/ Telmex website (former Mexican Prodigy website (Mexico)]
* [http://pages.prodigy.net/rdbrownmsb/ Mock-up of the Prodigy login screen]
* [http://pages.prodigy.net/rdbrownmsb/MadMaze2/ Recreation of the Prodigy Mad Maze game] (requries Internet Explorer 5+)
* [http://www.angelfire.com/folk/prodpunk "You Are Now in Room Punk" Archive of chat transcripts from Prodigy's (AKA Prodigy Classic) punk music chat room, mid to late nineties.]
* [http://www.prodigyclassic.com Prodigy Communicate] Prodigy Classic Chat Forums