, (in full, '''CompuServe Information Services''', or '''CIS'''), was the first major commercial
Online Service in the
United States . It dominated the field during the
1980 s and remained a major player through the mid-
1990s , when it was sidelined by the rise of information services such as '''
AOL ''' that charged monthly subscriptions rather than hourly rates. Today the CompuServe Information Service operates as an
Internet Service Provider (ISP), owned by AOL.
CompuServe was founded in 1969 as Compu-Serv Network, Inc. (the earliest advertising show the name with initial caps) in Columbus, Ohio as a subsidiary of Golden United Corporation. While Jeffrey Wilkins, the son-in-law of Golden United founder Harry Gard, is widely recognized as the first president of CompuServe, the initial president was actually Dr. John R. Goltz. Goltz and Wilkins were both graduate students in Electrical Engineering at the University of Arizona. Other early employees were also recruited from the University of Arizona, including Sandy Trevor (inventor of the CompuServe CB Simulator chat system), Doug Chinnock, and Larry Shelley. Wilkins replaced Goltz as CEO within the first year of operation.
CompuServe's origin was concurrent with that of
The Source . Both services can lay claim to being the "first" service, as both were operating in early 1979.
The objectives of the new company were two-fold: to provide in-house computer processing support to Golden United Life Insurance Co.; and to develop as an independent business in the computer
Time-sharing industry, by renting time on its
PDP-10 Mainframe Computer s during
Business Hours . It was spun off as a separate company in 1975, trading on the
NASDAQ under the symbol CMPU.
At the same time, the company recruited a number of executives who shifted the focus from offering raw timesharing services, in which customers wrote their own applications, to one that was focused on packaged applications. The first of these new executives was Robert Tillson, who left
Service Bureau Corporation (then a subsidiary of
Control Data , but originally formed as a division of
IBM ) to become CompuServe's Executive Vice President of Marketing. He in turn recruited Charles McCall (who followed Jeff Wilkins as CEO, and later became CEO of HBOC), Maury Cox (who became CEO after the departure of McCall), and Robert Massey (who was the last CEO of CompuServe). Barry Berkov was recruited from
Xerox to head the product development and product marketing function.
In 1977, Comp-Serv's board changed the company's name to CompuServe Incorporated. In 1980,
H&R Block acquired CompuServe. The purchase by H&R Block gave the company cash to expand operations, and helped H&R Block diversify their tax-season biased earnings. CompuServe associates fondly called H&R Block's founder and chairman
Henry W. Bloch , "Uncle Henry".
The original, 1969 dial-up technology was fairly simple — the local phone number in Cleveland, for example, was merely a line connected to a time-division multiplexer which connected via a leased line to a matched multiplexer in Columbus, which was in turn connected to a particular timesharing host system. Later, the central multiplexers in Columbus were replaced with
PDP-8 minicomputers, and the PDP-8s were connected to a DEC
PDP-15 minicomputer that acted as switches so a phone number was not tied to a particular destination host. Finally, CompuServe developed its own
Packet Switching network, implemented on DEC
PDP-11 minicomputers acting as network nodes that were installed throughout the US (and later, in other countries) and interconnected. Over time, the CompuServe network evolved into a sophisticated multi-tiered network incorporating
Asynchronous_Transfer_Mode ,
Frame_relay ,
Internet_Protocol and
X.25 technologies.
While best known for its consumer services division, the CompuServe Information Service, CompuServe was also a world leader in other commercial services. One of these was the Financial Services group, which collected and consolidated financial data from a myriad of data feeds, including CompuStat, Disclosure, I/B/E/S as well as the price/quote feeds from the major exchanges. CompuServe developed extensive screening and reporting tools that were used by every investment bank on
Wall Street .
Another major unit of CompuServe, the CompuServe Network Services, was formed in 1982 to generate revenue by selling connectivity on the nationwide packet network CompuServe had built to support its timesharing service. CompuServe designed and manufactured its own network processors, based on the DEC
PDP-11 , and wrote all the software that ran in the network. Often (and erroneously) called an '
X.25 network, the CompuServe network implemented a mixture of standardized and proprietary layers throughout the network. One of the proprietary layers was called 'Adaptive Routing.' The Adaptive Routing system implemented two powerful features. One is that network operated entirely in a self-discovery mode. When a new switch was added to the network by connecting it to a neighbor via a leased telephone circuit, the new switch was discovered and absorbed into the network without any explicit configuration. To change the network configuration, all that had to be done was add or remove connections, and the network would automatically reconfigure. The second feature implemented by Adaptive Routing was often talked about in network engineering circles, but was implemented only by CNS - establishing connection paths on the basis of real-time performance measurements. As one circuit became busy, traffic was diverted to alternative paths to prevent overloading and poor performance for users.
While the CNS network was not itself based on the X.25 protocol, the network presented a standard X.25 interface to the outside world, providing dialup connectivity to corporate hosts, and allowing CompuServe to form alliances with private networks
Tymnet and
Telenet , among others, giving CompuServe the largest selection of local
Dialup phone connections in the world. Other networks permitted CompuServe access to still more locations, including international locations, usually with substantial connect-time surcharges. It was not unusual in the early 1980s to have to pay a $30-per-hour charge to connect to CompuServe, which at the time cost $5 to $6 per hour. This resulted in the company being nicknamed ''CompuSpend'' , ''Compu'' or ''CI$'' .
CNS has been the primary supplier of dial-up communications for credit-card authorizations for over twenty years, a competence developed through its long relationship with
Visa International . At the peak of this line of business, CompuServe carried millions of authorization transactions each month, representing several billion dollars of consumer purchase transactions. There are still many businesses for which an always-on connection is an extravagance, and a dialup option makes better sense. Today this service remains in operation, deeply embedded within
Verizon (see below). There are no other competitors remaining in this market.
The company was notable for introducing a number of online services to
Personal Computer users. CompuServe began offering
Electronic Mail capabilities and technical support to commercial customers in 1978 under the name Infoplex, and was also a pioneer in the
Real-time Chat market with its
CB Simulator service introduced in 1980.
Around 1981, CompuServe introduced their CompuServe
B Protocol , a
File Transfer Protocol , allowing users to send files to each other. This was later expanded to the higher-performance B+ version, intended for downloads from CIS itself. Although the B+ protocol was not widely supported by other software, it was used by default for some time on CIS itself. The B+ protocol was later extended to include the Host Management Protocol (HMI) a mechanism for communicating commands and transaction requests to a server application running on the mainframes. HMI could be used by "front end" client software to present a
GUI -based interface to CIS, without having to use the error-prone CLI to route commands.
By the mid-1980s CompuServe was one of the largest information and networking services companies in existence, and it was the largest consumer information service in the world. It operated commercial branches in more than 30 US cities, selling primarily network services to major corporations throughout the United States. Consumer accounts could be bought in most computer stores (a box with an instruction manual and a trial account login) and awareness of this service was extremely high. The service continued to improve in terms of user interface and offerings, and in 1989 CompuServe purchased and dismantled one of its main competitors,
The Source .
The consumer information service had been developed almost clandestinely, in 1979, and marketed as ''MicroNet'' through Radio Shack. Many within the company did not favor the project; it was called ''schlock timesharing'' by the commercial timesharing sales force. It was allowed to exist initially because consumers used the computers during evening hours, when the CompuServe computers were otherwise idle. As it became evident that it would be a hit, CompuServe dropped the ''MicroNet'' name in favor of their own, and by 1987, CompuServe Information Service would be 50% of CompuServe revenues.
The corporate culture was entrepreneurial, encouraging "
Skunkwork " projects. Alexander "Sandy" Trevor holed himself up for a weekend, writing the "CB Simulator", a chat system that soon became one of CIS's most popular features. Instead of hiring employees to manage the forums, they contracted with sysops, who received compensation based on the success of their own forum's boards, libraries, and chat areas.
CompuServe also began to expand its reach outside the United States. It entered the international arena in
Japan in 1986 with
Fujitsu and
Nissho Iwai , and developed a
Japanese Language version of CompuServe called
NIFTYSERVE in 1989. Fujitsu and CompuServe also co-developed
WorldsAway , a prototype interactive community featuring a
Virtual World now called
VZones with newHorizones and Dreamscape worlds complete with
Avatars representing the participants. In the late 1980s, it was possible to log into CompuServe via worldwide
X.25 Packet Switching networks, but gradually it introduced its own direct
Dialup access network in many countries, a more economical solution. With its network expansion, CompuServe also extended the marketing of its commercial services, opening branches in London and Munich.
In the early years of the 1990s, CompuServe was enormously popular, with hundreds of thousands of users visiting its thousands of moderated Forums, forerunners to the endless variety of discussion sites on the
Web today. (Like the Web, many Forums were managed by independent producers who then administered the Forum and recruited moderators, called "
Sysops ".) Among these were many where
Hardware and
Software companies offered
Customer Support . This broadened the audience from primarily
Business users to the technical "
Geek " crowd, some of which migrated over from the
Byte Magazine 's
Bix Online Service . Over time, CompuServe also attracted a broad general public with a wide spectrum of Forums devoted to interests such as show business, including Entertainment Drive, CompuServe's sole content investment, founded by
Michael Bolanos , current events, sports, politics, and more. In 1992, CompuServe and Eliot Stein's ShowBiz Forum hosted the industry's first electronic movie press kit, for the Universal computer-themed feature film
Sneakers ; the film's director,
Phil Alden Robinson , participated in online chats with ShowBiz Forum members to promote the picture.
In 1992 CompuServe hosted the first known
WYSIWYG E-mail content and forum posts. Fonts, colors and emoticons were encoded into 7-bit text-based messages via the CompuServe navigation software
NavCIS , covering DOS and early Windows 3.1 systems. Introduction of a Windows-based
WinCIM (or
Windows CompuServe Information Manager) allowed
Point-and-click interaction with the service via an accelerated ''HMI'' communications protocol. For some areas of the service which didn't support HMI, the older, text-based interface could be reverted to. WinCIM also allowed caching of Forum messages, news articles and e-mail, so that reading and posting could be performed off-line, without incurring hourly connect costs. Previously, this was a luxury of the
NavCIS and
TapCIS applications for
Power User s.
During the early 1990s the hourly rate fell from over $10 an hour to $1.95 an hour. In April 1995, CompuServe topped three million members and launched its NetLauncher service, providing
WWW access capability via the
Spry Mosaic browser. AOL, however, introduced a far cheaper flat-rate, unlimited-time, advertisement-supported price plan in the U.S. to compete with CompuServe's hourly charges. In conjunction with AOL's marketing campaigns, this caused a significant loss of customers until CompuServe responded with a similar plan of its own at $24.95 per month in late 1997.
As the World Wide Web grew in popularity with the general public, company after company closed their once-busy CompuServe customer support forums to offer customer support to a larger audience directly through company
Website s, an area which the CompuServe forums of the time could not address because they had not yet introduced universal WWW access.
In the mid-1990s, CEO Maury Cox launched the WOW! initiative within CompuServe. The objective was to create a new generation of consumer information services which could be built on the revenue models brought to the market by AOL and to offer consumers a new rich visual experience. The WOW! service would also implement a parental control technology so that parents could limit and monitor the online activities of their children. A key component of this was a 'white list' of web sites that had been vetted by a team of CompuServe editors to ensure that the sites had content appropriate for children. The WOW! team was designed to be a 'skunk works,' with its core marketing and technology teams housed at a location away from the CompuServe corporate headquarters. Most of the leadership and team was recruited from outside the company.
To fund WOW!, Cox convinced H&R Block that the equity capital market should be tapped through a public stock offering. Block agreed, and subsequently 20% of CompuServe was sold via an Initial Public Offering (IPO), raising nearly $200 million for the company.
WOW! was not successful. CompuServe's traditional customers were not enthusiastic about the new user interface. The battle for customers between AOL and CompuServe became one of handing customers back and forth, using free hours and other enticements. There were technical problems in both the WOW! software and the network (the thousands of new generation
U.S. Robotics dialup modems deployed in the network would crash under high call volumes). For the first time in decades, CompuServe began losing money, and at a prodigious rate. An effort, codenamed 'Red-Dog', was initiated to convert CompuServe's long-time PDP-10 based technologies over to servers based on Intel x86 architectures and the Microsoft Windows NT operating system.
H&R Block was going through its own management changes at the same time. Henry Bloch retired as CEO, and his son, Tom Bloch, was named as his successor. When Tom Bloch resigned to become a public school teacher, he was replaced by Richard Brown, who had formerly been one of the top executives of
Ameritech . Dick Brown soon left to take the job as CEO of
EDS , and the H&R Block Board of Directors appointed Frank Salizzoni, a member of the HRB Board, to serve as CEO of H&R Block. It was during Salizzoni's tenure as CEO that H&R Block's Board of Directors made the decision to divest CompuServe. Maury Cox left the helm as CompuServe's CEO, to be replaced by Bob Massey. Massey had a short tenure in this role, and was relieved in 1997. Frank Salizzoni became the acting CEO of CompuServe from this time until its sale.
In 1997, H&R Block announced its intention to divest itself of CompuServe. A number of potential buyers came to the forefront, but the terms they offered were unacceptable to H&R Block management. One would have involved a leveraged buyout which would have saddled the CompuServe shareholders with substantial debt. AOL, the most likely buyer, made several offers to purchase CompuServe using AOL stock, but H&R Block management sought cash, or at least a higher quality stock.
In February 1998,
John W. Sidgmore , then the vice-chairman of
Worldcom , and the former CEO of
UUNET , devised a complex transaction which ultimately met the goals of all parties. Step one was that Worldcom purchased all the shares of CompuServe with $1.2 billion of WCOM stock. Literally the next day, Worldcom sold the CompuServe Information Service portion of the company to AOL, retaining the CompuServe Network Services portion. AOL in turn sold its networking division, Advanced Network Services (ANS), to Worldcom. Sidgmore said that at this point the world was in balance: the accountants were doing taxes, AOL was doing information services, and Worldcom was doing networks.
The only reason the H&R Block management team agreed to accept WCOM stock in exchange for the ownership of Compuserve was because they had been able to work out a deal to sell the WCOM stock for $1.2 billion in cash immediately after the transaction. In the end, H&R Block received $1.2 billion for a company it had paid $20 million for eighteen years earlier, during which it also generated substantial profits.
After the Worldcom acquisition, CompuServe Network Services was renamed Worldcom Advanced Networks, and continued to operate as a discrete company within Worldcom after being combined with AOL's network subsidiary, ANS, and an existing Worldcom networking company called
Gridnet . In 1999, Worldcom acquired MCI and became
MCI Worldcom , Worldcom Advanced Networks briefly became MCI Worldcom Advanced Networks. Worldcom was later unsuccessful in its bid to purchase Sprint. MCI Worldcom Advanced Networks was ultimately absorbed into UUNET. Soon thereafter, Worldcom began its spiral to bankruptcy, re-emerging as MCI. In 2006, MCI was sold to Verizon. As a result, the organization that had once been the networking business within CompuServe is now part of Verizon.
In the process of splitting CompuServe into its two major business, CompuServe Information Services and CompuServe Network Services, Worldcom and AOL both desired to make use of the CompuServe name and trademarks. Consequently, a jointly owned holding company was formed for no other purpose than to hold title to various trademarks, patents and other intellectual property, and to license that intellectual property at no cost to both Worldcom (now Verizon) and AOL.
In September 2003 CompuServe Information Service, now a division of AOL, added CompuServe Basic to its product lines, selling via Netscape.com. AOL offered it to AOL members leaving that service, possibly in response to reports earlier that year that AOL was losing significant business to low-cost competitors.
CompuServe Information Services is now positioned as the value market provider for several million customers, as part of the AOL Web Products Group. Recent U.S. versions of the CompuServe
Client software — essentially an enhanced
Web Browser — use the
Gecko Layout Engine developed for
Mozilla , within a derivative of the AOL client and using the AOL dialup network. The previous CompuServe service offering, referred to as "CompuServe Classic", remains available in the US and also in other countries where CompuServe 2000 is not offered, notably the UK and Asia-Pacific region. In Germany CompuServe 2000 was introduced in 1999 and abolished in 2001 because of failure on the German market, but the CompuServe Classic product also remains available. However, since then CompuServe Germany has introduced its own products for dialup and DSL internet access, and its own client software. (called ''Compuserve 4.5 light'').
In the
Pacific region (
Australia ,
New Zealand , etc.) Fujitsu Australia runs the CompuServe Pacific franchise, which in 1998 had 35,000 customers. It is thought to have far fewer now thanks to CompuServe Pacific's pricing plans, which have not been changed since 1998 (e.g.,
A$ 14.95 for 2 hours per month).
CompuServe forums today are more tightly linked to CompuServe channels.
In January 2007 the CompuServe brand managers at AOL sent an e-mail to members stating that it had no plans for compatibility with the
Windows Vista operating system, and suggested to its members who wished to use Vista switch to their AOL branded service.
Compuserve.com currently runs a slightly trimmed-down version of the now-defunct
Netscape.com Web portal, the latter of which was shut down in 2006.
One popular use of CompuServe in the 1980s was file exchange, particularly pictures. Indeed, from ) to standardize the images so they could be shared among different microcomputer platforms. With the introduction of more powerful machines, universally supporting color, CompuServe introduced the much more capable
GIF format, invented by
Steve Wilhite . GIF went on to become the de facto standard for 8-bit images on the Internet.
CompuServe, and its outside telecommunications attorney, Randy May, led the appeals before the
Federal Communications Commission (FCC) to exempt data networks from having to pay the Common Carrier Access Charge (CCAC) which was levied by the telephone
Local Exchange Carrier s (primarily the
Baby Bell companies) on long distance carriers. The primary argument was that data networking was a brand new industry, and the country would be better served by not exposing this important new industry to the aberrations of the voice telephone economics (the CCAC is the mechanism used to subsidize the cost of local telephone service from long distance revenue). The FCC agreed with CompuServe's position, and the consequence is that all dial-up networking in the
United States , whether on private networks or the public Internet, is much less expensive that it otherwise would have been.
In 1995 CompuServe set what in Germany caused some loss of German members.
The original CompuServe user IDs consisted of 9 octal digits in the form xxxxx,xxxx (a legacy of PDP10 architecture) that were generated in advance and issued on printed "Snap Paks." The Internet e-mail address of a CompuServe user was their user ID in the form xxxxx.xxxx@compuserve.com. In 1996, they started allowing users to come up with an alias for their Internet e-mail address, which could also be used for a personal webpage. In 1998, they offered users the option of switching their mailbox over to a newer system that provided POP3 access via the Internet, so that any Internet mail program could be used.
In 1996, CompuServe introduced a long distance phone card known as the CompuServe E-mail Message Center. More than just a long-distance calling card, it offered text-to-speech synthesis of messages in the user's inbox, fax, news and concierge services. It appears that the service offered by the long distance partner is still in existence today. The toll-free access number is 1-800-848-0680.
