Prodigy Introduces Dial-Up Service Summary

  • Last updated on November 10, 2022

In 1988, Prodigy Services Company was launched as the first interactive dial-up Internet service for consumers. With innovative features such as a user-friendly graphical interface, a low flat monthly fee, and unlimited access, Prodigy pioneered online home shopping, a total online newsroom, and other innovations that anticipated future trends in technology and marketing.

Summary of Event

The origins of Prodigy Services Company can be traced back to 1980, when the telecommunications giant American Telephone and Telegraph (AT&T) and the Columbia Broadcasting System (CBS) established Venture One, Venture One a market research and testing firm. Venture One gathered data to determine consumer interest in a videotex Videotex (television set-top box) information delivery system for home shopping and banking, news, weather, and so on. Videotex was an experimental system for transmitting data over telephone lines or television cables into an alphanumeric and pictorial display on a television or computer screen in the home. After the market tests were completed, Venture One was dissolved, and CBS and AT&T both pursued this market separately. Prodigy Services Company Computing, applied;Internet service providers Internet;service providers World Wide Web [kw]Prodigy Introduces Dial-Up Service (Sept., 1988) [kw]Dial-Up Service, Prodigy Introduces (Sept., 1988) Prodigy Services Company Computing, applied;Internet service providers Internet;service providers World Wide Web [g]North America;Sept., 1988: Prodigy Introduces Dial-Up Service[06910] [g]United States;Sept., 1988: Prodigy Introduces Dial-Up Service[06910] [c]Computers and computer science;Sept., 1988: Prodigy Introduces Dial-Up Service[06910] [c]Marketing and advertising;Sept., 1988: Prodigy Introduces Dial-Up Service[06910] [c]Science and technology;Sept., 1988: Prodigy Introduces Dial-Up Service[06910] Papes, Theodore Hayes, Dennis Brennan, Edward A. Akers, John Bellows, Jim Tisch, Laurence A. Wyman, Thomas H.

In 1984, CBS, under the leadership of Thomas H. Wyman, chairman and chief executive officer of the corporation since 1980, entered a joint venture with computer manufacturer International Business Machines (IBM) IBM and retailer Sears, Roebuck and Company Sears, Roebuck and Company to form Trintex, Trintex a commercial videotex service that enabled consumers to access news and sports reports, weather information, financial data, and other information, as well as to conduct home shopping and banking from a personal computer. Theodore Papes became the first president and CEO of Trintex.

After CBS became the target of hostile takeover attempts in 1986, Wyman resigned, and Laurence A. Tisch became the corporation’s acting CEO. At that point, CBS dropped out of all nonbroadcast ventures, including Trintex. Sears and IBM remained as equal partners in the company.

In June, 1988, under the leadership of Edward A. Brennan, CEO of Sears, and John Akers, CEO of IBM, Trintex changed its name to Prodigy Services Company. Papes became the president and CEO of the new Prodigy, which was headquartered in White Plains, New York. In September, 1988, this home electronic information service, which had been under development for four years, launched simultaneously in Atlanta, Georgia; San Francisco, California; and Hartford, Connecticut.

The company planned for Prodigy to become the first successful videotex service in the United States, with millions of consumers dialing up from their personal computers for the weather, world news, stock prices, horoscopes, home shopping, banking, investing information, and more. Other companies, such as Knight-Ridder Newspapers and the Times-Mirror Corporation, had lost money and failed to develop successful videotex services for the mass market.

At the time, other commercial dial-up services existed, such as CompuServe CompuServe[Compuserve] (owned by H&R Block), GEnie (started by General Electric), and Delphi, but Prodigy was the first completely consumer-oriented online service. For instance, CompuServe focused more on selling network services to major corporations, and its individual users were primarily computer enthusiasts.

Years of market research and planning had provided Prodigy with ideas about what consumers really wanted and needed. Prodigy employed a staff of more than five hundred, and it was estimated that IBM and Sears had invested more than $250 million in development of the new company.

There were numerous other differences between the Prodigy and its competitors as well as between Prodigy and previous, failed videotex ventures. First, Prodigy used a magazine-type format, which was supported by both subscribers and advertisers. Whereas other online services modeled their fee structures on telephone services that charged on a per-minute basis with differing rates for daytime and evening/weekend calls, Prodigy subscribers paid only a flat monthly fee of $9.95 for unlimited access. There were no long-distance charges, as members could dial local-access phone numbers in a national network of POP (point-of-presence) sites.

Dozens of companies signed up immediately to offer services through Prodigy, including Florsheim Shoes, Levi Strauss Company, American Airlines, J. C. Penney, Dean Witter Reynolds, NEC Home Electronics, Spiegel, Procter & Gamble, Volkswagen/Audi, Showtime/The Movie Channel, Buick, Ford, and Aetna Insurance. Almost one hundred advertisers also signed up right away.

Consumers needed relatively high-level computer hardware to use Prodigy services: powerful IBM or IBM-compatible computers, Apple Macintosh, or other computers with 512 kilobytes of RAM (random access memory) and a 1200-baud (speed) modem to access the network through a local telephone number. The modem (modulator-demodulator), a device that could convert between computer or digital data and the analog waves transmitted over telephone lines, was necessary for dial-up service. It enabled a consumer’s personal computer to communicate over phone lines with the Prodigy information services. Dennis Hayes’s company, Hayes Microcomputer Products, Hayes Microcomputer Products was the leading manufacturer of modems for personal computers at the time. To make Prodigy services affordable and competitive, he designed the Hayes Personal Modem 1200, a low-cost, compact modem exclusively for Prodigy subscribers.

While competing services such as CompuServe and GEnie were still text-based, the Prodigy computer interface was user-friendly, intuitive, and graphical. Prodigy artists designed inviting graphics and screen menus to present the news, services, and advertising. The higher-quality computers that consumers needed to use Prodigy enabled these full-color graphical screen displays.

In addition to hiring experts to contribute columns, Prodigy created a large, complete in-house news department, fully staffed with reporters, writers, editors, and graphic artists. The director of the Prodigy newsroom was Jim Bellows, a legendary journalist and news editor who had worked in both print and broadcast media, including the New York Herald Tribune, the Los Angeles Times, and ABC News: World News Tonight.

Prodigy Services Company was able to develop the technical infrastructure to support a nationwide system, and by 1990, Prodigy was available in most major cities across the United States.


By 1993, Prodigy had begun offering Internet e-mail for its members. In 1994, Prodigy became the first online service to offer subscribers access to the World Wide Web and Web page hosting. That year, Prodigy reached its peak of success with 2 million subscribers. As the Web started offering more content, increasing numbers of consumers began to use America Online America Online (AOL) as their Internet service provider (ISP). By 1996, Prodigy had fallen to third place, behind AOL and CompuServe. AOL had almost 6 million subscribers and CompuServe had nearly 5 million, whereas Prodigy had dropped to 1.3 million subscribers.

After investing $1.2 billion in Prodigy since 1985, IBM and Sears sold the company to Prodigy’s board of directors in 1996. In 1997, Prodigy became an ISP, offering services that included dial-up and DSL access, instant messaging, e-mail, and communities. By 2000, the company’s original online services had been phased out. Finally, in 2001, SBC Communications purchased Prodigy. In 2005, SBC acquired AT&T, and SBC rebranded itself as AT&T.

Although Prodigy Services Company no longer existed by 2000, it remained historically significant as one of the oldest brands on the Internet and the first consumer-oriented dial-up service. Prodigy was one of the earliest online services to hire reporters and employ a full newsroom staff. It was the first of the early dial-up companies to offer access to the World Wide Web and to host Web pages. Finally, its unique merging of consumers, advertisers, businesses, information media, and technology served as a bridge to future developments in telecommunications and marketing. Prodigy Services Company Computing, applied;Internet service providers Internet;service providers World Wide Web

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Bellows, Jim. The Last Editor: How I Saved “The New York Times,” “The Washington Post,” and the “Los Angeles Times” from Dullness and Complacency. Kansas City, Mo.: Andrews McMeel, 2002. Inspiring memoir by the legendary print, broadcast, and Internet journalist provides an insider’s view of the Prodigy newsroom. Includes index.
  • citation-type="booksimple"

    xlink:type="simple">Miller, Michael. Using Prodigy. Indianapolis: Que Corporation, 1995. The guide to the New Prodigy, the first major upgrade to the interface, navigation, and other features, since the 1980’s. Includes illustrations and index.
  • citation-type="booksimple"

    xlink:type="simple">Motavalli, John. Bamboozled at the Revolution: How Big Media Lost Billions in the Battle for the Internet. New York: Viking Penguin, 2002. Insider’s account includes discussion of Prodigy as part of established corporate media’s failed attempts to dominate the new world of cyberspace. Includes index.
  • citation-type="booksimple"

    xlink:type="simple">Stone, Alan. How America Got On-Line: Politics, Markets, and the Revolution in Telecommunications. Armonk, N.Y.: M. E. Sharpe, 1997. Presents a historical analysis of the convergence of computer and telecommunications technologies. Discusses Hayes’s fast modem designed specifically for Prodigy.
  • citation-type="booksimple"

    xlink:type="simple">Viescas, John. The Official Guide to the Prodigy Service. Redmond, Wash.: Microsoft Press, 1991. The only authorized guide to Prodigy, with detailed instructions and hundreds of illustrations. Includes index.

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Categories: History