CompuServe, Inc. (CompuServe Information Service, Inc., also known by its initialism CIS or later CSi) was an American Internet company that provided the first major commercial online service. It opened in 1969 in Columbus, Ohio, as a timesharing and remote access service marketed to corporations. After a successful 1979 venture selling otherwise under-utilized after-hours time to Radio Shack customers, the system was opened to the public, roughly the same time as The Source.
H&R Block bought the company in 1980 and began to advertise the service aggressively. CompuServe dominated the industry during the 1980s, buying their competitor The Source. One popular use of CompuServe during the 1980s was file exchange, particularly pictures. In 1985, it hosted one of the earliest online comics, Witches and Stitches. CompuServe introduced a simple black-and-white image format known as RLE (run-length encoding) to standardize the images so they could be shared among different types of microcomputers. With the introduction of more powerful machines enabling display of color, CompuServe introduced the much more capable Graphics Interchange Format (GIF), invented by Steve Wilhite. GIF later became the most common format for 8-bit images transmitted by Internet during the early and mid-1990s.
At its peak during the early 1990s, CIS had an online chat system, message forums for a variety of topics, extensive software libraries for most personal computers, and a series of popular online games, including MegaWars III and Island of Kesmai. In 1994, it was described as "the oldest of the Big Three information services (the others are Prodigy and America Online)". However, the rise of modern systems like AOL, as well as the open World Wide Web system, led to it losing marketshare. In 1997, a complex deal was devised with WorldCom acting as a broker, resulting in the company being sold to AOL. New products under the CompuServe sub-brand ceased in 2002, and the original CompuServe Information Service, later rebranded as CompuServe Classic, was eventually shut down in 2009 after 30 years.
Company history and development of the service Founding CompuServe was initiated during 1969 as Compu-Serv Network, Inc. in Columbus, Ohio, as a subsidiary of Golden United Life Insurance.
Though Golden United founder Harry Gard Sr.'s son-in-law Jeffrey Wilkins is widely miscredited as the first president of CompuServe, its first president was actually John R. Goltz. Wilkins replaced Goltz as CEO within the first year of operation. Goltz and Wilkins were both graduate students of electrical engineering at the University of Arizona. Other early recruits from the same university included Sandy Trevor (inventor of the CompuServe CB Simulator chat system), Doug Chinnock, and Larry Shelley.
The company's objectives were twofold: to provide in-house computer processing for Golden United Life Insurance; and to develop as an independent business in the computer time-sharing industry, by renting time on its PDP-10 midrange computers during business hours, mainly to other businesses. It was divested as a separate company during 1975, trading on the NASDAQ using the symbol CMPU.
Concurrently, the company recruited executives who changed the emphasis from offering time-sharing services, for which customers wrote their own applications, to a service providing application programs. The first of these new executives was Robert Tillson, who quit Service Bureau Corporation (then a subsidiary of Control Data Corporation, but originally formed as a division of IBM) to become CompuServe's Executive Vice President of Marketing. He then recruited Charles McCall (who succeeded Jeff Wilkins as CEO, and later became CEO of the medical information company HBO & Co.), Maury Cox (who became CEO after the departure of McCall), and Robert Massey (who succeeded Cox as CEO).
In 1977, CompuServe's board changed the company's name to CompuServe Incorporated. In 1979, it began "offering a dial-up online information service to consumers". In May 1980, at which time Compuserve had fewer than 1,000 subscribers to its consumer information service, H&R Block acquired the company for $25 million and within four years had grown its subscriber base to about 110,000.
Technology The original 1969 dial-up technology was fairly simple—the local telephone number in Cleveland, for example, was a line connected to a time-division multiplexer that connected via a leased line to a matched multiplexer in Columbus that was connected to a time-sharing host system. In the earliest buildups, each line terminated at a single machine of CompuServe's host service, so that one dialed different telephone numbers to reach different computers.
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 telephone number was not tied to a particular destination host. Finally, in 1977, CompuServe developed its own packet switching network, implemented by DEC PDP-11 minicomputers acting as network nodes that were installed throughout the United States (and later, in other countries) and interconnected. Over time, the CompuServe network evolved into a complicated multi-tiered network incorporating Asynchronous Transfer Mode (ATM), Frame Relay (FR), Internet Protocol (IP) and X.25 technologies.
In 1981, The Times explained CompuServe's technology in one sentence: CompuServe is offering a video-text-like service permitting personal computer users to retrieve software from the mainframe computer over telephone lines.The Times: Fireside access to sum of human knowledge, 24 Feb. 1981, pg. 15
The New York Times described them as "the most international of the Big Three" and noted that "it can be reached by a local phone call in more than 700 cities".
CompuServe was also a vendor of other commercial services. One of these was the Financial Services group, which collected and consolidated financial data from myriad data feeds, including CompuStat, Disclosure, I/B/E/S as well as the price and quote feeds from the major exchanges. CompuServe developed extensive screening and reporting programs that were used by many investment banks on Wall Street.
CIS On September 24, 1979, Radio Shack began offering the residential information service MicroNET, in which home users accessed the computers during evening hours when the CompuServe computers were otherwise idle. This was a success and CompuServe began to advertise it more widely as "MicroNET, CompuServe's Personal Computing Division". Its success prompted CompuServe to disuse the MicroNET name in favor of its own, becoming CompuServe Information Service, or CIS, on July 1, 1980. CIS's 1979 origin was approximately concurrent with that of The Source.
By the mid-1980s, CompuServe was one of the largest information and networking services companies, and it was the largest consumer information service. 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 this service was well known to the public. By 1987, consumer business would provide 50% of CompuServe revenues.
The corporate culture was entrepreneurial, encouraging "skunkworks projects". Alexander "Sandy" Trevor secluded himself 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 systems operators (sysops), who received compensation based on the success of their own forum's boards, libraries, and chat areas.
Newspapers
In July 1980, working with Associated Press, CompuServe began hosting text versions of the Columbus Dispatch, The New York Times, Virginian-Pilot and Ledger Star, The Washington Post, San Francisco Examiner, San Francisco Chronicle, and Los Angeles Times were added in 1981; additional newspapers followed.
Although accessing articles in these newspapers comprised 5% of CompuServe's traffic, reading an entire newspaper using this method was impractical; the text of a $0.20 print edition newspaper would take two to six hours to download at a cost of $5 per hour (after 6 p.m.).Archived at Ghostarchive and the Wayback Machine:
Selling connectivity Another major unit of CompuServe, the CompuServe Network Services, was formed in 1982 to generate revenue by selling connectivity to the nationwide packet network CompuServe had built to support its time-sharing service. CompuServe designed and manufactured its own network processors, based on the DEC PDP-11, and developed all the software that operated on the network. Often (and erroneously) termed an X.25 network, the CompuServe network implemented a mixture of standardized and proprietary layers throughout the network.
One of the proprietary layers was termed Adaptive Routing. The Adaptive Routing system implemented two powerful features. One is that the 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 explicit configuration. To change the network configuration, all that was needed was to add or remove connections, and the network would automatically reconfigure. The second feature implemented by Adaptive Routing was often discussed by network engineers, 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 customers, providing dial-up connectivity to corporate hosts, and allowing CompuServe to form alliances with private networks Tymnet and Telenet, among others. This gave CompuServe the largest selection of local dial-up telephone connections in the world, in an era when network usage charges were expensive, but still less than long-distance charges. Other networks permitted CompuServe access to still more locations, including international locations, usually with substantial connect-time surcharges. It was common during the early 1980s to pay a $30-per-hour charge to connect to CompuServe, which at the time cost $5 to $6 per hour before factoring in the connection-time surcharges. This resulted in the company's being nicknamed CompuSpend, Compu$erve or CI$.
CNS has been the primary supplier of dial-up communications for credit-card authorizations for more than 20 years, a competence developed as a result of its long-time relationship with Visa International. At the peak of this type of business, CompuServe transmitted millions of authorization transactions each month, representing several billion dollars of consumer purchase transactions. For many businesses an always-on connection was an extravagance, and a dial-up option made better sense. This service presently remains in operation, as part of Verizon (see below). There are no other competitors remaining in this market.