CompuServe, Inc., initially known as Compu-Serv Network, Inc., began its operations in Columbus, Ohio, in 1969. It started as a time-sharing and remote access service primarily marketed to corporations. This early focus on business-to-business services laid the groundwork for what would become the first major commercial online service in the United States. A significant turning point occurred in 1979 when CompuServe ventured into offering its otherwise
under-utilized after-hours time to Radio Shack customers, a move that proved successful and led to the system being opened to the public. This marked the beginning of CompuServe's transformation into a consumer-oriented online information service, roughly concurrent with the emergence of another early online service, The Source.
Early Growth and H&R Block Acquisition
In May 1980, with fewer than 1,000 subscribers to its consumer information service, CompuServe was acquired by H&R Block for $25 million. This acquisition proved to be a catalyst for rapid expansion. Within four years of H&R Block's ownership, CompuServe's subscriber base surged to approximately 110,000. H&R Block aggressively advertised the service, contributing to its dominance in the industry throughout the 1980s. During this period, CompuServe even acquired its competitor, The Source, further solidifying its market position. By 1987, consumer business accounted for 50% of CompuServe's total revenues, highlighting the success of its pivot to a broader audience.
Technological Innovations and Network Development
CompuServe was a pioneer in developing sophisticated networking technologies. Its original 1969 dial-up technology was relatively simple, involving local telephone lines connected to multiplexers that then linked to host systems in Columbus via leased lines. Over time, this infrastructure evolved significantly. By 1977, CompuServe had developed its own packet switching network, utilizing DEC PDP-11 minicomputers as network nodes installed across the United States and later internationally. This network incorporated various technologies, including Asynchronous Transfer Mode (ATM), Frame Relay (FR), Internet Protocol (IP), and X.25, demonstrating a continuous commitment to technological advancement.
One notable innovation was the CompuServe Network Services (CNS), formed in 1982 to sell connectivity to the nationwide packet network. CNS designed and manufactured its own network processors and developed proprietary software, including an Adaptive Routing system. This system allowed the network to operate in a self-discovery mode, automatically reconfiguring when new switches were added or removed. Crucially, Adaptive Routing also established connection paths based on real-time performance measurements, diverting traffic to alternative routes to prevent overloading and ensure optimal performance for users. While not strictly an X.25 network, CNS presented a standard X.25 interface to customers, enabling alliances with other private networks like Tymnet and Telenet, which provided CompuServe with the largest selection of local dial-up telephone connections globally.
Expanding Services and International Reach
Beyond its core information service, CompuServe introduced a range of innovative online features. It offered electronic mail capabilities and technical support to commercial customers as early as 1978 under the name InfoPlex. In 1980, it launched the CB Simulator, the first public, commercial multi-user chat program, pioneering the real-time chat market. CompuServe also introduced the Graphics Interchange Format (GIF) in 1987, invented by Steve Wilhite, which became a widely adopted format for 8-bit images on the internet. In 1985, EaasySABRE, a customer-accessible extension of the Sabre travel system, allowed individuals to book flights and hotel rooms online, predating widespread internet travel services.
CompuServe's expansion extended beyond U.S. borders. It entered Japan in 1986 through a collaboration with Fujitsu and Nissho Iwai, leading to the development of NIFTY-Serve, a Japanese-language version of CompuServe, in 1989. In 1993, CompuServe Hong Kong was established as a joint venture with Hutchison Telecom, attracting 50,000 customers before the dial-up ISP boom. The company also co-developed WorldsAway, an interactive virtual environment, with Fujitsu between 1994 and 1995. By the late 1980s, CompuServe had introduced its own direct dial-up access network in many countries and opened commercial branches in cities like London and Munich, solidifying its position as a global online service provider.
The Rise of the Web and Eventual Transition
Despite its innovations and global reach, CompuServe faced increasing competition with the rise of modern systems like America Online (AOL) and the open World Wide Web. At its peak in the early 1990s, CompuServe Information Service (CIS) boasted a robust online chat system, message forums, extensive software libraries, and popular online games. However, the shift in the online landscape led to a decline in market share. In 1997, a complex deal brokered by WorldCom resulted in CompuServe 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, marking the end of an era for the pioneering online service after 30 years.
