By Reid Goldsborough
The demise of the classic online service CompuServe on July 1 is more testimony about the inescapable movement of time and the ever-shifting positions of the heavyweights in the computer industry.
In its day CompuServe ruled the online roost. Founded in 1969 before the advent of the personal computer revolution, it was the most popular online service in the 1980s and continued being hugely important into the mid-1990s, providing reams of information as well as ample opportunity to communicate.
CompuServe’s business model, however, relied on an hourly rate system, and it was done in by services that charged a flat monthly rate, primarily by America Online (AOL), which wound up buying CompuServe in 1998.
AOL, in turn, has seen its fortunes rise and fall as well. Founded in 1983, it was everyman’s online service in the 1990s, providing an easy portal to the online world for those without a lot of technical expertise.
AOL reached its zenith just as it was merging with Time Warner in 2001 and just as the dot-com bubble was in the process of bursting, with online properties such as AOL losing a great deal of their previous value. Time Warner, which with the merger had changed its name to AOL Time Warner, lost $99 billion in 2002, at the time the largest loss ever reported by a U.S. company. It changed its name back to Time Warner the next year.
Time Warner announced plans this past May to spin out AOL, ending its relationship with it. AOL, infamous for its marketing tactic of littering mailboxes with unsolicited CD-ROMs containing its software, was done in primarily by broadband Internet providers.
The leading broadband provider and early broadband innovator is Comcast, initially a cable TV company founded in 1963 that began offering high-speed Internet service in 1994. Following Comcast in broadband Internet market share, according to Strategy Analytics, are AT&T, Verizon, and Time Warner Cable. Comcast has been increasing the speed offered to subscribers having standard home connections, with top downstream speeds now at 50 megabits per second and top upstream speeds of 10 megabits per second.
Companies such as Comcast that started out offering only cable TV use coaxial cable, and they’re currently in pitched competition with companies such as Verizon that started out offering only telephone service, which now use fiber optic cable. Each is vigorously expanding into the other’s turf, increasingly offering as a bundle Internet, TV, and phone service. Time will tell who wins this battle.
Another paradigm-shifting battle is currently being fought with computer operating systems. The big news here is the just announced entry of Internet search giant Google into the operating system space, which would put it into even more direct competition with software giant Microsoft.
Google on July 7 announced plans to develop Google Chrome OS, an open-source Linux-based operating system, though it likely won’t be ready until late 2010 at the earliest. Google is currently competing against Microsoft with its new Web browser, Google Chrome, released in December 2008, and with its online suite of application programs, Google Docs.
Google Docs includes a word processor, spreadsheet, presentation, and form-creation program, allowing users to create and edit documents online, for free, without having to install programs on their PCs. In contrast, the current version of Microsoft Office Standard Edition typically sells for between $300 and $400.
In response, Microsoft on July 13 announced plans to offer a free online version of Office, directly competing with Google Docs. It’s expected to be available sometime next year. What’s not clear is the affect it will have on the billions of dollars Microsoft currently earns annually on worldwide sales of Office.
In turn, Microsoft’s rise to the top of the software heap has come at the expense of others. In their day, WordPerfect used to be the word processing market leader, Lotus 1-2-3 the spreadsheet leader, and dBase the database leader.
Microsoft’s actions also led to the marginalization of OS/2, an operating system developed jointly by IBM and Microsoft and designed to be the successor of DOS, a role that Windows, developed solely by Microsoft, took over. OS/2 still lives on, partly, as the operating system of some automated teller machines.
IBM, which transformed personal computers from toys for hobbyists into legitimate office machines with the introduction of the first IBM PC in 1981, has effected the biggest shifts of position in the personal computer industry. IBM left the PC market completely in 2005, selling its PC division to the Chinese company Lenovo.