By the early 1980s, the foundation of what we now know as the 'internet' had been laid—its primary protocols were developed and tested in real-world scenarios. However, this system remained closed and was almost entirely under the control of a single entity, the U.S. Department of Defense. Soon this was set to change, as the system would expand to all computing departments of various institutions through CSNET. The network would continue to grow within academic circles before eventually opening up for widespread commercial use in the 1990s.
However, the idea that the internet would become the center of the emerging digital world, widely advertised as the 'information society,' was far from obvious in the 1980s. Even for those who had heard of it, the internet remained merely a promising scientific experiment. The rest of the world did not stand still, holding its breath in anticipation of its arrival. Instead, a multitude of options competed for funding and attention to provide access to online services for the mass consumer.
Personal computing
Around 1975, breakthroughs in semiconductor manufacturing led to the emergence of a new type of computer. A few years prior, engineers had figured out how to squeeze the main logic of data processing onto a single microchip—the microprocessor. Companies like Intel began offering high-speed RAM chips to replace the magnetic core memory of the previous generation of computers. As a result, the most important and expensive parts of a computer became subject to Moore's Law, which steadily reduced the cost of processor and memory chips in the following decades. By the middle of the decade, this process had lowered the prices of these components enough that the average American middle-class citizen could consider buying and assembling their own computer. Such machines came to be known as microcomputers (or sometimes personal computers).
The battle for the title of the first personal computer was fierce. Some argued that it was the LINC by Wes Clark or the TX-0 from the Lincoln laboratories – after all, only one person could interact with them at a time. However, putting aside the question of primacy, any candidate for the top spot, when assessing the historical sequence of events, must concede it to one clear champion. No other machine achieved the catalytic effect that the MITS Altair 8800 had in driving the explosive growth of microcomputers in the late 1970s.
Altair 8800 standing on an additional module with an 8" disk drive
The Altair became a catalyst for the electronics enthusiast community. It convinced hobbyists that they could build their own computer at a reasonable price, leading these enthusiasts to form groups discussing their new machines – for example, the Homebrew Computer Club. These hobbyist cells unleashed a much more powerful wave of commercial microcomputers based on mass-produced machines that did not require electronic skills – for instance, the Apple II and Radio Shack TRS-80.
By 1984, 8% of U.S. households owned a computer, accounting for about . Meanwhile, businesses were acquiring their own fleets of personal computers at a rate of hundreds of thousands per year – primarily IBM 5150s and their clones. In the higher-end segment of single-user computers, the market for workstations from Silicon Graphics and Sun Microsystems was growing, featuring more powerful computers with advanced graphics displays and networking equipment intended for use by scientists, engineers, and other technical specialists.
Such machines could not invite one into the sophisticated world of ARPANET. However, many of their users wished to access the promised merger of computers and communications, which theoretical scientists had been proclaiming in the popular press since Taylor and Licklider's 1968 article "The Computer as a Communication Device," and even earlier. In 1966, scientist John McCarthy promised in Scientific American that "the technology already demonstrated is enough to envision computer consoles appearing in every home, connected to public computers via telephone lines." He claimed that the range of services offered by such a system was simply impossible to list, but provided a few examples: "Everyone will have access to the Library of Congress, with better quality than what librarians currently provide. Complete reports on ongoing events will be available, whether it’s baseball scores, smog index in Los Angeles, or descriptions of the 178th meeting of the truce commission in Korea. Income taxes will be automatically calculated due to continually accumulating records of income, deductions, contributions, and expenses."
Articles in popular literature described the possibilities of email, digital games, and various services ranging from legal and medical consultations to online shopping. But how exactly would all this look? Many answers turned out to be far from the truth. Looking back, that era resembles a shattered mirror. All the services and concepts characterizing the commercial internet of the 1990s—and many others—emerged in the 1980s, but fragmentarily, scattered across dozens of different systems. With few exceptions, these systems did not intersect, standing alone. Users of one system had no way to interact or communicate with users of another, so attempts to attract more users to any of them were largely .
In this article, we will look at a subset of participants in this new digital territory grab—companies that sold split access and tried to enter a new market with attractive offers.
Load factor
In 1892, Samuel Insull, a protégé , moved west to lead a new division of Edison's electric empire, Chicago Edison Company. In this role, he consolidated many key principles of modern utility management, particularly the concept of load factor – it is calculated as the average load on the electrical system divided by the peak load. The higher the load factor, the better, as any deviation from the ideal 1/1 ratio signifies wasted resources – excess funds needed to handle peak loads that remain idle during dips in the schedule. Insull sought to fill the gaps in the load curve by developing new classes of consumers who would use electricity at different times of the day (or even different seasons), even if it meant selling them electricity at a discount. In the early days, electricity was primarily used for lighting homes, and mostly in the evening. Therefore, Insull began promoting the use of electricity in industrial production, increasing its daytime consumption. This left gaps in the mornings and evenings, so he persuaded the Chicago transit system to switch its streetcars to electric power. Thus, Insull maximized the value of invested capital, even though it sometimes required selling electricity at a discount.
Insull in 1926, when his photograph was featured on the cover of Time magazine
The same principles apply to capital investment in computers nearly a century later – and it is the pursuit of balanced load that led to the offering of discounts during non-peak times, allowing the emergence of two new online services for microcomputers, launched almost simultaneously in the summer of 1979: CompuServe and The Source.
CompuServe
In 1969, the recently established Golden United Life Insurance company in Columbus, Ohio, registered its subsidiary Compu-Serv Network. The founder of Golden United aimed to create the most advanced, high-tech company with computerized record-keeping, which is why he hired a young computer science graduate student, John Goltz, to lead the project. However, a sales manager from DEC convinced Goltz to purchase the PDP-10, an expensive machine whose computational capabilities significantly exceeded the current needs of Golden United. The idea behind creating Compu-Serv was to turn this mistake into an opportunity – it was planned to sell surplus computing power to clients who could connect to the PDP-10 via telephone lines from a remote terminal. By the late 1960s, such a time-sharing model and selling computing services were becoming quite popular, and Golden United wanted to grab its share of the pie. In the 1970s, the company's division spun off into an independent entity, rebranded as CompuServe, and created its own packet-switched network to offer affordable nationwide access to computer centers in Columbus.
The national market not only gave the company access to a larger pool of potential clients, but it also broadened the demand curve for computing time across four time zones. However, there was still a significant gap between the end of the workday in California and the beginning of the workday on the East Coast, not to mention the weekends. CompuServe's head, Jeff Wilkins, saw an opportunity to address this issue with the growing number of home computers, as many owners were spending their evenings and weekends on their electronic hobbies. What if they offered them access to email, bulletin boards, and games on CompuServe computers at a discount during evening hours and weekends ($5/hour, compared to $12/hour during working hours)? [in today's money, that's $24 and $58 respectively].
Wilkins launched a trial service called MicroNET (intentionally distanced from the main CompuServe brand), and after a slow start, it gradually transformed into an incredibly successful project. Thanks to CompuServe's national data network, most users could simply call a local number to access MicroNET, thus avoiding long-distance charges even though the actual computers they connected to were located in Ohio. When the experiment was deemed successful, Wilkins dropped the MicroNET brand and transitioned it under the CompuServe brand. Soon, the company began offering services specifically designed for microcomputer users, such as games and other software that could be purchased online.
However, the most popular services by far became communication platforms. For long-term discussions and content sharing, there were forums on topics ranging from literature to medicine, from woodworking to pop music. CompuServe typically allowed the forums to be managed by the users themselves, with some taking on the role of 'sysops' for moderation and administration. Another main messaging platform was CB Simulator, which was created over one weekend by Sandy Trevor, one of the directors of CompuServe. It was named after the popular hobby of citizen band (CB) radio at the time and allowed users to sit in real-time text chats on dedicated channels—this model was similar to the talk programs available on many time-sharing systems. Many users spent hours in CB Simulator chatting, making friends, and even finding romantic partners.
The Source
A new online service for microcomputers began operating just eight days after MicroNET, in July 1979. Essentially, it targeted almost the same audience as Jeff Wilkins's service, even though it evolved through a completely different model. William von Meister, the son of German immigrants whose father helped organize airship flights between Germany and the U.S., was a serial entrepreneur. He would start a new venture as soon as he lost interest in the old one or when disappointed investors withdrew their support. It was hard to imagine someone more different from Wilkins. By the mid-1970s, his greatest successes included the Telepost electronic messaging system, which delivered messages electronically across the country to the nearest switching station, finishing the last mile via next-day mail, and the TDX system that used computers to optimize the routing of phone calls, reducing long-distance call costs for large enterprises.
Predictably losing interest in TDX, by the late 1970s, von Meister enthusiastically turned to a new project, Infocast, which he wanted to launch in McLean, Virginia. Essentially, it was an extension of the Telepost concept, only instead of using mail for last-mile delivery, it was supposed to utilize an FM sideband (by this technology, the station name, musician name, and song title are transmitted to modern radios) to deliver digital data to computer terminals. Specifically, he planned to offer this to geographically dispersed businesses that had multiple locations requiring regular updates from the central office—banks, insurance companies, grocery stores.
Bill von Meister
However, what Maestro truly wanted to create was a nationwide data delivery network into homes via terminals for millions, not just thousands of people. However, convincing a commercial enterprise to spend $1000 on a special FM radio receiver and terminal is one thing, while asking individual consumers to do the same is another. Therefore, Maestro set out to find other ways to deliver news, weather information, and other things to homes; he found such a method in the hundreds of thousands of microcomputers that were mushrooming in American offices and homes, already equipped with telephone lines. He partnered with Jack Taub, a wealthy businessman with connections, who liked this idea so much that he wanted to invest in it. Taub and Maestro initially named their new service CompuCom, characteristically trimming and assembling words as was common for computer companies of that time, but later arrived at a more abstract and conceptual name — The Source [источник].
The main problem they faced was the lack of technical infrastructure capable of facilitating this idea. To obtain it, they made an agreement with two companies whose resources were roughly comparable to those of CompuServe. They had computers suitable for time-sharing operations and a nationwide data transmission network. Both of these resources were largely idle in the evenings and on weekends. The computing power was provided by Dialcom, headquartered on the banks of the Potomac River in Silver Spring, Maryland. Like CompuServe, it started its operations in 1970 as a time-sharing computer service provider, although by the end of the decade it offered numerous other services. Incidentally, it was through the Dialcom terminal that , the future chairman of the board and CEO of Google, first encountered computers. The infrastructure for communications was provided by Telenet, a packet-switched network that spun off from the company , BBN. By paying for access to Dialcom and Telenet services at discounted rates during off-peak hours, Taub and von Meister were able to offer access to The Source at a price of $2.75 per hour during nights and weekends with an initial deposit of $100 (which is $13 per hour and $480 in today's dollars).
Aside from the payment system, the main difference between The Source and CompuServe was the expectations of users regarding their systems. The earliest services from CompuServe included email, forums, CB, and software sharing. Users were expected to create their own communities and build their superstructures on top of the basic hardware and software, similar to how corporate users of time-sharing systems operated. Taub and von Meister had no experience with such systems. Their business plan was based on providing a wealth of information for high-end professional consumers: databases from The New York Times, news from United Press International, stock information from Dow Jones, airline ticket prices, local restaurant reviews, and wine pricing. Perhaps the most distinctive feature was that The Source greeted users with a screen menu of available options, while CompuServe users faced a command line.
In line with the personal differences between Wilkins and von Meister, the launch of The Source was as grand an event as the quiet rollout of MicroNET. Isaac Asimov was invited to the first event to personally announce how the arrival of science fiction had become scientific fact. And, typically for von Meister, his tenure at The Source was short-lived. The company immediately faced financial troubles due to a significant expense-to-revenue gap. Taub and his brother held enough of a stake in the business to push von Meister out, which they did in October 1979, just a few months after the launch party.
The decline of time-sharing systems
The last company to enter the microcomputer market due to load ratio logic was General Electric Information Services (GEIS), a division of the electrical giant. GEIS was founded in the mid-1960s, when GE was still trying to compete with others in computer manufacturing, in an attempt to displace IBM from its dominant position in computer sales. GE sought to convince customers that instead of purchasing computers from IBM, it was easier to lease computers from GE. This attempt had little impact on IBM's market share; however, the company was making enough money for investments to continue until the 1980s, by which time GEIS already owned a global data network and two major data centers - in Cleveland, Ohio, and in Europe.
In 1984, someone at GEIS noticed how well The Source and CompuServe were growing (the latter already had over 100,000 users at that time) and came up with a way to make the data centers operate outside of peak hours. To create its own offering for users, they hired CompuServe veteran Bill Lauden. Lauden, frustrated by corporate sales managers trying to break into the increasingly attractive consumer business, left the company with a group of colleagues to try creating their own online service in Atlanta, naming it Georgia OnLine. They attempted to turn the lack of access to the national data network into an advantage, offering services specifically aimed at the local market, such as special advertising and information about various events; however, the company failed, so Lauden was pleased with an offer from GEIS.
Lauden named the new service GEnie [англ. genie — джинн] – it was a backronym for General Electric Network for Information Exchange [сеть GE по обмену информацией]. It offered all the services developed by that time in The Source and CompuServe – chat (CB simulator), bulletin boards, news, weather, and sports information.
GEnie became the latest service for personal computers, emerging from the time-sharing computing power access industry and the logic of load factor. With the rise in the number of small computers to millions, digital services for the mass market gradually began to transform into an attractive business, rather than just a way to optimize existing capital. In the early days, The Source and CompuServe were tiny companies serving a few thousand subscribers in the 1980s. Ten years later, millions of subscribers were paying monthly fees in the U.S.—and CompuServe was at the forefront of this market, absorbing its former competitor, The Source. This process also made time-sharing access less appealing for businesses—why pay for both communication and access to someone else's remote computer when it became so easy to equip your own office with powerful machines? And until the advent of fiber optic channels, which drastically lowered communication costs, this logic did not change direction.
However, it wasn't only companies offering time-sharing access that could enter this market. Instead of starting with large mainframes and searching for ways to maximize their usage, other companies began with the technology that was already in the homes of millions of people, seeking ways to connect it to a computer.
Further reading
- Michael A. Banks, On the Way to the Web (2008)
- Jimmy Maher, “A Net Before the Web,” filfre.net (2017)
Source: habr.com
