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Prodigy Expands Service, Raises Prices

September 10, 1992

NEW YORK (AP) _ Prodigy Services Co., the information and home-shopping service for personal computer users, said Thursday it would expand its offerings and speed up its communications system, but also raise its price.

The moves are aimed in part at ending Prodigy’s losses, which are borne by its owners, International Business Machines Corp. and Sears, Roebuck and Co.

Prodigy said it would triple the number of ″bulletin boards,″ or electronic message areas in which users can communicate via typed messages on particular topics, such as gardening, sports and travel.

Prodigy also said it would speed up its telephone-based delivery system so members’ PCs are more responsive when they make a request for information. The higher transmission rate also means the screen graphics Prodigy uses will ″draw″ themselves more quickly.

However, the higher delivery speed is an extra-cost option. Prodigy said it would disclose the price shortly. Most Prodigy members also must buy a new modem, the device that links their computer to the phone system, to take advantage of the higher speed. Prodigy said it would sell its members a low- cost modem.

Members have the option of continuing to receive Prodigy at today’s slower speed, but they and other users will see their Prodigy bills rise, from $12.95 a month to $14.95.

Prodigy also said it would provide, at additional cost, a way for members to create and edit messages before hooking up to the service. This will keep a member’s phone line free and lower Prodigy’s phone costs, since users today are forced to stay on the line the entire time they write messages.

Members pay for their local phone hookup, but Prodigy pays for the long- distance connection to its central computer.

Prodigy launched its service nationwide two years ago and now claims about 1.75 million users. It also has signed up about 140 companies, such as Mazda, Lands’ End and Spiegel, to place ads that run at the bottom of the computer screen or allow Prodigy members to order goods electronically.

Prodigy won’t disclose its finances, but Ross Glatzer, named Prodigy’s president earlier this year, said the service stands by its previously stated goal of making money in ″the early 1990s.″

The company hopes to make up some of its losses through the price increase and lower phone costs. It also will sell other new extra-cost options, such as a Sesame Street feature for children.

Some industry analysts are skeptical about Prodigy’s profitability goal. Jupiter Communications, which follows the electronic information industry, believes Prodigy will not recover the money its parents invested - which Jupiter estimates at more than $800 million - before the year 2000.

Jupiter said the number of PC owners who have a modem is not large enough to sustain Prodigy.

However, Jupiter believes Prodigy will succeed if it changes its delivery system. Instead of relying on PCs, Prodigy could serve consumers through devices such as ″personal digital assistants,″ the handheld gadgets a number of companies, including IBM, are developing.

Prodigy also most likely will offer its service through a new generation of telephones that will be equipped with a small video screen, Jupiter said.

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