Prodigy: Comeback Kid or Punch Drunk?

Seeing Prodigy Communications Corp. back in the news again brought back fond memories.

Last week, the White Plains, New York-based online service provider plunked down $100 million (US$) in cash and stock to purchase popular Web-hosting company BizOnThe.Net.

With this move, according to Prodigy president and chief operating officer David Trachtenberg, “Prodigy firmly establishes itself as a leader in the rapidly growing small-biz marketplace.” He added that “Prodigy will make it easier for small-biz owners to focus on their business — rather than IT needs.”

The Odyssey Of Prodigy

If this were any other company, such a good move would be getting the attention of many analysts and the media. However, since Prodigy is a fallen giant trying to make a comeback, I think this story has largely been ignored.

The fact of the matter is, even if all of BizOnThe.Net’s 80,000 customers sign on as Prodigy subscribers, the erstwhile number one Internet provider would still only have a paltry 680,000 subscribers. Considering that American Online has 20 million members, Prodigy seems a little like an aging former heavyweight champion desperately trying to convince everybody that he deserves another crack at the champ.

Founded as Trintex in 1984, Prodigy was a joint venture of IBM, Sears and CBS, which dropped out in 1986. In 1988, Trintex launched Prodigy in a few cities, including Atlanta, San Francisco and Hartford, Connecticut. It made its national debut in 1990 — years before the Internet was a household word.

Inflexible Policies

By 1992, Prodigy had become the number one online service, easily thumping third place AOL and number two CompuServe. Everything seemed to be going its way until it began to have some ongoing points of disagreement with some people. Unfortunately, the people happened to be its subscribers.

For one thing, it was alleged that Prodigy erased subscriber complaints from electronic bulletin boards. It also was less than politically correct when it shut down an online area where gay rights activists were fighting with Christian fundamentalists. Additionally, as e-mail proliferated, Prodigy decided to charge subscribers for sending more than 30 e-mail messages each month.

New Ownership

As a result of all this foolishness, AOL became the top online service by 1993. In 1995, Edward Bennett, former head of Viacom’s VH-1 network, took over the reins of Prodigy and tried to change its stiff image. He soon discovered that the staid management style of IBM-Sears made accomplishing this goal impossible and helped put together a $250 million sale of the company to a group that included Mexico telecom holding company Carso Global Telecom.

Since then, Prodigy has launched a Spanish-language Internet service.

On The Comeback Trail?

Even though Prodigy’s latest deal with BizOnThe.Net seems to be a winner, I really have my doubts that it will do the trick. I’ll never forget when former heavyweight champion George Foreman hit the talk show circuit and tried to convince everyone that he was ready to take on Mike Tyson. He sure talked the talk, but his gut kept popping out of his shirt during the interview — telegraphing quite another message.

It could be the same way with Prodigy. It’s definitely talking the talk and making some good moves — but sometimes you only get one title bout.

What do you think? Let’s talk about it.

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