THE PASSING OF AN INTERNET PIONEER

Founding Prodigy Chief Created Online Services for Consumers

After selling and manufacturing some of the first business computers, Theodore Papes helped create one of the earliest online services for consumers.
Mr. Papes, who died Jan. 8 at the age of 81, led the development of Prodigy Services Co., a digital enterprise that provided online news, email, shopping and other services years before the World Wide Web.
A joint venture of International Business Machines Corp. and Sears Roebuck & Co., Prodigy was meant to introduce online services to a mass audience. Founded in 1984 and rolled out regionally starting in 1988, Prodigy caught on with the help of intensive marketing. In 1991, it passed the million-subscriber mark. But not long after, it began to flag in the face of competition from rivals such as America Online.
"We were the pioneers, but we ended up with some arrows in our back," says Les Briney, Prodigy's director of technology.
Mr. Papes, a career IBM executive who had led the company's European operations and systems products divisions in the 1970s, was appointed in 1984 to head the new venture, which initially included CBS as a third partner. From Prodigy's White Plains, N.Y., headquarters, he oversaw focus groups and software developers as they decided what might appeal to consumers on a dial-up computer network.
They settled on a mix of services that foreshadowed today's Internet, though with key differences. Prodigy featured a graphical user interface, one of the first at a time before Microsoft's Windows had been widely introduced. Early competing services such as Compuserve Inc. were run with typed commands. Prodigy was supported in part with something similar to today's browser banner ads, custom-delivered according to the user demographics.

One of Mr. Papes's key moves was to convince Hayes Microcomputer Products Inc. to produce a low-price modem, one of the first aimed at the consumer rather than business market. Most home-computer owners at the time had no means of connecting their computer to a network.
"All the things we take for granted today were just pie in the sky," says Ross Glatzer, who worked alongside Mr. Papes at Prodigy.
Some experiments, such as online grocery shopping, were failures. But others, like online flower ordering, airline reservations and stock quotes, gained more traction. More surprising to Prodigy's designers was the popularity of its email and bulletin-board systems. The bulletin boards became the center of controversy in 1991 when it emerged that Prodigy pre-screened and deleted postings. A few months later, the company was again in the spotlight when it defended on free-speech grounds the rights of users to post anti-Semitic hate messages.
The intense debate surrounding the bulletin boards foreshadowed many fights over freedom of expression on the Internet. But it was hardly the kind of thing Mr. Papes expected as a button-down IBM executive responsible for some of the most powerful business computers on the market.
The son of a Greek immigrant who established a home- furnishings business in Gary, Ind., Mr. Papes was president of his senior class in high school and a Navy veteran. He was hired out of college in 1952 by IBM, where he sold some of the earliest computers to banks. He later became an executive responsible for developing communications terminals, storage drives and operating systems. He moved quickly up the IBM hierarchy, becoming a vice president in 1968 at age 40.
Although he took on a series of more responsible positions, family members say, it became evident that he wouldn't become chief executive of IBM itself, and so in 1984 he was open to heading up a new online joint venture, initially called Trintex.
Three years later, when Prodigy was about to be rolled out, Mr. Papes told Fortune, "We're creating something so compelling that you'll say, 'I've got to have it.' "
First, though, users had to learn about it. Alvin Toffler, the author of "Future Shock," was hired to star in television ads promoting the service. Another spokesperson was journalist Linda Ellerbee.
"We were trying to change the way people had always done things," says Mr. Glatzer, who became Prodigy's CEO after Mr. Papes retired in 1992.
When Mr. Papes stepped down, Prodigy claimed 1.4 million subscribers. But the company soon began losing ground to rivals like AOL, which brought new marketing muscle, vibrant graphics and a Microsoft Windows platform to the nascent online world. Prodigy was sold by IBM and Sears to a private-equity firm in 1996 for a fraction of the companies' investment.
While Prodigy was eventually eclipsed by its rivals, the company played a pivotal role in introducing the early home-computer users to online networking, says Barry Berkov, former executive vice president of Compuserve. "AOL would probably never have been successful without the mass promotion that Prodigy did."