Heated Competition Spurs On-Line Service Innovations

Article excerpt

NEW YORK (AP) _ With competition heating up in the on-line industry, CompuServe Information Service said Tuesday it will launch a less expensive service for computer neophytes.

Meanwhile, a chief rival, Prodigy Services Co., took the wraps off new software that will give its service a better appearance and tighter connection to the Internet.

Both companies are unveiling the products as competition for subscribers has intensified with the growing use of the Internet, particularly the World Wide Web, and developments in the on-line products of AT T Corp., Microsoft Corp. and News Corp.

CompuServe, the biggest on-line system with 3.2 million subscribers worldwide, will also change its pricing structure and provide new access software in September.

"This announcement represents a significant shift in focus," said Bob Massey, chief executive officer of CompuServe.

Its parent company H R Block Inc. will invest more than $70 million in the improvements, an amount that will lead to a decline in profitability starting with the fiscal first quarter that ended Monday.

The company plans to market its new on-line service, code-named "Wow," to people who are novices with personal computers. Its current service appeals chiefly to experts and businesses that share documents and software electronically.

"But for the casual e-mail market that's developing, it has to become more intuitive," said Maureen Fleming, analyst at Digital Information Group in Stamford, Conn.

The company will change its pricing structure by eliminating surcharges for so-called "extended" services, such as participating in a discussion group about movies. Instead, CompuServe will move to hourly fees. The first five hours will be free with the $9.95 monthly charge and additional hours will be $2. …