CompuServe, facing up to increased competition and recurrent quarterly losses, has dumped the 'Wow' consumer service it launched just over a year ago.
After reporting losses of $58 million (#34 million), or 63 cents a share, for the second quarter ended 31 October, compared to net profits of $16.7 million one year ago, the company revealed that Wow was out and the old corporate model was back. CompuServe will take a one-time charge of $4.9 million for dropping Wow.
In an attempt to woo existing and new customers, the company also revealed its latest software, CompuServe 3.0, a new brand name known as CSi or CompuServe Interactive, and a new company logo to go with it.
Wow will close down on 31 January 1997 and its 100,000 users will be invited to move to CompuServe Interactive.
Jerry Roest, CompuServe's European general manager, blamed the US for the company's losses, claiming success in Europe. "We are still the biggest Internet service provider in Europe and are still on a positive linear growth." Of Wow he said: "Wow became extremely expensive but we have learned very valuable lessons from the project."
Roest spoke of the company's growing commitment to the business market, but denied that UK consumers would beadversely affected. He explained: "CSi makes using both CompuServe and the Internet much easier, for consumers and business users alike."
In true marketing style, none of the CompuServe officials would admit that increased competition in the consumer market from AOL, MSN and individual ISPs had dictated WoW's fate. But in expanding its corporate offerings and making its service more business oriented, CompuServe has made a clever move. AOL lacks the sophistication of CSi for business users, and MSN is aimed squarely at the consumer market. All it needs to do now is convince business users that CSi is a better alternative than those offered by ISPs.
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