Making its first move into the consumer market, General Electric Information Services Co. is expected to announce today that it has launched a new telecommunications network service for home computer users.
The Rockville-based division of General Electric Co. -- one of the nation's largest teleprocessing companies for industry -- plans to offer access to such "online" services as electronic mail, electronic bulletin boards and electronic newsletters for a flat $5 an hour fee for off-peak hours: evenings, weekends and holidays.
Ultimately, the company hopes to offer home banking and home shopping services through Genie, the General Electric Network for Information Exchange.
Genie puts Geisco in direct competition with Dow Jones & Co., Readers Digest's The Source, H&R Block's Compuserve, Knight-Ridder's Viewtron, General Telephone & Electronics and other companies in the fledgling electronic home information services market. Analysts estimate there are over half a million subscribers to these services, generating an estimated $70 million a year in revenue.
However, several market research groups ranging from Link Resources to International Data Corp. project that home electronic information services will become a multibillion-dollar industry within the next 10 years.
GE's announcement "is real important because big players add credibility to the business," said Gary Arlen, an industry consultant. "The question is, what is that business?" he said, explaining that it has taken far longer for home information services to catch on than originally predicted.
Geisco will offer its new service through its existing network of computers and communication technology.
"We'll be using our excess capacity," said Bill Loudin, the manager in charge of Genie. "Ninety percent of our computers just sit there at night and do nothing. This is a very cost-effective and potentially profitable way to enter this business. Seeing that there are already half a million people using these services, there is the beginning of a marketplace that makes it worthwhile for GE to pursue.
"The potential is there to make it a $200 million-a-year business within five years."
However, Loudin expects Genie to be only a "marginal" contributor to Geisco's revenue over the next 15 months. He also acknowledges that, while there may be more than 500,000 people subscribing to existing online services, barely 100,000 use them consistently.
"We'd be pleased capturing 10 percent of that 100,000 initially," said Loudin, who added that he expects the typical Genie subscriber to use the service for about four hours a month.
The service will be available to personal computer users who have modems -- that is, communications devices that enable their computers to "talk" with other computers over the telephone lines. Geisco maintains that its $5-an-hour charge is cheaper than online fees charged by CompuServe, The Source and other consumer computer networks. However, those competitive services now have a broader array of communications and online service offerings.
Loudin said that "through 1986 is when we make the critical decisions as to how much we invest in this industry."
Other major companies -- including IBM Corp., AT&T and CBS -- are expected to become players in the home computer services market, as are the seven regional Bell operating companies. Several large banks -- including Citicorp and Bank of America -- now offer home computer banking services and are expected to expand their home information service offerings.