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Technology Stocks : America On-Line: will it survive ...?
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To: Eric Jorgenson who wrote (370)10/17/1996 1:08:00 AM
From: Zoltan!   of 13594
 
Back to you.

1)You quoted McPaper "Much has been written about "churn"...It's a question of value, many who join decide it's not worth the cost. The one exception found is AOL: More than 4 out of 5 (82%)who have tried AOL still use it."

You must realize those figures are preposterous. Don't you think that AOL would have passed the 10 million mark long ago if these figures were even remotely accurate? And just where do you think analysts got the numbers to derive the 50% churn rate and AOL's $240 net subscriber acquisition cost? AOL.

You omitted the source of your figures - Yankelovich. A polling outfit. Such are not hard numbers but reflect users'ignorance and/or poor methodology.

2)Line charges cost ISP's 1.5 - 3 cents per minute. Bear in mind AOL's overhead/subscriber is among the highest, if not the highest, in the industry with their regal new headquarters, massive advertising and proprietary content. Run the numbers. Even with "other revenue", I'll bet AOL barely breaks even on their 20 hr plan if users use close to the 20 hours. - They will surely lose $ big time with heavy Net users.

3)Internet access through AOL IS slower. Because of their peculiar centralized server setup. Many times AOLers don't even get all the page colors or get old cached pages - purposeful moves by AOL to speed things up. And a tactic admission of how slow they are.

4)Infrastructure: AOL has long been criticized for its inadequate infrastructure, the reason for its notorious blackout and frequent brownouts. It simply diverts resources to its real goal: acquiring new accounts.

- BTW, what do you think of AOL's new 50 hours free tryout? 50 hours! Methinks its the early returns on AOL's $100 million advertising blitz. Apparently, AOL & George Jetson have laid an egg.

I think the curtain is being drawn on AOL. At least in its current incarnation.

Regards
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