America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Brian K Crawford who wrote (384)	10/20/1996 3:03:00 PM
From: Zoltan!	of 13594

A couple of nights ago I saw an extended interview of Marc Andreeson of Netscape. He confirmed that AOL was spending $240 to acquire each net new subscriber. He predicted that within a couple of years that internet access would be sold like cellular, something about which you must be familiar. In essence the electronic device, here an "internet appliance" rather than a cell phone, would be provided when contacting with a service provider. He stated the appliance will be available from sources like Nintendo within a year at a cost of @$200. Andresson compared this $200 outlay with the $240 AOL spends. The advantage of the "giveaway" is that is would bind the user to the provider for some period, cutting "churn". He predicted AT&T would probably lead the way and others would have to follow. My observations: Such capital outlays would seem to favor the larger providers, especially those like MS, AT&T et al, which can subsidize their efforts with the $ thrown off by their main business. It does also foreshadow a bruising and protracted battle for customers in which interim profitability suffers. The real winners? Certainly the networking companies and internet appliance manufacturers. Regards

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