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Technology Stocks : America On-Line: will it survive ...?
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To: Roy Snodgrass who wrote (162)9/24/1996 11:24:00 AM
From: steve lipson   of 13594
 
<More U.S. Households Now Access the Internet Through Internet
Service Providers Than Through Commercial Online Services>

My reading of the Odyssey survey is a little different than the widely reported headline that ISPs gained share in the Web market vs. online providers. Basically that tells us what we already knew -- Compuserve and Prodigy are irrelevant.

Looking further, we see that AOL actually increased its penetration in PC households to 18%, up from 14% at the start of the year.

The release from Odyssey posted here did not give a household penetration number for the leading ISPs. It did give their market shares, and the largest is Netcom with 8%. So if half the PC households are now surfing the net, which may still be a generous assumption, that means Netcom has a 4% penetration by the sterner measure applied to AOL.

I'm long AOL, which doesn't mean I'm not worried about the churn rate and how fast they are going to be able to ramp up advertising revenue so that they can meet the flat price competition of ISPs. But one thing I'm not worried about is the franchise position they've built. McDonald's doesn't have to sell every hamburger consumed to be successful, or even 50%. Being the market share leader in a business everyone uses is enough to make any MBA drool.
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