Excite@Home Has Its Bounty Ready
By Adam Lashinsky
Silicon Valley Columnist
Holiday hodgepodge...
You've got to admire a plucky competitor, even if it is a quasi-subsidiary of the nation's former phone monopoly and newest cable-industry heavyweight.
The competitor in this case is Excite@Home (Nasdaq:ATHM - news) , a would-be thorn in the side of Internet service king America Online (NYSE:AOL - news) . Excite@Home's largest shareholder is AT&T (NYSE:T - news) .
Excite@Home is an Internet pipsqueak compared to AOL, with the paying customer breakdown something like 500,000 for the former and 17 million for the latter. But what the relative upstart has on the latter is access to "fat pipes," otherwise known as superfast, or broadband, Internet service through its partners' cable systems. Now what Excite@Home wants is AOL's customers. So much so that it will pay a bounty to get them.
Excite@Home President George Bell, speaking last week at an industry conference in New York, repeated his company's mantra that new @Home subscribers who use AOL typically keep their AOL accounts for two to three months, largely for fear of changing their email addresses. To help ease the pain, says Bell, Excite@Home "will pay for your AOL account for a month or two" while new users get used to the broadband experience.
That sounds an awful lot like a bounty for subscribers to change service providers. And that in turn sounds an awful lot like the games the long-distance providers played against each other a decade ago. Such a competition could mean tighter profit margins for AOL if it's forced to retaliate and higher customer-acquisition costs for Excite@Home. The latter isn't overly worried about profit margins, since it has no profits.
"AOL still has lot of strength, but I think we're beginning to see the cracks in the armor," says Phil Leigh, an Internet analyst with regional brokerage Raymond James in St. Petersburg, Fla. "Still, those cracks are small compared to the tremendous momentum they have going forward." After all, notes Leigh, AOL adds more subscribers in a typical quarter than Excite@Home has in total.
Bell says the bounty program -- my words, not his -- will begin in the fall. An AOL spokeswoman said AOL honchos weren't available in the preholiday rush for the doors. |
