New York Times article on Pipeline/PSIX- will be in tommorow's paper.
Maybe I'm the wrong guy to ask but this doesn't read real positive guys.
What did they pay for Pipeline? I think $100 Million comes to mind but that's a guess.
Also, does anyone know how they are paying their bills, either as a vendor or from looking at D&B? It looks like cash is real tight the way they shut this Pipeline down.
Great idea charge $9 more than everyone, offer less service and finally allow you to use Netscape.
Here it is...
Seeking Suitor, PSINet to Reinvent Pipeline
By ROBERT E. CALEM
Pipeline, the three-year-old Internet service provider that was founded to help novice computer users connect to the Internet, nolonger wants the business of novices. By early next year it will be re-launched as a higher-priced service aimed strictly at expert Netsurfers.
The new service, which will retain the Pipeline name, will cost more, will offer less technical support. And, unlike the one-size-fits-all approachthat introduced thousands of New Yorkers to the Internet but grewoutdated with the preeminence of the World Wide Web, the new Pipeline will be supplemented by options like ISDN* connections and choice of Web browsers.
The announcement by Pipeline's owner, PSINet, Inc., of Hernd, VA has triggered protests from members over the loss of the
service's community-oriented focus, and it has generated
skepticism among industry analysts.
Pipeline has never been profitable, but analysts last week characterized the decision to scrap the old service as a last- ditch attempt to make PSINet an attractive takeover candidate. Moreover, they contended, if a buyer did not emerge soon, the tactic could backfire.
On May 10, PSINet announced a "strategic reorganization" and plans to introduce a new Internet access service later this year for consumers who are comfortable using computers and exploring cyberspace.
On the same date, PSINet said it had reduced its employee rolls by 15percent, or 85 people -- a third of them from its New York office, which the company all but closed.
"PSI is just getting itself ready to be sold," said Tom Pincince, senior analyst at Forrester Research in Cambridge, Mass. "They don't have the ong-term cash reserves to keep up the pace of infrastructure growth and employment growth in this marketplace."
Pincince noted that PSINet announced on May 15 that it had hired th investment banking firm Merrill Lynch & Company to, in the company's words, "review strategic alternatives."
"That means find a buyer," Pincince said.
And Ross Rubin, a senior analyst at Jupiter Communications Company in New York, said that raising Pipeline's subscription cost could have opposite the intended effect because "experienced users often move to lower-priced providers from higher-priced."
James Gleick, a cofounder of Pipeline, expressed dismay and
disappointment with the plan, as well as regret about the founders'
decision to sell the service to PSINet last year.
Like Rubin, Gleick said that raising Pipeline's prices might not reverse thetrend, because it could alienate many of the paying customers the service had already won. But Gleick tempered his remarks by saying he understood PSINet's motivation. Pipeline has never turned a profit, he said.
"PSI lowered prices across the board and lost more money than I ever did," Gleick said. Now they're in the position of having to go back to their customers and raise prices. People are more angry when you raise prices than they are grateful when you lower them."
Still, PSINet remains confident that Pipeline can finally be profitable if it jettisons the customers who ask for too much technical support -- the so-called newbies -- and if it instead concentrates on building a better network infrastructure and offering services that appeal to experienced Net surfers.
"Pipeline is not going away at all," said Brian Muys, a Pipeline spokesman. "We have a good amount of equity built up in the
Pipeline name and we are loathe to write that off. We're moving it
upscale to the more savvy or experienced user who requires much less handholding.
"Catering to the $19.95 customer has not been profitable because of customer support," Muys said. Alluding to the common instruction "Press any key ..." he said that at the $19.95 price point, Pipeline has attracted too many customers who "call in to ask where is the 'Any Key'?"
"We realize we're going to lose customers who are price sensitive and we're prepared for that," Muys said. "The more experienced users will pay the freight."
Pincince isn't so sure. "Tech support is a way to distinguish yourself in this market in which there are few ways to distinguish yourself -- tech support, price and additional services, such as gaming," he said.
PSINet expects the new Pipeline service to be available for beta testers later this month and to be relaunched at the end of this year or early next year. The price hasn't been determined yet but will probably be about $29 a month, Muys said.
The service will include new software, provided by PSINet's software subsidiary, InterCon Systems Corp., that will be similar to the program that comes bundled with the current Pipeline service. It will be an all-in-one package that allows access to e-mail, FTP* and Telnet*, as well as a choice of Web browsers.
Most important, after spending more than a year developing its own browser to run over Pipeline's proprietary Pinkslip protocol, the new software will support Netscape Communications Corp.'s
industry-standard Navigator browser. Although the new package will not
include Navigator, Microsoft's Internet Explorer browser will be offered as an option.
Unlike the current Pipeline client, the new software will have a "Web-centric interface," Muys said. To attract experienced Net users, he said, Pipeline will also offer "some sort of service guarantee" as well as an optional ISDN connection.
Muys said that Pipeline would probably abandon its current emphasis on building virtual on-line neighborhoods for customers in specific metropolitan areas, as it did in New York, Chicago, Los Angeles and Britain. That possibility won mild applause
from Rubin of Jupiter, who stated: "Certainly some information services can appeal to local audiences. I don't know if a whole access provider has to be focused on that." And certain local markets, including New York City, are particularly difficult to crack, he said. "Lots of small guys are grabbing for lots of small segments."
To be successful nationwide, Rubin added, an Internet service provider has to distinguish itself by offering more valuable services at a "package"price. "We're rapidly getting to the point where they're not going to beable to compete on price," Rubin said. "They have to raise the bar, with ISDN, domain name hosting or vanity ID's." Some Internet service providers are offering these now for "outrageous fees," he said, and suggested that would have to change.
Indeed, Muys predicted, Pipeline will try to distinguish itself with su options at a low price relative to the current market.
But Rubin remained skeptical, predicting growing competition for
Pipeline. "On the national market," he said, "Internet access is going to become a commodity and be picked up by people wanting to offer you
phone service and cable service and whatever other kind of service."
Internet access is not a commodity yet, Rubin noted. "If it were,
everybody would have it."
And Pincince remained downright pessimistic. "There is a slim possibility
that PSI will be an ongoing entity" long- term, he said. "They have to either be bought or go away."
As for Gleick, "I'm sad," he said. "It's not what I hoped for when PSI bought the Pipeline. They didn't really have anybody, as it turned out, who was capable of running the Pipeline as a community.
"There were other paths that could have led to a different future for the Pipeline. I can't help but feel some responsibility." |
