What a way to go......up.America Online's software
goes wireless, broadband
BY NICOLE VOLPE
NEW YORK (Reuters) - America Online Inc. Tuesday released a
software upgrade for its flagship Internet service with new features
executives said would provide wider access over wireless devices
and high-speed data connections.
The new AOL 5.0 version of the software has features for Web
searches, posting photos online, homepage personalization and
online events calendars and has already been downloaded in a
preview version by 2 million AOL members.
''The new editions of AOL are always important because they add a magic moment, because
everyone wants the new one,'' AOL President Bob Pittman said in an interview that followed a
news conference to drum up attention for the annual fall upgrade.
AOL shares closed up 4-3/4 at 113-1/2 on the Nasdaq Tuesday.
The new software sets the stage for the roll-out of service to wireless devices, as well as
high-speed Internet access, which the company has begun on a small scale.
AOL has started offering such access over telephone lines operated by Bell Atlantic Corp. in
cities such as Baltimore and Philadelphia. AOL plans eventually to take the faster service
nationwide, through existing deals with other phone companies and satellite television operators.
It is also working to reach agreements to deliver high- speed services over cable television
networks, but has failed to reach agreements with major U.S. cable operators so far.
''We are stumbling through all the start-up phases,'' Pittman said of the evolution toward
high-speed services. ''It is a gradual process.''
Pittman envisions eventually having a seamless network of high-speed access over digital
subscriber lines (DSL) that offer constant Internet connections using standard telephone lines,
wireless, satellite and cable TV connections.
The new AOL software moves toward this idea as it is able to recognize what kind of connection
a member is on and then reacts with the appropriate level of text or video for the connection.
Abishek Gami, analyst at Chicago brokerage William Blair, estimated that AOL has no more than
a few thousand broadband customers now, but that steps taken in the software would help to
bring future partnerships.
''What they are doing is laying down the platform and it is a declaration to the Internet world
saying what can be done with this platform,'' he said. ''What is significant is AOL keeps making
improvements to its product and over time you can expect to see announcement after
announcement of partnerships that generate revenue.''
AOL said in the fall that it would offer new services, including a voice-to-telephone service that
will read e-mails to customers via telephone.
Another service coming this fall is a wireless alert that would message members by pager to inform
them about a piece of news or an e-mail that had arrived, or send a reminder about an urgent item
on the new online calendar service.
Pittman said these services were being tested and it was as yet unclear if AOL would charge for
such services or provide them as part of the membership.
Wall Street analysts have said that, given the compatible prices of competing Internet services,
such as Microsoft Corp.'s MSN network, that AOL could raise its prices for its premium service
by as much as $2.
''It is clear we have pricing power and we have not taken advantage of it,'' he said at the news
conference where the new software was unveiled, adding that AOL would continue to look at
pricing.
He told Reuters in an interview after the news conference that it would not be necessary for AOL
to raise prices.
''At $21.95 (per month subscriber fee) our business is going great guns, if you look at our
profitability and our growth of earnings,'' he said. ''A price increase would certainly not be needed
to keep our earnings going.''
Schroder & Co. analyst Arthur Newman wrote in a note Tuesday that he expects an initial mailing
of about 10 million disks. Disks will also be made available at several computer an consumer
electronics stores. |
