I have to agree. Despite what they may have said in the past, current market conditions dictate a rapid buildout strategy.
The AOL/Time Warner juggernaut makes profitability unlikely in the short term in any case. AOL's subscriber base was built over many years and has only recently become profitable. There's no reason to think that ATHM will be able to acquire subscribers for little or no cost in a competitive market.
ATHM will only squander their franchise if they attempt to show profitability with under 2 million subscribers. There is no historic precedent to justify such a strategy.
If they try they will be a subsidiary of AOL/TIME Warner in a very short order. ATHM needs as many subscribers as possible, as soon as possible.
Besides, AOL has proven that the ISP aspect of their business is a low profit affair and that the real money will come from advertising and other services.
AOLs subscribers are only faces to throw ads at. The problem with the web is that no one can control where their subscribers go or what they see or click on and in that sense, AOL has a superior model to Excite@home.
Broadband won't be as much of an issue in the future because AOL will be upgrading all or most of it's users to some sort of broad band technology, be it satellite, cable, DSL, whatever and the Pac Bells, GTEs, SBCs, and the like will be circling around ATHM with DSL. ATHM has the early lead but needs to grow now and grow fast.
I feel that it is a sound approach and management's fiduciary responsibility to the shareholders is being addressed adopting this strategy. In this industry, a short-term view is tantamount to suicide!
It's a numbers game! ATHM needs numbers. Excite needs numbers. T needs numbers. AOl just bought 13 million cable customers when it bought Time Warner so it will have even more.
--Dave |
