America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: MW who wrote (5102)	10/19/1997 9:41:00 AM
From: Todd Daniels	of 13594

1) Notion that AOL sub growth can continue at historic rates is absurd. "If aol grows their subs to lets say 20,000,000 over the next few years" The main driver of growth -- home PC penetration -- is slowing dramatically. Not only has the growth rate of home PC sales overall slowed markedly, multiple sources such as Computer Intelligence (which monitors store sales) and the Consumer Electronics Manufacturers' Assn are consistently reporting that only 30-40% of sales are first-time buyers versus upwards of 75-80% a few years ago. Most sales are replacement/upgrade. techweb.cmp.com techweb.cmp.com Even more ominous -- CI et. al. are now reporting that the $1000 PC is NOT attracting new buyers, but repeat ones. Only 20% of buyers of $1000 PCs are newbies. See 10/20 Investor's Business Daily for one report on this. Bottom line -- rate of expansion of the installed base of home PCs is plumetting to single digit (around 5%), versus 25-35% rates of 1992-6 upon the back of which AOL growth rode. "It doesn't look like the needle [of home pc penetration] will move up dramatically in the immediate future" Greg Maffei, MSFT CFO; until June Corporate Development VP. (Wash Post 8/10) You begin to see why MSFT if focusing on cable/digital TV/Web TV More to follow.......

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