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: steve lipson who wrote (5149)	10/21/1997 5:18:00 PM
From: Todd Daniels	Read Replies (1) of 13594

>>You may be underestimating the potential that resides in existing >>PC households where the upgrade purchase is motivated in part by >>desire to replace an old machine with one robust enough to take >>advantage of the online offerings. >>Thus AOL growth due to pure PC newbies may slow, but the >>more mature and practical offerings online may bring in a second >>wave of growth from previous PC non-net homes. Do you have numbers for that potential, or is this just theory? Do you know what % of upgrades are such, or are you just theorizing? Did you consider that: 1) AOL is designed to run on 386es and that in fact something like 30%-40% of their subs are on them and early, underpowered 486s. 2) Via warranty card mailing lists AOL has by now hit on every PC home in the US many many times. 3) Upgrading isn't new; just proportion of it. i.e. some percentage of upgraders always have gone online. But that % long has been far less than % of new buyers who go online. IOW, no matter how you slice it, the rate of growth slows as % of PC buying from upgrades increases. AOL refers to this as "controlled growth". >>Haven't done the math to see what it would look like. Like I said................. >>Haven't done the math to see what it would look like, but the >>cellular industry...............used Pop valuations that looked >>at all the potential customers in a coverage area without even >>worrying about actually signing them up for service. Oh goody! Let's throw yet another industry into the valuation metric mixmaster. (But recall that in the end cellular is a cash flow business just like cable).

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