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Technology Stocks : America On-Line: will it survive ...?
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To: Mark Brophy who wrote (12427)12/11/1998 1:14:00 PM
From: Sam   of 13594
 
AOL has 15m customers, but there are 600m people in North America and Europe, so they've only reached a small minority. They'll probably get 20m or 30m customers before the growth stalls, but I think we can be sure that growth will stall because the net isn't a very good experience with 28.8K modems.

If AOL reaches only a small minority - it reaches the BIGGEST small minority of any other paid subscriber service. Yes, we all have visions of cable modems dancing in our heads - but that won't be a reality any time soon (talking about mass scale, not pockets of access).

The majority of homes still use 28.8 dialup...and until the price point for ADSL and cable comes down to a mass market level (ie. $20), your not going to see a huge amount of growth in that technology.

Keep in mind as developers, we don't design websites to fuction at the highest denominator (ie. cable or xDSL), but rather to the lowest. That way we don't alienate consumers. Until high speed infastructre is so ubiquitous that it's on par with dial-up, your not going to see much of a change.

AOL only has $1.25b cash, so they can't finance the purchase of even a small cable
company. Even if AOL exceeds current earnings projects substantially, they still
won't have the $4b cash that Paul Allen paid for a small cable company.

That is why we trade something called stock, which we all know and love. Don't focus on cash in the bank alone.

S.
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