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Technology Stocks : America On-Line: will it survive ...?
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To: Dan Woodbury who wrote (13042)12/24/1998 9:38:00 AM
From: Pruguy   of 13594
 
Thanks for the excellent post,
IMHO, AOL has a unique advantage. They have a dominant market share in a fragmented business in it's infancy. You are absolutely correct they have to deal with the xdsl and cable situation. One has to believe that they will work this out. Putting that thought aside, they have a very good grip on their customers.
1) they are significantly cheaper that the other isp technologies.
2) customers of the other technologies will demand they have access to AOL. Compare this to the cable companies. essentially they make moiney 2 ways:1)subscribers 2:network fees. The cable companies carry what their customers want. Over time most competitive providers will come to the conclusion that they won't want to alienate their largest pool of customers(aol) and will see it's in their interest to offer them.
3) the longer one uses aol, the more attached one becomes and makes it more difficult to leave. You must change your e-mail address, maybe your long distance service etc. This becomes a matter of convenience to stay than to go. Locally here I pay 40 a month for adsl and would rather pay an additional 9.95 month than to make all the changes I would have to if I dropped aol entirely. I feel locked to them and I believe their strategy is to increase their lock on subscribers to make the change more cumbersome. Over time the loss of revenue from the monthly fee will be made up from ansillary revenues.
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