1) Lack of widespread broadband capability which will completely replace dial-up.
Right now the game is dial-up: 17M versus 350k subs say it all. Although I agree that broadband is the future (which is why I am in ATHM), the questions are (a) whether cable will be the dominant medium, even if it has the technical advantage (b) whether ATHM will be able to establish/maintain a monopoly even if cable wins, and (c) whether DSL, wireless, or whatever will make significant inroads to allow AOL to grow into a competitive edge within the next 3-4 years.
2) The maturing of the users. AOL depends on newbies and non-technically oriented people who want a more limited experience than the web provides.
E, I have heard this for a long time (believed it myself), but no longer accept it. AOL is marketing to the masses, which is where the money is. Again, 17M says it all. As the average user sophistication grows, it is a lot easier to grow your service to match that sophistication than it is to establish a large membership. Look at Compuserve back in the 70's. Look at Prodigy in the 80's. They were both ahead of themselves.
I hope ATHM succeeds, but my bet is that AOL will grow a lot more before ATHM begins to establish itself in a mass way with broadand. That is why my strategy is to own AOL with a hedge in ATHM. As their relative fortunes shift, I will try to shift my own investment towards one or the other.
BWDIK |
