Well, there are two things in the news today that seem to be negative for AOL - one is that @Home looks to triple subscribers this year (we knew that, but not everybody did), and the other is that there is a "slowdown" in PC sales.
One of the things that perhaps not many saw was in the OfficeMax earnings press release where they said that 4th quarter prices for PC's were down 27% from last year. Even huge unit growth cannot offset such price declines.
I see the PC slowdown as not really a slowdown in volume, just a continuing decline in prices, accompanied by a reduction in the growth rate of PC sales. So long as unit growth continues, AOL should do fine. Declining prices attract people who are much less techie, and just want it to work. AOL works, in fact it works fine for almost everything.
I don't know about anybody else, but my kid uses AOL to talk to her friends (while on the phone with them too!!), and most of the kids in her class seem to have AOL. When we visit friends, their kids use AOL with their friends. So if the kids want AOL why would a newbie choose Prodigy, for example, who has positioned themselves strictly as an alternative to AOL? AOL just gets more imbedded every day. Maybe this is the network effect, or the winner-take-all economy in action.
The sophisticated AOL user may want to change to another ISP, but why go through the bother? The sophisticated user can work around nearly all of AOL's shortcomings anyway, with the exception of download speeds, or the lack of a local dialup number. |
