There are a number of hard facts which make AOL one of the ripest shorts on the market. The management has received no mercy from the press and with good reason. My reasons for shorting AOL aren't based on the mind-boggling incompetence of the management, but on the fundamentally disorganized and ill-defined structure of AOL's entire operation.
1. Designing, implementing and maintaining proprietary protocols, client software and server software is both expensive and almost guarantees an inferior product in the long run. The importance of having standards-based technology like Java or even ActiveX is really going to hit home this year.
2. Designing, implementing and maintaining a proprietary hardware infrastructure is also an expensive and sub-optimal solution. What business does AOL have in maintaining what is effectively a giant, centralized computer? The whole model is brain-dead from start to finish. A local pet store or a national car rental agency would be far better off establishing a site on a public network versus proprietary, centralized, AOL.
3. AOL provides no means by which business or personal customers can develop and deploy their own content, that is, their own network applications which end-users can access. Everything has to be done directly through AOL. This common-sense defying setup was doomed from the outset.
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Transmission and reception will be handled by telecommunications companies; hundreds if not thousands of them. Software tools used for building network applications and services will be handled by the current players such as Microsoft, Borland and JavaSoft. The online information services will be the companies which make up the whole economy: Coke, Ford, Prudential, Toyota, Panasonic. There isn't any need for a proprietary middle man even if that were practical, it is not. Organizational services will be provided by Lycos, Yahoo and others.
If AOL is not the pinnacle of obsolete thinking then what is?
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