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To: Eric Wells who wrote (72135)	8/5/1999 1:19:00 PM
From: Eric Wells	Read Replies (3) \| Respond to of 164684

Tom - to add to my previous post - you also have to consider the very large number of people that currently are not on the internet - both in the US and outside the US. These people have no knowledge of features provided by AOL's access service - and I would guess that when many of these people decide to get on the net, their choice of ISP will be influenced by price. And if so, the equation is easy: free is better than $20 a month. I believe that much of AOL's current market cap is based on the assumption that AOL will continue to successfully capture large numbers of new internet users. My view is that intense price competition (such as that suggested by Microsoft's announcement today) puts at risk AOL's ability to continue to grow users at a brisk rate. Keep in mind that AOL recently announced offering free access in the UK to counter competition there. Thanks, -Eric Wells

To: Eric Wells who wrote (72135)	8/5/1999 1:31:00 PM
From: Wizard	Read Replies (1) \| Respond to of 164684

AOL is $21 if you go through AOL or $9.95 if you go through another ISP and just want AOL content. Lets be clear though, free does not mean zero. There are free PC's right now but you can't get one for zero. I am worried about MSFT hurting AOL's incremental margin on access but the difference isn't $240/year. Nobody is suggesting MSFT just eat all of the costly access charges and give it away for free. The issue is if they do it 'at cost.' If MSFT did it for $9.95, that is arguably below cost and I doubt the Justice Department will allow MSFT to do that. How is the Justice Department going to allow MSFT to kill every ISP and AOL by selling stuff below cost? That isn't going to happen. If they do, then the incremental subscriber might go to MSN but AOL members tend to be loyal and Microsoft has been in this business since 1995 and haven't been able to figure out what consumers want. Make no mistake, MSFT can hurt AOL's margins but will the incremental buyer go to MSFT for $15 or go to AOL for $19-21. That is a tough question but the difference is more like $60/year, not $240/year.

To: Eric Wells who wrote (72135)	8/5/1999 9:21:00 PM
From: Tom Kearney	Respond to of 164684

Eric - Yes I exagerated when I said free - got carried away - but I really believe there are many who would avoid MSN unless the differences were extroadinary. There are many who really hate that MSFT has such a strong position in so many areas. Even when IE became free, Netscape had many users. But, yes, their margins were crushed; but that was a one dimensional product. My biggest position by far is MSFT, and I've held it for nearly 5 years, now - very productive. But, I almost always seek alternatives to MSFT products when possible. I can't conceive of using them for an ISP myself. They have many net offerings, but most are mediocre aren't they? I think there is an ABMS (anybody but MicroSoft) dynamic there. We'll see! JMHO. Regards, Tom