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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: country bob who wrote (35082)	12/7/1999 6:26:00 AM
From: Mao II	Respond to of 41369

News: AOL, Wal-Mart Work On Marketing Pact Steven Vonder Haar 12/06/99 America Online is negotiating a potentially broad-based electronic commerce relationship with Wal-Mart Stores and is on track to announce a major partnership with the retailing giant later this month, industry sources said. The deal is expected to include significant in-store promotion of AOL within Wal-Mart, along with an online advertising and distribution deal designed to drive AOL users to Wal-Mart's virtual storefront. The partnership will tie the fortunes of the world's largest online service provider with the biggest name in retailing, creating formidable new competition for Amazon.com and other companies aspiring to establish themselves as general merchandisers on the Web. The alliance also signals broader efforts by AOL to expand distribution channels to sustain subscriber growth - an approach that reduces AOL's reliance on Microsoft and its current deal that bundles AOL user software in the Windows operating system (OS). It is not known whether Wal-Mart will make some type of cash payment to AOL in the cross-promotion deal, but such an arrangement appears likely. Just last week, AOL inked a four-year deal with jobs and career service Monster.com that will bring in $100 million in advertising fees over the life of the contract. Given the scope of Wal-Mart's product offerings, the retailer's presence on AOL is expected to be far more pervasive. How much Wal-Mart pays may depend on how much of its electronic commerce strategy becomes hitched to AOL. One possibility is that AOL could expand beyond just advertising to provide hosting services for the Wal-Mart site, helping the retailer handle traffic surges such as the one that shuttered the Toys "R" Us site to the bulk of would-be toy shoppers in November. AOL already provides such store hosting capabilities for partner retailers, such as BarnesandNoble.com. Also possible is a partnership that would create a cobranded AOL-Wal-Mart online store that could be accessed only by AOL subscribers, industry sources said. A Wal-Mart alliance also brings major benefits to AOL. Promotion in the 2,485 stores in the Wal-Mart chain, along with the 456 Sam's Club outlets, would give AOL a vehicle for reaching an audience that represents more of the mainstream than AOL's existing 19 million-member subscriber base, said Peter Krasilovsky, program director at The Kelsey Group research firm. "There's a disconnect between a Wal-Mart customer and AOL's core audience," Krasilovsky said. "AOL's subscribers are more high-brow than AOL would like people to think." A Wal-Mart alliance also could prove handy for AOL if and when the company launches its long-anticipated low-cost AOL television device, which is expected to be targeted primarily at mainstream users. Tapping into a new audience sector could be key for AOL, with the clock ticking on its own distribution deal with Microsoft, which is set to expire in 2001. In the partnership, AOL uses Microsoft's Internet Explorer browser in exchange for bundling the AOL user software in Microsoft's Windows OS. If AOL decides to incorporate its own Netscape-developed browser into AOL to replace Microsoft's Internet Explorer once the deal expires, it can be expected that AOL would lose its position on Windows. Last month, AOL and Microsoft dueled for a distribution partnership with Tandy's RadioShack chain. Microsoft ultimately won the battle to feature its services within RadioShack stores and agreed to pay $100 million to help RadioShack set up an expanded online retailing site. In October, AOL announced its own deal to invest $800 million in PC maker Gateway, making AOL the default Internet service provider for Gateway-made machines. AOL spokeswoman Wendy Goldberg declined to comment, saying the company "does not comment on rumors or speculation." Wal-Mart officials could not be reached for comment. live.av.com