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To: wlheatmoon who wrote (2060)12/7/2000 11:59:58 AM
From: wlheatmoon  Respond to of 2850
 
Nov 27,2000

Voice Challenges the Screen
In Race for the Wireless Web
By Thomas E. Weber
Staff Reporter of The Wall Street Journal

WHEN LAWRENCE GOETZ wants to check his stock portfolio on the run, he reaches for his cell phone. But the 27-year-old research assistant in Brooklyn, N.Y., doesn't have one of those wireless wonders with a built-in Web browser.
Instead, Mr. Goetz dials a toll-free number to reach a service called Tellme. He speaks a few words into the phone and listens as stock prices are read aloud to him. Compared with Web phones, he says, Tellme is fast, easy to use -- and, even better, it's free.

The wireless Web is growing fast, but its shape remains hazy. Little more than a year ago, the Net was agog over WAP, a standard for making Web pages for viewing on the screens of Internet-enabled cell phones. Since then, wireless companies have been pushing phones that let you tap out messages and key your way through menus.

Now, though, voice services are coming on strong. Yahoo! America Online recently unleashed phone services that let members listen to e-mail and news by calling a special number. Tellme, meanwhile, has gotten great reviews and is marketing itself aggressively.

WILL WE TALK or type our way through this untethered world? The question matters not only to consumers who want to access the Web anywhere, but also to thousands of businesses trying to figure out how best to exploit a wireless audience. For now, everyone is looking for clues to what the wireless future will look -- or sound -- like.

At Yahoo By Phone, the future sounds like a pleasant young lady. "Welcome to Yahoo," she tells callers who dial 800-MY-YAHOO. To use the service, you sign up for a free membership. After you log in by punching in an identification number and password, you can navigate through the service's voice-mail-style menus. Pressing 1 gets you e-mail; pressing 4 conjures up a weather forecast.

Yahoo also offers information on special pages that can be viewed by WAP phones. But Geoff Ralston, vice president of communications services, believes Yahoo By Phone will make a bigger splash in the coming months. That's because the voice service works on any telephone, not just the relatively rare Internet-enabled models. "This is anywhere, anytime access to Yahoo," he says.

Maybe, but is it useful? "Having your e-mail read aloud to you is generally a dreadful experience," says Ben Linder, vice president of marketing at Openwave Systems, a wireless software maker formed by the recent merger of Phone.com and Software.com. "Reading your e-mail on a screen is an easy, simple thing to do."

Phone.com became a sensation in the WAP boom thanks to its browser software. On a PC, users rely on a browser like Microsoft's Internet Explorer to grab and display Web pages. Phone.com created a tiny browser for wireless phones that can show Web information formatted according to the WAP standard. Users view the data on the phone's screen and type on the keypad.

BUT LATELY the bloom has come off WAP. Phone makers have been slow to roll out WAP-enabled handsets, and the services haven't always worked as advertised. Now some Web-site operators are growing skeptical. Creating a WAP version of an existing Web site can be difficult and expensive. To attract an audience, sites must be willing to pay for prime placement on phone companies' WAP menus. On top of that, the small screens and lack of a typewriter keyboard can make WAP surfing a frustrating experience.

"My gut tells me there's almost no customer for a WAP phone," says Barak Berkowitz, president of wireless concern OmniSky . "It's not a rich experience." Mr. Berkowitz thinks Internet users want a bigger screen and a more flexible method of entering data than a phone keypad. That's what he's selling in OmniSky, a service that lets owners of Palm and Handspring organizers tap the Internet through wireless modems and a special browser.

OmniSky customers get a better window onto the Web than WAP phone users, but they pay for the privilege. The service costs $40 a month and requires a $99 modem. And it too can seem painfully slow, especially to those accustomed to high-speed connections on their desktop computers.

All the wireless services face that problem. We've been spoiled by our PCs, and the wireless experience is bound to suffer by comparison. Ultimately the talk-versus-type question will come down to what kind of information people want. OmniSky is most likely to attract power users who always want to be connected.

For a mass market, at least in the near future, the needs are likely to be far simpler. That's why Tellme has such appeal. When you dial up the service at 800-555-TELL, you may not be able to perform a full-text search of the Web. But you can easily get driving directions, flight information, traffic reports and restaurant recommendations. "Voice is a pragmatic solution," says Mike McCue, Tellme's CEO.

Mr. McCue, it turns out, isn't a purist. Though he argues that voice has the advantage over screens in the early years of the wireless Web, he also thinks the two must converge so that consumers will be able to speak commands into the phone, then view results on a screen. When pressed, most wireless executives agree. Bryan Wargo, co-founder and president of 2Roam, which creates wireless sites for businesses, still prefers screens to voice services but adds: "When you can combine the two, that's the killer app."



To: wlheatmoon who wrote (2060)10/17/2001 11:52:51 PM
From: John Pitera  Respond to of 2850
 
interesting note on AOL-- i've been saving..........Kass on AOLGoing Off Line With AOL Time Warner

By Doug Kass
Special to TheStreet.com
5/29/01 3:15 PM ET

Last week, AOL Time Warner (AOL:NYSE - news - boards) announced that it will increase the price of the AOL Unlimited Plan by $1.95 to $23.90 a month.

Analysts immediately heralded AOL's ability to "control" the price of its product and waxed enthusiastically about the positive cash-flow ramifications of the move.

From early April up to last week's announcement, AOL common stock has risen by 60% to $54, boosting the company's market capitalization to $238 billion, or roughly 43 times consensus
earnings and four times projected revenue for 2001.

Ever optimistic, sell-side analysts (there are 31 buy recommendations and zero sell recommendations) and institutional holders duly reported that after AOL's previous monthly price increase
in April 1998, AOL shares rocketed from $10 to $40 in a nine-month period. But that was then (when AOL had only about 10 million subscribers representing about 25% of all households with
personal computers), and this is now (20 million subscribers, or more than 40% of households with personal computers).

Unlike the situation in 1998, AOL now faces the challenges of a maturing PC industry and an already high penetration of the market for its services. This year will mark the second year in a
row in which AOL will snare a smaller number of net new additions to its subscription base.

As the company's core business has become more fully developed and with Time Warner in the fold, the company is increasingly sensitized to the vicissitudes of the economy (such as
advertising outlays). Already, as seen in a table below, the worsening dot-com advertising environment is weighing heavily on revenue growth. (I'll have more on the Time Warner component in
a follow-up column.)

The other tables below are telling. As mentioned, a maturing PC industry coupled with AOL's relatively high penetration of U.S. households suggests that the company's subscription-based
revenue growth will moderate and soon stabilize. AOL's recent price hike might be a reaction to these very real threats. (I recognize that Internet use over cellular phones and personal digital
assistants provides a new market for AOL. But many of those users already subscribe to the service, so this won't result in a wave of new subscribers.)

The timing of AOL's price increase is odd, as it comes in the early stages of the integration with Time Warner. I believe the price increase might have been instituted earlier than anticipated as
AOL's management is not only concerned with the issues in the preceding paragraph and slowing subscriber growth, but also that its integration with Time Warner might be going poorly
and/or its core business is not meeting expectations. (That speculation is based on conversations with sources within AOL.)

If the economy fails to deliver, AOL also faces the possibility that subscribers will drop its service due to the price increase. With its monthly service increasing from $21.95 to $23.90, AOL's
service price is beginning to approach consumers' average monthly cable and telephone bills, which arguably provide far more utility than an Internet service provider. Indeed, Merrill Lynch has
reduced its forecast for new subscribers this year. Moreover, since the previous pricing increase more than three years ago, the average subscriber's daily use of AOL has leaped from less
than 40 minutes to 70 minutes. How much more usage can be expected beyond more than an hour a day?

Interestingly, a report this week by Merrill Lynch states, "We had already explicitly factored an increase (in pricing) into our model, so we are not changing our numbers." Really?

Never has a company reiterated its ability to meet publicly declared forecasts as often as AOL's management has this year. The gentlemen do protest too much!

The general demise of the Internet sector has drawn heavy institutional support to "the survivor" -- AOL Time Warner. For example, Janus Capital, those wonderful folks who owned Nokia (266
million shares) and Cisco (183 million shares), is AOL's largest institutional holder with 254 million shares.

Bulls, like Janus (and the entire "sell side" of Wall Street), will reject my argument. Rather, they will likely point to AOL's dominant (should I say monopolistic?) position, which shows no signs
of vulnerability. As to AOL's market position, they are accurate. After all, AOL has successfully thwarted all competition. Back in the Internet's infancy, CompuServe employed an unsuccessful
strategy against AOL in the early to mid-1990s and fell by the wayside. Free Internet service providers, such as Juno, failed to dent AOL's market share in the late 1990s.

Nevertheless, I disagree on two fronts. First, I sense most investors are unaware of the marked deceleration in the growth rate of subscribers. Second is the issue of valuation. Implicit in my
short is that I am unwilling to pay 23 times cash flow and 44 times next year's estimates for a maturing enterprise.

While consensus earnings estimates are for $1.28 a share in 2001 and $1.60 a share in 2002, I'm using $1.25 and $1.45, respectively, because my prognosis for new subscribers and the
contribution from Time Warner is less than generally forecast.

Insiders might agree, based on the unprecedented level of selling.