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Technology Stocks : America On-Line: will it survive ...? -- Ignore unavailable to you. Want to Upgrade?

To: Andrew Shih who wrote (7474)	2/10/1998 8:00:00 PM
From: craig crawford	Read Replies (2) \| Respond to of 13594

<<< There are two fundamental problems to look out for in AOL's future: 1) Heightened increase in competition 2) Increase in average usage. >>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1) Competition is a fact of life in all businesses. AOL seems to be doing fine with all the competition now so why should that change? 2) Increase in average usage just means that AOL will be getting all that much more revenues from advertising. << 1) While there is currently no competitive service for new users, AOL is probably one of the worst ISP as far as connections and quality of service >> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I have used several different ISP's. AOL at present is just as fast if not quicker than lot's of other ISP's. I rarely ever lose my connection to AOL. At other ISP's I have used I lost the connection a lot and had to dial back in. << Cable modems and xDSL will begin to emerge and become the connections of choice. Thus, the Baby Bells and cable companies are going to become the ISPs of note. >> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Not exactly. Phone companies will need to have equipment to run DSL but they can still farm out the rest to an ISP like AOL. They don't have to become an ISP. AOL will probably strike up many deals to do DSL. << Is $19.95 even a profitable price point? >> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ AOL earned 17 cents this quarter didn't they? The rates haven't been raised yet so I assume they did it with $19.95 rates. << When cable modems and ADSL is common, and video/audio is broadcast over the Internet, who is going to stay with a 56K connection? >> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ You think AOL is going to lose it's position in the industry just because new transmission techniques are utilized?

To: Andrew Shih who wrote (7474)	2/11/1998 1:55:00 AM
From: Mike C	Respond to of 13594

Future revenues - Andrew, both you and Craig are posting good insight into the subtile points of AOL's future business. Many of Wall Street's darlings with high multiples have some monopolistic edge on their competition. The monopoly arises from, overwhelming momentum and market presence - Microsoft, or Technical know how - Intel. Any competition faces a daunting task in overwhelming such market or technical strengths. AOL could be considered monopolistic or as only currently market dominant. The reason for their lead, in my opinion, stems from their distribution campaign where a dozen CDRoms are sent to nearly anyone with an address. When a new computer user decides to go online he can always find a disk, pop it in and be up and running. My local ISP required two days of my time for correct operation. The computer neophyte is unwilling to face the difficulty of or unable to easily change providers. This provides some level of member sticking power even with price increases. If AOL grew to 100 million subscribers we could be talking Super Bowl like ad revenue. The outlook question at hand is what does the member future look like? Herein lies the key to this stock's growth potential. You and I couldn't hope to fabricate a 10 million transistor computer chip in our basement but we could make a good stab at being a decent ISP. Neophyte computer users may begin to appreciate that there are other ISP's with equal setup conveniences and there is the impact of new technology as discussed. All these issues weaken any monopolistic shading for any one ISP and are most dangerous for the leader. This brings us to the most important missed point - RATE OF GROWTH of New members. Not the 1 million or so new subscribers mentioned but the RATE of this increase. True, the number of new members is increasing but the rate of this increase shows a beginning down trend. This projects to a finite number of users in the near future ( not 100 million by the way) and, as we have all appreciated on this thread, AOL's potential for revenue is heavily dependent on the number of EYES. Plot Compuserves's new member numbers over the last ten years for an interesting comparison. The whole picture can be clouded by the potential for foreign deals and joint ventures - What do you think? Mike C.