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

To: Chuzzlewit who wrote (1849)	1/7/1999 12:03:00 PM
From: RocketMan	Respond to of 41369

You directed this question to Philip, and I would like to see what he and others think, but I also would like to comment on it: What barriers to entry exist for portal companies other than brand identity. Do you feel that having an interface for which you pay extra is a viable plan given the fact that companies like Yahoo provide many of those amenities free of charge to the consumer? Put another way, does AOL provide a reasonable value added to its customer? IMHO, portals have no BTE's -- zero, zilch, nada. However, don't discount the importance of brand identity and loyalty. The problem is that we on SI don't think like the typical AOL (or MSN, YHOO, etc) user. Our minds and habits are warped from too many hours in front of the screen, and we tend to be impulsive, tech-saavy, and switch just for the sake of switching. But I think that the average user is someone who is internet-phobic and just wants to use AOL to isolate him/herself from the innards of the machine and the internet. Just installing the software and logging on is a great acheivement, and once they have an email address and begin corresponding with friends, the last thing they want to do is take another chance with a different portal. Concerning your comment that Yahoo provides the same free of charge. The reason they can do this is because they do not have to provide the ISP infrastructure that AOL and others have. No costs for modems, leased lines, service desks, etc. If AOL blocked out Yahoo's IP (not saying they should), Yahoo would be in real trouble. Also, I understand that much of Yahoo clicks come during the day, which makes me suspect that they are also getting a free ride from business networks that are paying the overhead. Not saying this is bad for Yahoo, only saying that comparing Yahoo with AOL on this issue is really comparing apples and oranges. A much better comparison is between ATHM (broadband) and AOL. In theory, ATHM can provide the same content as AOL but at much higher speed, hence quality of experience. But as I said, I expect that AOL will get broadband soon. If not, I will probably switch the bulk of my investment from AOL to ATHM.

To: Chuzzlewit who wrote (1849)	1/7/1999 1:15:00 PM
From: Out_of_the_Trap	Respond to of 41369

Well stated by RM(1852): "...I think that the average user is someone who is internet-phobic and just wants to use AOL to isolate him/herself from the innards of the machine and the internet. Just installing the software and logging on is a great achievement, and once they have an email address and begin corresponding with friends, the last thing they want to do is take another chance with a different portal." 1) Emotion is driving this business at the moment. Pragmatic(such as yourself) investors look at AOL(Yahoo,etc) and say there's no "substantive" reason to expect a highly profitable company 1-5 years from now. Emotion is a powerful thing(as I'm sure you know better then most) and it will(is) going to continue to drive this and other such issues. 2) Then comes consolidation in the industry and it's coming. Too many providers are all chasing the same customers at the moment. That will change(the quicker the better) and the one who wins will be the one with the most innovation and product offer. AOL currently offers the broadest product offer as a portal and no one can touch em. IMO, there're doing just what MSFT has been doing(as quick as they can) for the past 4 years. What drew me to AOL was the nscp acquisition: The judge's decision was not even dry on the page in the DOJ case and AOL snapped em up…. in chess that was a check move on MSFT in the consolidation game for control of the top portal(you and I may not be impressed, but I've been a PC user since 85, therefore I'm not the ‘average user'). 3) “…average user is someone who is internet-phobic…” Did you get a chance to hear the CEO for SUNW on 60 min last Sunday? His point that the MSFT product(WIN) is an inferior product as compared to Java(or Apple for that matter) is true…. but it's reality. My point: Good or not, 90%+ are dependent upon WIN and that's not likely to change one day soon; not for Java, not for IMac(did you see Apple was downgraded today to “ under-perform ”, and this in spite of all the hype & #1 sales.), not for noth'in. AOL, IMO, is setting a similar standard by their product offer(and it's getting bigger every quarter) and those ‘average users' will always want a warm fussy. “Brevity is the soul of wit”. So I'll go back to listening on this thread & regards. PAS