The Fabulous Market Babe:CHECK THIS OUT
Stock of the Day
1/25/99
At Home and America Online / ATHM & AOL
Talk about a competition that no one saw coming...
But hey, that's what makes tech interesting.
Not to mention a great source for trading and investing.
So given all of the recent news surrounding these two, I thought it would be helpful
to offer some perspectives as to where the lines on both sides are being drawn, as
well as each of the paths going forward.
First off, let's look at the "newbie" on the block, ATHM.
With the XCIT purchase, ATHM will be shifting the XCIT group towards developing
proprietary content for ATHM.
Something that, just to point out, is not as easy as its sounds. After all, the goal in
developing proprietary content is to capture users and keep them there. As such,
ATHM's question becomes the following:
"What are we going to develop that is not already on the 'net?"
Good question.
As such, expect ATHM, and this shouldn't be that much of a surprise, to develop
content that takes advantage of its bandwidth, i.e. music and online games.
In addition to the above, it is more than likely that ATHM, concurrent with providing
faster access to XCIT's services, develops a plan such that XCIT's services are
available to everyone, but priority is given to ATHM's users.
So with the XCIT purchase, ATHM has clearly signaled its path going forward, given it
understands the following: A majority of users, post their initial exploratory surfing, go
to the portal controlled sites for the bulk of their online activities.
Thus for ATHM, if it has very fast access and some content, users will go thorough
ATHM but now stay at its destination due to the news, e-mail features etc., on the
site.
As for all of this from AOL's perspective, AOL is very aware that the future lies with
fast access. Which, of course, poses a problem for AOL, for as faster access
becomes more readily available, this more than likely will cause new users to dump
AOL and its dial up service, or just bypass it completely.
Which, incidentally, should explain the small DSL deal that AOL recently is stuck its
head into, one which more than likely grow in depth and breadth over time.
As such, it is highly doubtful that AOL/DSL subscribers will see "100 free hours" of
DSL access. Plus, users of AOL should expect that AOL's service will more than likely
be developed into two tiers -- one with DSL and one without, with the charge for
those with DSL getting propped up to around $60/month.
So this one, if anything else, should be interesting to watch given the opposite poles
that ATHM and AOL are at, with ATHM having fast access and currently developing
content, while AOL possesses content, but is developing its fast access.
Whereby, of course, the next stage for both companies is to converge the two and
offer a combination of both.
Something that, incidentally, makes all the sense in the world, given the goal is to
provide fast access and then anchor the user to the site, so they will then add
additional revenues by viewing ads, spending money, etc.
Otherwise known as the crux of the battle.
So, in wrapping all of this up, some thoughts should be added on ATHM, given this
year will be a very crucial one for them.
Here's why.
Last year provided ATHM with the opportunity of getting the word out. As such, the
challenge this year is to convert that message into subscribers.
And ATHM needs to do so in a big way.
Specifically, the company needs to more than double its users this year from 300K,
i.e. the subscriber number at the end of the year needs to be closer to the 1mm mark
rather than the 500K mark.
Which, just to make the point, shouldn't be all that tough to do. After all, if the targeted
user views cable TV as a necessity, then faster Internet access will more than likely
be viewed also as a necessity.
Plus, on top of all of this, over the next five years, a lot of fiber bandwidth will be
coming on line (QWST etc), and as such, ATHM must move quickly to establish high
speed access market share.
Yes, this year will be quite an interesting one.
To say the least. |
