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

To: RTev who wrote (5712)	2/24/1999 6:28:00 PM
From: RocketMan	Respond to of 41369

I see we're more or less on the same wavelength. Given that 30% of Americans are currently on the internet (from Case's comments yesterday), I see AOL continuing to grow with their current model until that figure hits 70% or so. At that point the internet will be so ubiquitous that unless AOL gets some killer content they will lose market share to competitors. When will that point be reached? I suspect we might be there in 3-4 years, by which time broadband will also have a significant market share. Of course, by that time I would hope that AOL is also a broadband player. This is why I like Pittman's background, and the way he has been taking AOL in the direction of a media company. Together with Andressen, they might be able to combine the best technology with some great content. Actually, I think they will have to do this, because the ISP business is going to get even more crowded.

To: RTev who wrote (5712)	2/25/1999 10:01:00 AM
From: Steve Robinett	Read Replies (2) \| Respond to of 41369

RTev, I see there's one of your posts I missed. Sorry. It raises interesting questions about the basic idea of AOL. You point out that AOL is in the Online Service business, the ISP business and the content provider business. Obviously, each of those area presents opportunities for AOL and problems. ISP is a low-margin/high-cost business, content provider is expensive and subject to capricious public taste like any entertainment company, and Online Service, aka, portal, gets AOL competing with Yahoo and all the other portal people. Currently, AOL is following the MTV/AT&T model. Subscriber fees pay the bills like AT&T's long distance business pays the bills and other activities provide most of the margins (e-com and ads). Content they are trying to get people to pay them to put on AOL, the MTV model (get a means of distribution--cable TV, Internet--and have someone else provide content like recording companies provide music videos on MTV). Obviously, Mr. Pittman, an MTV grad, is the key to this strategy, which for the moment seems to me a good one. If any particular content fails to attract people, someone other than AOL loses and AOL plugs someone else into that guys slot just as videos come and go on MTV. I would guess AOL will simply let the market decide the nature and mix of its business, much as TV networks try to let ratings decide content. Still, if they wind up only a portal, they are no different than Yahoo or Gonet or a number of other portals. As only an ISP, they are in a low margin business. As only an Online Sevice, they are back where they began years ago as a bulletin board. They seem to me to have reached the point where they can manage resources in a flexible way. They are actually making money--not much, but some--they have highly overvalued stock to use for acquistions and a brand name so strong people call it the only Internet blue chip (which is bull--blue chips have to pay dividends for a while to actually be considered a blue chip). Those assets plus a little paranoia obviously gives AOL enormous advantages in responding to the market, even if their "concept" is a bit muddled at times. Best, --Steve