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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (22400)	5/9/1999 6:23:00 PM
From: Jill	Respond to of 74651

I have to agree, Michelle...don't use AOL myself because I find all the slow bells and whistles annoying...but branding and critical mass are everything. AOL is comfy, middle-America, it marketed itself correctly, and I'm sure it will finesse the bandwith problem. Who said McDonalds hamburgers "tasted" good? Doesn't matter. Golden arches.

To: Lizzie Tudor who wrote (22400)	5/9/1999 6:52:00 PM
From: RTev	Read Replies (2) \| Respond to of 74651

Are you forgetting about the AOL chat rooms? Nope. I wasn't forgetting them. I was just waiting for someone to mention it. I agree that chat is the "killer app" for AOL. And I think you nailed the significance of it: "once you have critical mass in your user population thats pretty much it." AOL has that. They capture the libido of teenagers and many more interests (many of them, as I understand it, libido-based) with their chat rooms. AOL is said to have a very high "churn rate" in subscriptions -- people who sign up but leave quickly. I'd be willing to bet, however, that those who leave don't participate in the chats. I haven't even seen AOL's software for a year or two, but I understand that draw. I was one of the original subscribers of AOL's predecessor company -- something called Quantum Communications back in '86 or '87. What's amazing about AOL is that they don't seem to have changed much about the system since that original design for the Commodore 64. They still use the same names for chat rooms and moderators. Anyone who used QuantumLink on the 64 would be immediately comfortable with AOL today. I got hooked on it back then. It was amazing -- even at 300 baud on a Commodore 64. AOL has other advantages. -- Some people perceive its application-like interface to be easier to use than the internet-based alternatives. -- They have a huge marketing advantage since they've convinced many that AOL means "internet" -- even though it's as far as you can get from being the internet. But the chats seem to be what draw and hold people to the service. But here's the problem: What happens if someone discovers a pure-internet alternative that's even better? Maybe it would be Microsoft's NetMeeting. (There's a scary place that would frighten any convention-respecting editorialist.) Maybe one of the java-based chats, or one of the many free chat rooms on every other portal out there. What happens if the critical mass leaves AOL? Since their chat rooms are not available on the internet, they depend on AOL subscribers to populate the things. But most of the internet is also available on AOL so even AOL subscribers could move off to another more compelling service. AOL attempts to trap their users into their system -- something no real ISP can come close to doing. There's no one else doing anything like what AOL is doing. It's an advantage right now, and it's what they do to protect their franchise. I don't see it as a safe bet that it will keep working in the future, because -- for all those reasons Bill mentioned in his post on the utility-like nature of the ISP business and a few more -- they may not be able to count on locking in subscribers in the future.