With its purchase of Netscape, America Online is making its biggest move yet to convince its customers to tune in to the web, turn off their TVs and drop out of traditional entertainment such as movies and video rentals. With the added mass audience of Netscape customers, they might be able to pull it off.
The AOL deal all about ease of use for Internet access. When my brother-in-law, a computer virgin in his 40s, recently bought his first PC, he wanted to know which online service to use. Without any hesitation, I recommended AOL. For people that have never touched a PC, it is dirt simple to get started. And he later called me with pride as he recounted his experience in getting his account set up all by himself. When was the last time someone told you how easy it was to set up his or her Internet account? When was the last time your ISP made it easy to change your screen name, uh, user name? Or allowed you to have up to five different names on a single account? Not likely.
AOL is concerned with being the next entertainment platform Provider, and is going after Disney, the broadcast TV networks, and other media moguls. Forget the chump change of Internet eCommerce: we are talking real money here. They want to be the first Internet Superstation, to coin a phrase. And just as Ted Turner ushered in a whole new era of cable with his WTBS, AOL might have a chance here if they play their cards right, capture the right mix of corporate and home customers, and understand how to partner with the right kinds of players quickly.
If not, there is always Disney. They have tons of dough, tons of branding, and tons of talent.
An AOL Internet Superstation makes lots of sense. Look at what is happening today to the TV networks. Viewers have left behind the comfort of those low-numbered stations on the dial, moving elsewhere on the broad landscape of cable channels, if not off the screen entirely. Choices are good; choices are what entertainment is all about. Ratings -- meaning viewers -- for all the networks are down, and continue to fall. People are looking elsewhere, and AOL wants them on their Internet channel. But to be a player in this universe will take more than the 14 million people checking their email and entering chat rooms. They'll need millions more who are using Netscape browsers and their ISP. Add these numbers together, and that's an audience that any network programming honcho will take a meeting on.
Buying Netscape brings in more viewers for AOL, it is plain and simple. All those people too lazy or too intimidated to change the home page of their Netscape browsers will now be looking at AOL content. That is more eyeballs, although I question whether the Media Matrix numbers really make all that much sense. When was the last time you did anything on www.netscape.com, other than to try to find the latest browser version? How about the last time you looked at www.aol.com? Not likely.
The trouble is AOL has made so many missteps with business customers it is hard to see them changing their track record. As a quick test, check your rolodex at work to see who the name of your local AOL account executive is. What, you don't have an AOL account executive? You are not alone. For the most part, AOL isn't on the corporate radar when it comes to computing, the Internet, or even entertainment, unless you count the number of business executives who pay for AOL accounts for their families. Let's review the historical record for AOL's corporate toeholds:
Remember when AOL purchased the Global Network Navigator when the web was still young? No, you probably don't. This was a content play, with a primitive portal full of delicious stuff that the folks at Songline developed. Where is GNN today? Nowhere.
What about the web server software called Navipress? A nice piece of work, one of the first web servers that contained a content authoring tool as part of the process. Where is this product now? It is called Aolpress, and it is still around, although less than 10,000 servers total are running it today.
What about AOL for the Enterprise? Or its Enterprise Dial-Up remote access service? These tentative steps into the corporate kingdom are gone and forgotten. Indeed, many corporations are fed up with employees checking their personal AOL mail on company time that they block access from within their firewalls. And remember AOL Driveway, its entry into push technology? Not likely: it never went anywhere.
Now look at what AOL is buying for its $4 plus billion with Netscape. A portal site, a web server with some content authoring tools, and a bunch of enterprise products. Does this sound familiar? All of these things play to AOL's major weaknesses. You might say, "well, that is why they are buying Netscape, trying to fill in the holes and complement with other's strengths." Will they, though? Not likely.
Infoworld put it most eloquently a few weeks ago: "Major unresolved issues resulting from the proposed [AOL/Netscape/Sun] alliance include system integration hurdles; the creation of a viable software architecture across a patchwork of products from Netscape and Sun; potentially confused channel strategies; and unclear relationships with potential partners such as IBM, Oracle, and Novell."
For the most part, the trade press hasn't figured out this Internet Superstation angle yet. Instead, they talk about the AOL deal having to do with increasing browser market share, facilitating eCommerce, or going up against Microsoft. Not likely.
Microsoft actually benefits from the AOL deal in several ways. First off, they have killed off a major NT application source (Netscape) without firing any ammunition. Can anyone see Sun really putting their heart into selling NT versions of Netscape Enterprise Server? Not likely.
Second, Microsoft has strengthened their hold on AOL. AOL needs IE to work, since so much of its version 4.0 software is tied into to IE. Netscape's browser could become part of AOL software, but not anytime soon. In the meantime, look to Microsoft to exploit this advantage.
Third, Microsoft has a stronger story to tell for corporate customers than Netscape: Microsoft has the ears, if not the hearts and minds, of IT management. Netscape has the hearts and minds of the guys in IT trenches, and can't get their message up the corporate food chain. In fact, in the numerous interviews I have had over the past year with Netscape product managers, I would first hear about the ISP market and rarely if ever get any solid story on how these products would play in the overall corporate marketplace.
Now go through your rolodex and find the name of your Netscape sales rep. Not likely. Sun's sales force can help here, but Sun has been woefully outgunned by Microsoft before and I don't think things will change with the "cachet" of having Netscape and AOL behind it.
When it comes to better entertainment for the 90s and beyond, the new AOL will be a major player. When it comes to providing better corporate access and Internet applications, the new AOL remains unproven. Maybe it is time to take a meeting with your local Disney executive.
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