The company that dominated dial-up Internet use is coming to grip with the future. As broadband use increases dramatically, AOL has watched subscriptions decline and advertising dollars move to Google, Yahoo, and MSN. Facing approaching irrelevance, AOL has decided to act.
AOL Reinvents
In an effort to compete, AOL is reinventing itself as an open use portal. To date, AOL has always restricted use of its portal to subscribers. No longer. AOL is beta testing a portal that makes services and content available to everyone. If all goes well, the company will launch the service this month.
AOL’s Motivation
The growth of broadband use has correlated to the decline of AOL. It is estimated that as many as 20 percent of subscribers have left the service in the last three years. This loss, of course, correlates to a loss of revenues. As a publicly traded company, AOL must act or face a shareholder revolt.
Catch 22?
AOL is playing a dangerous game with the free portal. The company is risking losing more subscribers that have stuck with the company simply because they like the AOL portal. If “You’ve Got Mail” is now free, why would anyone pay for it? AOL is soon going to provide an answer.
Further complicating matters, AOL faces an extremely difficult transformation. There is a cliché – If it walk like a duck, quacks like a duck and smells like a duck, it’s a duck.” At its heart, AOL is a dial-up connection company. How likely is it that AOL will smoothly convert into Yahoo, MSN or Google? Time will tell, but one can expect AOL to learn some hard lessons in the transformation.
What It Means For E-Commerce
The AOL development has little direct impact on e-commerce. As time passes, however, the new strategy could significantly impact Google. Google currently supplies search results to AOL and places Google Adwords on the system. As subscribers decrease, you can expect AOL to develop solutions to replace Google. Much like Yahoo did, Google will eventually be booted from the AOL platform. The loss of 20 million AOL users must be causing Google some consternation.
The Internet is a dynamic, evolving platform. The AOL transformation is just another step in the process. Only time will tell if AOL can adapt in the evolutionary process.
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Selasa, 06 April 2010
Senin, 05 April 2010
AOL - MSN Beats Out Google
In the ongoing AOL sweepstakes, it appears MSN may be the winner over Google. So, what will it mean for all three companies?
AOL On the Block?
As you may know, the AOL unit at Time Warner has been thrashing around for the last year while trying to find a way to remain relevant. The problem for AOL, of course, is the continually decreasing use of dial-up modems as a method for accessing the Internet. Depending on the study you look act, dial-up modem access now accounts for approximately 40 percent of all Internet users. This number is consistently dropping as DSL and cable Internet access systems become more popular. The resulting struggles at AOL are having an interesting impact on the search engine wars.
Google and MSN are trying to position themselves to dominate online search. The situation boils down as follows: Google is the king, MSN wants to be it. This situation takes on particularly interesting impact when one considers that Google now supplies ads and search results to AOL. In doing so, Google derives roughly 10 percent of its revenues from the AOL relationship.
In the summer of 2005, rumors started that AOL was for sale. MSN and Google were obvious buyers. The only problem was both companies realized AOL was a good short term play, but a terrible long term one given the death of dial-up modem systems. So who would buy AOL and how much would they be willing to pay? Would Google let MSN swipe 10 percent of its business? If so, how high could Google drive up the price of AOL for MSN?
Google Makes Major Mistake
If rumors are to be believed, MSN and Time Warner have reached a deal on the AOL platform. So, how much will MSN pay Time Warner for AOL?
Nothing. Not one penny.
By the end of December 2005, MSN and Time Warner are expected to announce a partnership wherein the two companies will intertwine their Internet units and pursue joint advertising efforts. In turn, Google will be kicked off all AOL listings, to be replaced by MSN or some AOL-MSN mix of search results and advertisements.
The executives at Google are making a major mistake, a critical blunder. Google will lose 10 percent of its business to MSN without MSN being required to expend any resources for the business. The Google Adwords program, the primary revenue source for Google, will no longer be on AOL. Surely Google could have come up with something more enticing to AOL or at least forced MSN to pay some serious cash for the acquisition. Instead, it failed on both accounts.
Google is a great search engine, but this is just one in a number of business mistakes made by the Internet giant. How could it lose 10 percent of its business without making MSN pay for it? If MSN pulls this off, one will wonder who is at the controls at Google and what they could possibly be thinking.
AOL On the Block?
As you may know, the AOL unit at Time Warner has been thrashing around for the last year while trying to find a way to remain relevant. The problem for AOL, of course, is the continually decreasing use of dial-up modems as a method for accessing the Internet. Depending on the study you look act, dial-up modem access now accounts for approximately 40 percent of all Internet users. This number is consistently dropping as DSL and cable Internet access systems become more popular. The resulting struggles at AOL are having an interesting impact on the search engine wars.
Google and MSN are trying to position themselves to dominate online search. The situation boils down as follows: Google is the king, MSN wants to be it. This situation takes on particularly interesting impact when one considers that Google now supplies ads and search results to AOL. In doing so, Google derives roughly 10 percent of its revenues from the AOL relationship.
In the summer of 2005, rumors started that AOL was for sale. MSN and Google were obvious buyers. The only problem was both companies realized AOL was a good short term play, but a terrible long term one given the death of dial-up modem systems. So who would buy AOL and how much would they be willing to pay? Would Google let MSN swipe 10 percent of its business? If so, how high could Google drive up the price of AOL for MSN?
Google Makes Major Mistake
If rumors are to be believed, MSN and Time Warner have reached a deal on the AOL platform. So, how much will MSN pay Time Warner for AOL?
Nothing. Not one penny.
By the end of December 2005, MSN and Time Warner are expected to announce a partnership wherein the two companies will intertwine their Internet units and pursue joint advertising efforts. In turn, Google will be kicked off all AOL listings, to be replaced by MSN or some AOL-MSN mix of search results and advertisements.
The executives at Google are making a major mistake, a critical blunder. Google will lose 10 percent of its business to MSN without MSN being required to expend any resources for the business. The Google Adwords program, the primary revenue source for Google, will no longer be on AOL. Surely Google could have come up with something more enticing to AOL or at least forced MSN to pay some serious cash for the acquisition. Instead, it failed on both accounts.
Google is a great search engine, but this is just one in a number of business mistakes made by the Internet giant. How could it lose 10 percent of its business without making MSN pay for it? If MSN pulls this off, one will wonder who is at the controls at Google and what they could possibly be thinking.
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