AOL Breaks Down Walled Garden; Is It Too Late?

After providing plenty of preliminary notice that such an announcement was forthcoming, Time Warner’s AOL unit officially announced today that it will make its email, instant messaging, security software, and other services free of charge to anybody with a broadband connection.

It’s a belated attempt by Time Warner to breathe new life into its online advertising business, currently a distant fourth behind Google, Yahoo, and Microsoft’s MSN. Not everybody is convinced that will make an appreciable difference, with many market analysts suggesting that it’s a case of too little, too late.

AOL says it wants to migrate all of its remaining dial-up subscribers broadband Internet connection, and it also wants to drive more broadband traffic to rich multimedia content, such as streaming video, the resides on AOL.com. Interestingly, though, AOL will continue to offer and sell its dial-up access service, but it will no longer market it aggressively.

That seems like a mistake. What AOL ought to do, I believe, is give its installed base of 17.7 million dial-up subscribers — down from 20.8 million a year ago and from 35 million at the pinnacle of its popularity in 2002 — early warning that it will be shuttering its dial-up business within six months. That will give customers plenty of time to find a new access provider, offering either broadband or dial-up services; and it will allow AOL to focus resolutely on drawing broadband traffic to its site to boost ad-generated revenue.

AOL needs focus. It says it will introduce a variety of new products over the coming weeks, including personalized e-mail domains, video-search services (including searches of Google and YouTube video databases as well as its own), and additional security-related services. It will have to keep moving in that direction, providing innovative services the clearly differentiate it from Yahoo, Google, and Microsoft.

I doubt that it can win that battle with the old dial-up business along for the ride.

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One response to “AOL Breaks Down Walled Garden; Is It Too Late?

  1. To every company innovations are key to any successful business. If the company waits to see what the competition is doing before they develope and grow, opportunities will be missed and failure would result. AOL is trying to survive instead of being the forerunner in internet products and services.
    Outsourcing is another problem that will not help this business. Find out what the customer is interested through Demographics, surveys, price mapping and research. Then and only implement the new ideas . Thank you

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