Copyright © 1995 Robert Seidman (robert@clark.net). All rights reserved. May be reproduced in any medium for non-commercial purposes.
Last week, I listed a URL for the New NetGuide Now page, but apparently one that doesn't work for a lot of you (even if it does work for me). You'll want to give it a look at: http://techweb.cmp.com/techweb/ng/netnow/ngnow.htm .
Also, last week I said that I'd be appearing in an interactive chat hosted by the Internet Center on America Online on Sunday, June 9th. Since June 9th wasn't a Sunday and since it happened to be in the past, I'm optimistic that most of you knew that I meant July! Still, thanks to all of you writing in to let me know the error of my ways. I hope you'll join me there, this Sunday JULY 9, at 10:00 PM ET, at Keyword: BOWL
Maybe the coffee mug thing wasn't such a good idea? If not, I can take comfort in the fact that at least it wasn't my idea. Anyway, over 500 of you voted on one of the coffee mug logos. The decisive winner was Logo #3 submitted by Thor Ivar Ekle. Demonstrating the international power of the Internet, Mr. Ekle resides somewhere in Norway. If you haven't seen the logos yet, pay your respects to our Norwegian friend and the other finalists by visiting: http://www.clark.net/pub/robert/vote.html .
While the good news is that over 500 of you voted on a coffee mug logo, only 50 or so of you have sent me mail saying: "I want a mug!" In fact, even the guy who came up with the idea in the first place hasn't expressed interest yet! If you're interested in a mug, please send me an e-mail message (robert@clark.net) with the subject line: I Want a Mug! If you want more than one, let me know how many in the body of the message.
Getting the newsletter out by Friday evening is important to me because I'd like to start having a weekend! However, to say that it will be distributed "by" close of business was a mistake. I might make that deadline sometimes, but because of the "Stock Watch" section, I want to at least wait until the market closes on Friday.
Next week, I'll be attending the Interactive Services Association's 10th annual conference in Boston (see details in the "Sites to See" section). There may be some good fireworks at the shoot-out events between the heads of the various online services-because of this, delivery of next week's edition may slip to Saturday.
As for the "daily" version on the Web. Let's just say that it is currently in "beta" test. You can check it out on my home page at: http://www.clark.net/pub/robert . It might be there daily, Monday through Friday, but it might not be. I'm trying to figure out how to manage my time in a fashion that allows for a daily.
America Online announced this week that they have passed the three million subscriber mark. They also announced a restructuring into 3 main organizational units: AOL Services, headed by Ted Leonsis; AOL Technologies, headed by Mike Connors; and AOL New Enterprises, led by David Cole.
In, a nutshell this takes the reorg of last fall a step further. AOL International rolls into the New Enterprises group which will also be working on enterprise solutions, software products, local affiliates, and strategic investments.
AOL's Internet Services division, previously led by Case, and then David Cole has now rolled into the other groups, especially Leonsis' AOL Services Group as a new the new GNN branded Internet based service nears launch.
"Our success has been driven by the combination of content, context, community, connectivity and cost. With hundreds of services, and now with the added benefit of World Wide Web access, we provide consumers with a wide range of content choices. We then take that sea of content and put it in a useful and fun context by organizing and presenting it in an engaging way. We try to foster a sense of community, so our customers feel like members, not just subscribers. We make it easy for people to connect to AOL by providing local access numbers in 600 cities -- and, more recently, by rolling out our own high-speed AOLNet data network. Finally, we price the service in a simple, predictable, and affordable fashion," said Case in the press release with regard to going over the 3 million mark.
"AOL's rapid internal growth and ambitious acquisition strategy has resulted in substantial growth in employees and expansion of business units," Case said. "Our new structure-organized based on markets and customers, rather than products and technologies -- sharpens our areas of focus, to enable the company to continue to grow rapidly. This also cuts my direct reports in half, enabling me to spend less time on managing day-to-day operations and more time on strategic matters," said Case regarding the reorg.
Not missing the opportunity to get a veiled reference to the upcoming Microsoft Network service that is planned to be bundled with the Windows 95 operating system, Case added, "We intend to continue focusing on the factors that have contributed to America Online's extraordinary growth, and we're hopeful that we'll be able to continue developing this new medium in an atmosphere of fair and free competition."
Later in the week, AOL stock soared setting 52 week highs two consecutive days (Thursday and Friday), closing the week up over $9/sh. over the previous week at $53.13. A variety of reasons were cited among them, the subscriber growth, Goldman Sachs and Co. raised the long term (12-18 month) price target for the stock from $70/sh. to $80/sh., and reports that MS is preparing to unbundle MSN from the Win '95 operating system (see story below).
A part of me is wondering if somebody's getting ready to swallow AOL's poison pill. AOL, of course would not comment on the movement of the stock, but I'm sure they're all smiles down in Tyson's Corner (Vienna). Especially one of the guys there who encouraged me in January to look at an AOL career. There's still a lot of money to be made in options, he told me. "Nah," I said, "You guys have maxed!" That's why I have a stock QUOTES section and not a stock PICKS section.
I'm not sure we'll talk THIS much about Microsoft once they actually launch! But, in the news this week there were a couple of blurbs. One being that they are making contingency plans to unbundle the Microsoft Network. I saw a couple of stories playing this up as Microsoft seeing the writing on the wall. Ha!
They're realists, it could happen and they're planning for it. By no means do I think they view unbundling the MSN software from the operating as inevitable.
Also, Microsoft is fighting back against data from Pipeline Communications (not to be confused with the Pipeline Internet service). Pipeline Communications handles online registration for a variety of customers as well as providing a mechanism for offering free trials. The Justice Department allegedly was interested in any factual data that Pipeline Communications could offer as to how many people sign up for free trials. Pipeline calculated that MSN would have as many as nine million customers by the end of THIS year based on 30 million units of Windows '95 sold by the end of the year. Hey, if they can get 9 million customers in just over 3 months (assuming an August 24 launch), then I will fervently be working on a plan that allows me to house my newsletter on the Microsoft Network without ticking off my management at IBM. 9 million seems more than a bit unrealistic.
To fight back against such projections, Microsoft enlisted its public relations firm, Waggener Edstrom to issue a statement downplaying those numbers. So what is Microsoft saying THEY predict? Eight hundred thousand to two million subscribers by year end -- 800,000 to 2,000,000 -- wow. Now, the 800,000 isn't all that unreasonable when you consider that America Online is growing at about 250,000 a month (net) according to their numbers. But this is a service that has been around several years and has quite a bit of content. With all the content Microsoft has lined up, they still have quite a bit less content than AOL, CIS or Prodigy. But if the basic monthly fee is half of what the big 3 is offering (all at $9.95/mo.) it could happen like that.
All of the big three are keeping their lips pursed about what they plan to do as far as rates go. AT&T's Interchange can come out with a $5.00/mo. basic plan because the structure of their system is such that as soon as they add any of the content providers the fee winds up around $9.95/mo. Plus, because of the structure of Interchange, AT&T doesn't seem to be marketing the service at all-this may change, but for now it appears the marketing burden has been placed soley on the content provider. So, none of the big 3 feel compelled to lower prices or currently view Interchange as a threat.
But if Microsoft Network launches with a price of under $5.00/mo.-even if they unbundle the software this could give the big 3 fits! AOL is now the largest online service, but even factoring out charges due to acquisitions, in the quarter ending 3/31/95 AOL's earnings were $5.1 million on revenues of about $106 million. Now consider that for that quarter, over 58% of America Online's revenue-or about 61.5 million came from the $9.95/mo. subscription fee. Now let's say AOL has to get in a price war and drop the subscription fee to $5.00/mo. If you apply the impact to the quarter ending March 31, the revenue generated from the monthly subscription charges drops from 61.5 million to less than $31 million. That would've spelled a pretty big loss for the quarter.
Much remains to be seen. While I don't doubt that as many as 2,000,000 could try Microsoft Network out by the end of the year, I doubt nearly that many will stay with it. Some analysts are predicting that churn will initially be huge for MSN. I'd concur with that analysis. But if a lot of subscribers find they are getting what they want from MSN and the price comes in at less than $5.00, America Online might actually be hoping that the Pipeline prediction of 9,000,000 subscribers is correct. In that scenario, the market would be growing by so much, that America Online could then risk getting into a price war and hope to make up the numbers in volume and by increasing the average $/mo./user.
It looks as if Microsoft is flexing its political muscle and has emerged with a pretty strong lobby. Recently, Rep. Chris Cox (R- Calif) and Rep. Ron Wyden (D-Ore) have proposed a technological solution rather than legislation that would ban (i.e. censor) certain material online. I agree with the proposal, but the timing of the proposal made me think, "Wow, Bill G. has some smooth operators!" I thought that because first word of the proposal from Mr. Cox and Mr. Wyden came only days after Microsoft announced that it was teaming up with Netscape and Progressive Networks (makers of the RealAudio) to form the "Information Highway Parental Empowerment Group."
The charter of the "Information Highway Parental Empowerment Group" is to create standards that would allow parents to control their children's access to various material via software.
Now Microsoft seems to have Bob Dole in their corner. While surely, Microsoft-at least Mr. Gates-will be a big supporter of Mr. Dole's plans to become the next President, Mr. Gates should pat his team of lobbyists on the back. They're doing one heck of a job.
And before I get hate-mail from any lobbyists: I have nothing against lobbyists. They're as American as apple pie!
While America Online and Prodigy have vocalized their concerns about Microsoft's plans for integrating the Microsoft Network with the Win '95 operating system, CompuServe has been relatively quiet. That changed this week. America Online and Prodigy have mostly spoken about Microsoft's ability to leverage its dominant marketing positions to gain a significant stronghold in the online marketplace.
CompuServe's complaint has more to do with dollars and cents-what they have to pay to have their software bundled. To be fair, the others have brought that message up as well, but it sometimes gets lost behind the "leveraging their dominant position"message.
The way it works is this-computer manufacturers have to pay Microsoft for each copy of Windows '95 loaded onto a machine and sold. Kent Stuckey , CompuServe General Counsel, in a telephone interview with Knight-Ridder Financial News, said that the hardware manufacturers (IBM, Dell, Compaq, etc.) are making "demands for significant payments" to bundle CompuServe's own software-this is likely true with the other services as well.
There are a couple of factors at play. One is that whatever the OEM agreements was for DOS and Windows 3.xx, that's now out the door. Windows '95 has more features and a higher retail price than the current DOS/Windows combination. While I am not aware of what the OEM agreements are, it is not unreasonable to expect manufacturers to look for ways to defer the costs without having to pass them back directly to the users. One way of doing this would be to charge more for an OEM deal to bundle an online service software product.
Stuckey pointed out that while CompuServe has to pay the hardware manufacturers " many, many millions of dollars" to have its software bundled on new machines, in effect, Microsoft is getting paid for its online service since it is integrated with the Windows '95 operating system that Microsoft is being paid for. Stuckey expressed that this will give Microsoft a marketing and economic advantage over other online providers.
According to the story by Sara Hansard for Knight-Ridder Financial New, a spokesman at Microsoft dismissed Mr. Stuckey's argument by pointing out that Microsoft has invested considerable resource in developing Windows '95. Hardware manufacturers "want to be able to offer their customers a lot of services" said the Microsoft Spokesman indicating that online services were among the types of services manufacturers want to offer.
The story also stated that Simon Lazarus, an Attorney for America Online commented that Microsoft will able to leverage the way it provides access software in a way to give Microsoft a big marketing advantage versus the other online service providers. Lazarus said that within the next few years, that might allow Microsoft to dominate the online services market.
Walter Mossberg's Personal Technology Column:
In last week's issue I indicated that Walter Mossberg's "Personal Technology" column that runs in the Wall Street Journal on Thursday's is one of my "must" reads! Good news for those of you who don't get the Journal, but want to check out the column: Dow Jones/Wall Street Journal/Mr. Mossberg have conspired to give the Personal Technology column its own Web space! And its free! The column will be delayed for the Web by 1 day, and should show up on Fridays, but if the new column isn't there yet, you can catch last week's column and some "golden oldies"at: http://ptech.wsj.com/.
This made the "site o' the day" list for me this week for their "JournoPorn: Dissection of a Media Scandal"pages. This site is devoted to debunking the "shabby"journalism used by Time Magazine in its recent cover story on "CyberPorn". I'd give you my take on this, but what the heck, read what "Ned Brainard" and others have to say at: http://www.hotwired.com/special/pornscare/ .
You do NOT need to be a registered HotWired subscriber to read these pages.
Interactive Services Association's 10th Annual Conference :
It's not too late to enroll for the Interactive Services Association (ISA) 10th annual conference to be held in Boston from July 12 - July 4. It's not dedicated to "online" but rather ALL interactive services. Among the highlights are an awards ceremony and the shoot-outs where presidents from the various services square off head to head in what often turns out to be quite entertaining debate! The theme for this years conference is quite fitting: "The Hoopla, Hype and Reality". I'm planning to be there to cover the scoop for "In, Around and Online".
P.S. the day of the shoot-outs is July 14th. That just happens to be my birthday. I can't think of any place I'd rather be on my birthday that at one of the online shoot-outs! I hope some of you will be there too. Find out more at: http://policy.net/isa/conference/conference.html
Warner-Lambert Family of Consumer Products :
"What was the longest recorded bout of sneezing?" asks one of the questions on the allergy-cold-cough-sinus quiz. The answer: from January 13 to September 10, 1983 by a woman in the United Kingdom.
Make no mistake, the Web page at http://www.warner-lambert.com/ is an advertisement for the Warner-Lambert line of products. But, as the former Actifed poster boy, I heartily recommend this site as yet another example of advertising done correctly on the web. There's a wealth of information here, and it's fun. Quizes, a way to find the right product based on symptoms and more. With a line up with the likes of Actifed, Listerine, Rolaids and Lubriderm, how can you go wrong? There's something for everyone!
My feelings on Word, a new web "magazine" found at http://www.word.com/ can be best summed up with two words: Not good. I'm being gentle here too, (for example: "It really sucks!" probably describes my feelings better, but I'm trying to be nice).
Word has done a very nice job with FORM! The form is excellent, they've leveraged a lot of Netscape tags and come up with very visually compelling web pages including some nice usage of animation. I'll definitely tip my hat to the webmeisters at Word and the design layout specialists. For form alone, you should give the site a look, but only bother if you're using Netscape 1.1 or above, and otherwise it isn't even worth the look. Oh yeah, it will help if you have a T-3 connection to the Internet...they were running pretty slow this afternoon via T-1 (could be the server is getting pounded) and even a 28.8 SLIP/PPP connection seemed unbearably slow. But despite all of that, some folks worked very hard on the stylistic presentation and they did a great job.
But I don't get the content! And spare me the "you're too old too understand" criticisms. Am I too old to understand Stevie Nicks? No way! I _was_ 17 when the (Prince written) hit, "Edge of Seventeen" came out. Okay I was 19, but still I think I am as capable as anyone else at understanding a story on one of the aging idols of my youth. I looked for a purpose in that piece, but I'll be darned if I could find it...
It would seem they are trying to out "hip" everyone, but it is as if they took every issue of Wired, Rolling Stone and every other magazine and said, "Let's find the very worst thing about these magazines and make it into our own magazine."
Doesn't seem to matter -- I don't know what they're charging, but they have LOTS of sponsors. They even had Saab. Me, I'm holding out for BMW. All right I'd settle for Hyundai, but that's beside the point. Right now while the Web is riding high on hype, they can probably extort sponsors and get away with it. For now, I'll stick with HotWired (http://www.hotwired.com), PATHFINDER (http://www.pathfinder.com) and c|net (http://www.cnet.com).
Word is worth a look for the form, even if there is no function. Word is all dressed up with no place to go but up.
UUNET Technologies closed the day up $5.50 for the day. As of this writing, no information was available as to why.
This Last 52 52
Week's Week's Week Week
Company Ticker Close Close High Low
------- ------ ------ ------ ------- -------
America Online AMER $53.13 $44.00 $53.13 $13.75
Apple AAPL $48.63 $46.44 $50.94 $26.38
AT&T T $54.38 $53.00 $55.88 $47.25
Bolt,Beranek & Newman BBN $30.00 $27.38 $30.00 $10.00
General Elec. GE $60.00 $56.38 $60.00 $45.38
H&R Block HRB $40.25 $41.00 $47.63 $33.00
IBM IBM $99.50 $96.00 $99.50 $54.50
MCI MCIC $22.88 $22.00 $25.88 $17.25
Mecklermedia Corp. MECK $35.75 $37.75 $38.25 $ 4.25
Microsoft MSFT $95.63 $90.38 $92.38 $46.88
Netcom NETC $26.75 $25.50 $31.75 $16.75
News Corp. NWS $23.13 $22.63 $24.31 $14.38
Performance Syst. Intl PSIX $19.50 $15.19 $19.50 $12.00
Sears S $59.63 $59.50 $60.00 $43.50
Spyglass Inc. SPYG $29.50 $28.63 $29.56 $26.50
UUNET Technologies UUNT $35.88 $27.50 $35.88 $21.75
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