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============================================================================= Seidman's Online Insider ============================================================================= Weekly Summary of Major Online Services and Internet Events ----------------------------------------------------------------------------- Vol. 2 No. 45 (Formerly known as In, Around and Online) November 17, 1995 ============================================================================= Copyright (C) 1995 Robert Seidman (robert@clark.net). All rights reserved. May be reproduced in any medium for non-commercial purposes. IN THIS ISSUE ============= -Notes from the Editor -Time for CompuServe -Internet vs. Microsoft? -CompuServe Sniffing Vapor -This and That -Stock Watch -Disclaimer and Subscription Info Notes from the Editor ===================== First: I want to apologize to anyone who has written me and not received a response. I do read all my mail, and encourage you to keep sending it -- even the flames! Unfortunately, I can't respond to it all. Second: Next week is Thanksgiving, and personally speaking, I am very thankful for all the wonderful things that have happened over the last year! To celebrate the spirit of thanks, I'm taking the week off from the newsletter. But don't despair, I'm in the process of trying to pull together some pertinent online info for your reading pleasure in place of next week's edition. Time for CompuServe =================== Last week I wrote about the Wall Street Journal piece by Jared Sandberg which reported that Time magazine would be jumping ship from AOL to CompuServe. This week, Time did just that, leaving AOL and a reported half a million dollar deal for CompuServe and a reported "several million dollar" deal. Last week, I pointed out why I felt Time was an important strategic alliance for America Online. Apparently though, I didn't state my case well. So I'll try to do a better job here. I feel Time was an important alliance for AOL, but only for one reason. Customer acquisition. Period. After that, Time is pretty worthless to AOL. Time is content that is created for the print medium and ported over to the online medium. While things like message boards, chats, and the Time Daily are nice, I don't think they will keep most users coming back again and again. Here, service like the Motley Fool win hands down. They've taken the online medium and leveraged it to its fullest, doing things that just can't be done in print. The Fools run circles around Time when it comes to utilization of the online medium. Still, I maintain that for now, the Motley Fool isn't going to be as big of an incentive as Time magazine in the potential new user's mind. Once the user signs on though, content like the Fool will do a much better job of keeping the users coming back. Why? It's really pretty simple. The Fools have personality. They ooze personality! The content is formed not so much by the news or by editors as by the interaction between the Fools and their readers. That is a powerful draw. But staples like Time magazine can play a big part in drawing in new subscribers. That's an important component. Apparently it wasn't worth "several million" to America Online. Time will tell... Internet vs. Microsoft ====================== We've heard some of this talk in the past, and now we're starting to hear a lot more of it. IBM, Oracle, Sun, Netscape...they're looking to steal some of the "beasts" thunder. "Death to the evil empire in Redmond!," must be their battle cry. Today, that's all it is folks, a battle cry. The notion that the Internet is going to kill Microsoft anytime soon is ludicrous. Truly. Before reaching for the "compose" button to send me a letter, notice those two very important words up there: "anytime soon". Could it happen? Could the Internet destroy Microsoft? Well, stranger things have happened. *There are Standards, But They're Not Microsoft's* At center stage in the analysis that Microsoft will be killed by the Internet is the issue of standards. Microsoft has done a good job of owning the standards. MS-DOS, Windows, etc. Big standards to own. Guaranteed revenue generated on most of the IBM compatible PCs sold. Big bucks. But standards like TCP/IP or HTTP or HTML, etc. are open standards. So what's poor Microsoft to do? Well, Microsoft could take the Netscape stance, develop a browser and a server. Give the browser away and then sell the proprietary server software like Netscape. Microsoft will definitely do just that. Remember, Netscape is in this for the money too. If you don't think they're trying to turn their "open standards" browser into a proprietary technology, you probably don't believe that the word "gullible" is in the dictionary. But now along with Netscape, the likes of Sun, Oracle and IBM are looking to the future of the Internet in hopes that it will end Microsoft and Intel's stranglehold on the desktop. The Internet, along with high bandwidth can make operating systems obsolete they say. Disk drives? Who needs them? "We'll store everything on the server!" Okay, but how much will you charge me to pull it OFF the server? Today almost everything is free. One thing we can safely say is that if such plans ever come to fruition, there isn't going to be a free lunch. Someone has to pay. *The Players* Netscape, Oracle, Sun and IBM. *Netscape's Browser Strategy*: -Build a better browser and develop a NEW STANDARD -Widely distribute the browser -Keep making the browser better -Sell Server Technology -Hype the concept -Announce Initial Public Offering -Make lots of money in stock Key Strengths: Timing and know-how. Their plan seems to be working Key Weaknesses: They aren't Microsoft Oracles Appliance Strategy: -Powerful PC's and operating systems and software begin to infringe on server market -Worry Like Hell -Come up with concept to hype -Announce plan to build inexpensive ($500) Internet appliance -Develop a *NEW STANDARD* for the Operating System for these appliances -Hype the hell out of it -Hope stock price reacts favorably Key Strengths: Charismatic speaking, smoke, mirrors. Key Weaknesses: How do you build a GOOD $500 dollar Internet appliance? Seriously, this sounds so good but Netscape on 4 megs of RAM is tough. Okay, so they're throwing in 4 megs of Flash RAM, too. Java in its current state is inconceivable on anything less than 16 Megs. Oh yeah, we haven't gotten to Sun yet. The appliance may cost $500, but they give you a $50 CPU! What's that, a 386? Vrooom. Surf with speed, I can hardly wait. What about a nice keyboard, Mr. Ellison? Okay, so keyboards are pretty cheap, but it's over and above the $500. What about a nice monitor? Web surfing on a 14" monitor in 640*480? No, but thank you very much. Even that monitor is going to cost a couple of hundred. One more thing, what's this business of ATM connections for the appliance? High band-width for the masses? We have to love it. Cheap high-bandwidth access that is. Fact is, that for $500 you'll get the equivalent of a slow PC that you need to buy add ons for (keyboard, monitor, ATM connection). So what if there's no need for a disk drive, disk drives are one peripheral that's gotten very inexpensive. Don't get me wrong, Oracle is doing some other things with regard to Web servers that are very cool. However, they're dependent upon Oracle databases. Larry Ellison's idea of the inexpensive Internet appliance is conceptually a real winner. For now, reality makes it a pie in the sky vision. Lots of money may be invested in building such an appliance, and I suspect, for now, it will be as successful as other appliances like AT&T's EOM, Apple's Newton, etc. In other words, it will bomb. Bill Gates must be shaking in his loafers. Elision's concept isn't that different from Microsoft's. Ellison wants to own the operating system that runs the Internet appliance and believes he can provide a good $15 operating system. The thing that's really very nice about his vision is that he believes that everyone should always have the most current version of an operating system. Don't have it? It's easy, you just download it over your high-speed connection. Oh sure, none of that exists yet, but that's beside the point. The point? What will Ellison charge for the updates, that's the point! *Sun's Java Strategy* - Create a programming language on minicomputers with lots of memory and huge displays connected to T-3's to the Internet and cross their fingers \ that in all the hype they can create a NEW STANDARD. - Laugh at the thought of the language running programs on smaller computers with a lot less memory. - Push the language on those platforms anyway - Pray like hell memory gets a lot less expensive - In the hype, sell as many licenses as possible and hope the stock price goes up Key Strengths: Java allows some really neat things to be done on the Web. With a Java compatible browser, you can run these "applets". While today, the applets I've seen are all Web based, there's no reason why there couldn't be a Java browser, a Java spreadsheet program and a Java version of America Online. Okay, so I'm kidding about the last one. Maybe. Key Weaknesses: In its current implementation Java is very memory intensive and runs slowly on PC's that don't have more than 8 megs. A good Java toolkit will have to be developed that will allow content creators to implement Java applets without any knowledge of the program language itself. This isn't really a weakness so much as that it hasn't happened yet. If Sun can get developers jazzed about Java to the point where there's a ton of Java applets out there, and someone builds a front end that allows manipulation of HTML and Java, and the performance of Java improves, it could be quite successful. The bigger question of how a Java developer will securely sell and protect rights to the Java applet is another story...and one that won't need to unfold anytime soon. *IBM's Internet Strategy* Since I work for IBM, I'm going to avoid this one. Go ahead, call me a chicken. I can live with that. *Oh Yeah?* While some of my comments here have been tongue-in-cheek, most of them are serious. I think Microsoft is currently in a better position than Oracle, Sun or Netscape (and even IBM), with regard to the Internet. Oh sure, I know what you're thinking: "If that's the case why did the #1 rated PC Software analyst Rick Sherlund of Goldman, Sachs & Co., a long-time backer of Microsoft, change his rating on Microsoft from "buy" to "moderate outperformer"? It's true that Sherlund downgraded Microsoft based on concerns leading to a perceived lack of Internet Strategy at Microsoft. Earlier this month, Sherlund removed Microsoft from a select group of "priority" recommended stocks because he believes Microsoft's growth will slow in '97. According to a report from Reuters, Sherlund cited concerns over the Internet and Microsoft's lack of ability to create new standards. "We believe Microsoft will respond to the challenges of its competitors but this is a serious threat to Microsoft's ability to set standards for important parts of the industry and we anticipate the upcoming battle will pit Microsoft against a coordinated effort by rivals such as Sun Microsystems Inc., International Business Machines Corp., Oracle Corp., Netscape Communications Corp., Apple Computer Inc., various phone companies, and others who have an interest in undermining Microsoft's position in the industry and using the shift to the Internet as an inflection point to push new standard," said Sherlund. I attempted to contact Morgan Stanley analyst, Mary Meeker. Meeker is the #2 ("we try harder") rated PC Software analyst, and I was hoping she could share some insight. Meeker's greatest hits include Netscape, America Online and the prediction that Intuit would bounce back after the Microsoft/Intuit merger fell through. Unfortunately, Meeker didn't contact me in time for this writing. So, I'll have to take a crack at this myself. I'm probably about the #3,821,476,590 rated PC Software analyst, but what the heck. It's pretty simple, really. It doesn't matter what Microsoft's current position is, and it doesn't matter how well they might do with Win 95 and Blackbird, their own Internet Explorer browser and whatever else they do with the Internet. It doesn't matter whether Bill "I Got the Internet Religion" Gates has instructed Microsoft to consider the Internet implications in all development of all products, and it doesn't matter if Microsoft's perceived lack of Internet strategy is really lacking anymore than anyone else's strategy. It doesn't matter. See, there's this big pool of money. Right now, Microsoft has it. Everyone else wants it. And they'll do almost anything to get it, including sleeping with their own enemies. Since Microsoft has the most when it comes to PC Software and operating systems, this puts them in the strange position of HAVING THE MOST TO LOSE. When you get right down to it, I think that's what Sherlund's recent analysis is all about. It is pretty scary when you stop and think about it. Result of Sherlund's downgrading? Microsoft is down over $9 from last week. During COMDEX week no less! Meanwhile, Netscape is up $13 to close the week at a whopping $110.50 Okay, Netscape's announcement of a 2-1 stock split didn't hurt, but Netscape was up $9.75 on Friday, the day after Sherlund's downgrade of Microsoft. The Internet is hot, and as big as Microsoft is, they're not able to get their mitts all over it yet. The keyword is "yet". The value of the stock is a critical component of Microsoft's success, too. The best and brightest minds seem to gravitate, eventually, to where they can make the most money. Microsoft has made a lot of its employees millionaires because of how well the Microsoft stock has done. If the stock can't continue to blaze, that would be very bad. If some other companies stock is doing better, say, Netscape or Sun, the best and brightest will gravitate towards those companies. CompuServe Sniffing the Vapor? ============================== Back in the good ole' summertime, CompuServe announced that it would be launching a new service that would be constructed from the bottom up to be a service aimed at the non-technical portion of the world. Back then, it sounded like they were trying to out AOL, AOL. When I spoke with Michelle Moran at the time, they said that the new service, code-named WOW! would launch in the spring of '96 and that it would be demo'd at the Fall Comdex. When I wrote about it originally in the August 4th issue of "In, Around and Online", I hinted that I didn't think they would hit their launch date. Based on reports coming in from Comdex, I'm quite sure of it. "They didn't really show the service," said one reader. "I couldn't really tell what it was," said another. And from our friends at "Suck" <http://www.suck.com/> and their Friday 11/17 edition: "CompuServe had next to nothing to demo of WOW! at this week's Comdex beyond a hashed-together videotape of post-MTV velocity jump cuts of a couple of icons matched with breathless overdubbed narration." You'll want to read all of the "Suck" piece which basically laughs at CompuServe spending thousands of dollars on a market research study so they could find out the obvious... This and That ============= SIMBA, SIMBA, SIMBA: This is one Lion you have to love! I know I plugged SIMBAnet <http://www.simbanet.com/> last week, but now I see they have archives up. I also see that they haven't posted a new version to America Online (though there is a link their to the Web site) since 11/15. FREE! -- TIME Inc. Shakes Up Management: Fuchs pushed out, and our old friend, Walter "Over 10 Million Hits Served" Isaacson who headed up Time New Media (which includes Pathfinder) has taken over as managing editor of the flagship Time Inc. product, Time Magazine. -- AMERICA ONLINE AND INTUIT announced a strategic agreement to jointly provide electronic banking to AOL members, starting in the first half of next year. "America Online members will gain instant access to their checking, savings, money market and credit card accounts at participating banks and financial institutions. They will be able to check their balances, download complete account statements, transfer funds, and pay bills -- all electronically from within their AOL account," said the press release. -- SONY AND VISA announced "a multi-year agreement for the development of a first-of-its-kind, multi-faceted entertainment, information and consumer transaction environment on the World Wide Web to be called Sony Station. The site will incorporate innovative, entertaining new programming within a "walk-through" entertainment center in cyberspace for the online consumer." <http://www.sony.com/> This is a sign of the times of shifting away from the online services model and going directly to the Internet. For the short term, this seems like a foolish move and I'd LOVE to see their business model of how much revenue they plan to generate in 96 and 97. They want to cut out the middle man, and since all the online services now have access to the web, it doesn't seem like a bad move. Today, an online service can do a lot more to bring people to a site, but the online services want a piece of the action. In a story by Reuters, Sony said it selected the Internet over the online services "because it's clear that consumer online services are being eclipsed by the Internet," according to Jeff Sagansky, a Sony executive vice president. "It's really the Internet that we are placing our bets on," Sagansky added. At the press conference announcing the service, Visa USA President Carl Pascarella announced that he expects an end to the stalemate between Visa and MasterCard over software standards for conducting transactions over the Internet. Visa and MasterCard broke off partnering on standards after Visa lined up with Microsoft. MasterCard has partnered with IBM, Netscape and GTE among others. But it's an important issue and apparently MasterCard and Visa are trying to resolve their differences. Pascarella said that he expects a converged standard possibly as early as the first quarter. "We believe that the convergence of these standards is of the utmost importance," Pascarella said. "We are working on a convergence of a standard... We want a convergence as quickly as possible." -- BON VOYAGE BARRY! Barry F. Berkov, executive vice president of CompuServe Incorporated's Information Services Division, is leaving the company to pursue other career interests. Berkov, an 18 year CompuServe veteran. Look for Berkov to bounce back somewhere else or as a consultant. 18 years of experience is hard to come by in this industry. Berkov's departure adds to a growing list of "long time" CompuServe employees, including former president Maury Cox, who have left the fold. -- DON'T DOWNLOAD FILES FROM STRANGERS! After months and months of the ain't we lucky we've got 'em "Good Times" virus hoax on AOL, the real thing seems to have appeared. AOL officials have said that a file called AOL GOLD or "install.exe" is circulating both via AOL and the Internet. While reading the mail message itself causes no harm, downloading the file and executing it could wipe your hard drive. -- I'M SCHEDULED to be the guest in ABC's Friday@4ET, on Friday, December 1. If you couldn't guess, it will be at 4PM ET in the ABC BETA Cyberplex on America Online. Keyword: ABCBETA . I hope to see some of you there! -- See you the week after next week! Happy Thanksgiving! Stock Watch =========== All hail Netscape & not a bad week for Mr. Sidgemore and the gang at UUNET. New this week: Sun Microsystems, Oracle . This Last 52 52 Week's Week's Week Week Company Ticker Close Close High Low ------- ------ ------ ------ ------- ------- @Net Index IIX $245.34 $255.31 $259.85 $185.76 America Online AMER $78.25 $81.63 $88.50 $16.69 Apple AAPL $40.13 $39.75 $50.94 $33.63 AT&T T $65.38 $63.00 $66.38 $47.25 Bolt,Beranek & Newman BBN $36.00 $38.50 $40.00 $12.63 FTP Software FTPS $30.13 $33.00 $35.50 $20.25 General Elec. GE $67.00 $65.63 $67.00 $45.38 H&R Block HRB $46.63 $46.63 $47.75 $33.00 IBM IBM $95.13 $97.38 $114.63 $68.00 MCI MCIC $26.13 $25.38 $27.13 $17.25 Mecklermedia Corp. MECK $12.88 $16.00 $24.38 $ 2.13 Microsoft MSFT $87.38 $96.88 $109.25 $58.25 Netcom NETC $79.50 $79.00 $91.50 $16.75 Netscape Comm. Corp NSCP $110.50 $97.50 $110.50 $45.75 NetManage NETM $23.13 $22.75 $27.25 $12.25 News Corp. NWS $19.38 $19.25 $25.13 $14.38 Oracle Corp. ORCL $48.13 $ $48.25 $24.66 Performance Syst. Intl PSIX $20.50 $20.81 $25.50 $12.00 Sears S $39.38 $38.63 $40.00 $21.50 Spyglass Inc. SPYG $100.50 $92.00 $100.50 $26.50 Sun Microsystems SUNW $87.50 $ $94.75 $29.88 UUNET Technologies UUNT $91.50 $72.50 $91.50 $21.75 Disclaimer ========== I began writing this newsletter in September 1994, at the time I was working for a technology company that is now owned by MCI. In March, I began working for International Business Machines Corporation. As of July, my management has agreed to allow me to do some work on the newsletter during business hours (probably about 6-8 hours a week). I speak for myself and not for IBM. Subscription Information ======================== To subscribe to this newsletter by e-mail: Send an e-mail message to: LISTSERV@PEACH.EASE.LSOFT.COM In the BODY of the message type: SUBSCRIBE ONLINE-L FIRSTNAME LASTNAME Example: Subscribe Online-L Robert Seidman If you wish to remove yourself from this mailing list, send a message to: LISTSERV@PEACH.EASE.LSOFT.COM and in the body of the message type: SIGNOFF ONLINE-L . A Web version of the newsletter is available at: <http://www.clark.net/pub/robert>.