AOL U-turn: Web 2.0, free and broadband services
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AOL is a ’single-minded’ company. When it adopts a concept, it’s doing it with the heart. No fake, only steady resolutions. And AOL clearly say it’s embracing Web 2.0, meaning that it’s going all free web-based services, user generated contents and shared application improvement, ad supported business model, and a vast majority of customers that connect to the Web through their broadband Internet access.
The today’s announced roadmap was partially unveiled these last weeks. It started with opening its AIM source code to developers, followed by some bold moves into the VoIP market (free phone calls and numbers), repositioned Netscape as a Digg killer, and more recently, rumored to launch a vast promotion campaign whose objective is to lead 8 million dial-up or new subscribers to broadband users.
Meanwhile, it looks like AOL is giving away its roots, what makes its success. Forget the dial-up customer. Forget the family who wants to discover the Net. It’s time to go trendy and finally, to recognize that Web 2.0 is the real Web. Good or bad? Time will tell, indeed. But here’s why making AOL 2.0 become a success won’t really be that easy:
- Web 2.0 services are usually for 15- to 35-years-old tech savvy users, which required ultra-reactivity and intuition. AOL still yields in the traditional Web portal, with close source applications and top-to-bottom adjustment.
- Giving away services for free is cool. But if it doesn’t work, AOL couldn’t decently flip back to a paid subscription model, unless loosing again some portions of its user base.
- Generating revenues from ads is uncertain and cyclic. Currently, AOL ads revenues are growing, which is good to start a major overhaul. But AOL has to monitor careful its repositioning operation, to finish it before sponsors chill their ad investments.
- Many of AOL services have already competitors. Will AOL Mail be nicer than GMail with integrated GTalk?
AOL isn’t the first major corporation to U-turn. IBM did it in the 80s-90s, repositioning itself as a business service provider and not anymore as a server manufacturer. But has AOL enough resources to reiterate such a call…
UPDATE, July 12, 2006 ― The Wall Street Journal (via ars technica) evaluates what free will cost to AOL. Over the next three years, the company is expected to loose $1 billion. A substantive bleeding. So to balance profits and evolution, whether AOL’s advertising revenues inflate by 30% for the same period, whether AOL gain cargoes of new members loyal to its free services, which doesn’t seem the best scenario unless AOL rolls out the YouTube or MySpace sharpshooters.
Jul 10, 2006 | By Nuno
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