America Offline?


The news that Sears and H&R Block are divesting
themselves of their shares in Prodigy and Compuserve 
respectively should come as no surprise. (Sears indicated 
that it "remained a retailer first and foremost", while
Block said it "wanted to focus on its tax-return 
business". Yes - well...)

Meanwhile, News Corp - owned by media-mega-mogul 
Rupert Murdoch has dumped Delphi; AT&T has shelved the 
Interchange Network; GE has unloaded Genie; Apple is 
"re-evaluating" its Web equivalent of urban blight, eWorld;
and Microsoft is redirecting its Network efforts towards
Web-accessible content.

So it looks as if  AOL will be left to pick up the slack, 
increasing its stranglehold on the WebWimp market.

But for how long?

For the last two months,  FeNiX has been privately 
advising shareholders in AOL and other on-line 
services to bail out while the going is good. 
(See  Avian 2, dated October 1995). The passage of 
the Telecommunications Act has merely hastened the inevitable.

As the realization by the great unWired that Internet 
Access is available cheaper - and, incidentally, with no 
restrictions - through a local ISP (Internet Service 
Provider), so AOL's customer base will be eroded. With 
one of the most abysmal Web browsers around, AOL 
customers who manage to sample the Web through a local 
ISP/Netscape combination are, in my experience, almost 
universal in their dumping of AOL.

Who, after all, needs the AOL version of WIRED when the 
REAL THING is available with just a few mouse clicks? 
(WIRED + AOL??? Whoever woudda thunk it?)

No, Sears et al don't know anything we don't. It's just the 
big bucks are coming to the realization that the term 
"on-line service" is oxymoronic.

As Web access becomes cheaper and easier (through a 
combination of competition and easier-to-use software), 
so AOL's customer base will erode. Of course, there will 
be a core of Tiffani454's and DickTwelve's, intent on 
virtual adolescent fumbling. But that core will shrink as 
the audience matures and younger, more sophisticated  
people take to the Web direct.

AOL will experience a honeymoon period as it sweeps up 
the demographic crumbs from the on-line service table. 
Independent ISP's will be in for a slightly longer 
honeymoon as customers discover the delights of 
unfettered Web access (and no annoying graphic downloads
on their dime). 

But not for long. FeNiX puts the era of cheap Internet 
access at about six months. That is, until truly 
independent ISP's start feeling the heat from the 
combination cable/telecom/satellite conglomerates that 
the Act will spawn.

Our advice? Know when to hold, and know when to fold... 


2/22/96
© 1996 John Blower