CNET points out that AOL Access faces a crunch. Dial up users are converting to broadband via local cable companies already, thus trickling away. Second is that local cable companies are grabbing a lot of the early switchers to broadband, meaning AOL is either fighting to keep the customers it has and switch them to broadband with a slight loss in profit, or trying hard to woo existing customers away who aren't interested in broadband because they're reluctant to change.
Now comes a big rumor via Valleywag that AOL's Access division is going to make some massive cuts come in August to early October of this year due the lackluster broadband performance.
A slightly bombastic email tip to Valleywag claims 75% layoffs due to the fact that the economics of AOL Broadband don't seem to work. The tipster theorizes that AOL will either have to figure out some way to make AOL free to compete with the likes of NetZero and go ad supported, or get narrowband cost down.
This sits firmly in unverified rumor territory, but it does sum up the difficulties being faced by AOL Access at the least. At the most it could indicate some shakeups ahead.
This sits firmly in unverified rumor territory, but it does sum up the difficulties being faced by AOL Access at the least. At the most it could indicate some shakeups ahead.
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Reader Comments (Page 1 of 1)
6-28-2006 @ 6:32PM
Mark R said...
AOL has tons of problems biggest is that its subscribers get the highest membership fees in the industry. You can pay the $30 or go to AOL.com and get it for free. Why pay when you can get it for free?
As for the narrow minded folks at AOL broadband why should I pay an extra $30 (that's $60 a month) I can blog stocks just fine with my AOL dial up or I can pay $50 for comcast and get a free AOL account and not have to worry about shifty AOL billing practices.
Unless I needed to download lots of P*rn why do I need a high speed connection anyhow? If it takes 3 seconds to open a web page or a tenth of a second it still takes the same time to read the page wile my connection is idle.
6-28-2006 @ 10:42PM
GG said...
the survival of aol depends on content. As the conversion of tv and internet merge content will be king on the internet. This will drive adds to aol content pages etc. For now they will have growing pains. Aol will have to position itself intelligently in the future for this to become a reality.
6-29-2006 @ 12:46AM
Frodo Baggins said...
yeah it sucks for our brethren who are stuck in access most of them will surely be gone soon the rumors are true, a new business model is in the works and their survival is highly questionable
but taking aol free, downsizing the company to focus on content AND the clients, tools and experiences which are the only remaining viable value proposition aol has to offer is virtually a no brainer
of course being a no brainer means that the chances parsons and the rest of twx executive management gets on board are probably low time warner's strategy is unabashedly to harvest the last of the cashflow, eat the remains of the golden goose and perhaps make a few down comforters with the feathers i've come to believe that time warner executive management is actually taking some grim glee in choking the final breaths out of the albatross that has hung around their necks lo these many years
if time warner doesn't completely shit on the new business model, they are likely to ruin it by insisting on the worst possible implementation one rumored scenario is that aol will only convert broadband users to free status when a member calls to cancel what a schmuck policy that would be the biggest loss (other than the goodwill of our remaining victims) would be the opportunity for a powerful new marketing campaign based around the message "aol is free" (free from spam, free from viruses, free to access anywhere, free to anyone, free free set them free - sting hooting the chorus of his hit from dream of the blue turtles in the background
the next question is who gets stuck with the bill? does time warner spin off aol llc with google and allow the new entity to take the half billion dollar hit to revenue on their books or can aol stick time warner with a one of those special one time write offs that analysts are so able to so glibly ignore
the new business model will work aol has in ad.com the self service third party revenue engine for display advertising that google has built for text links it may be that in the future that the display advertising is worth even more than googles text link engine together of course google and aol seem like an unstoppable juggernaut
the final piece of the puzzle for really fixing aol is cleaning house with senior management even if miller leonsis and all of their cronies are able to retire on the ipo money from the new entity there is a total dearth of competent management in the ranks of our current vps perhaps google can lend us a management team -- although the organizational and operational mess at aol needs a team with history as well as business and technological savvy just holding the place together through a transition this noisy will be no mean feat aol continues to gout talent at a frightening pace
if it is thy eye that offends the, then pluck it out sorry access, you're offensive at the moment perhaps more of you than one might imagine can be preserved as the dial up and premium customer support franchises in a digital services organization that is dying to find something, anything people will pay aol for of course if that dumbass mckinley isn't ousted in the process, you don't wanna go there either
6-29-2006 @ 2:45PM
Gimli said...
Frodo, you are not an AOL employee despite the token mention of "brethren in Access".
The business model at AOL will change, as it has almost every two years. Remember that no one thought Unlimited access for a monthly fee was a good idea back in 95. It turned out to be THE idea for the NB dialup business. Who is to say that what is to be revealed in the 3rd QTR will be "as crazy as" unlimited dialup was or not. I have confidence in the future of AOL. I am an employee.
As to September or October, I say that your posting resembles, closely, the much referred to entry on Valley Wag. It sounds to me that a half informed, halfling has gone off half cocked. September and October will come as surely as they do every year. However, 75% layoffs in Access is ludicrous beyond the pale. Dialup is still profitable for AOL, even though it's in decline. That said, laying off 75% of the people who support that product and the billyuns of $ revenue defies feduciary responsibility. Even executing the sale of that division to some other company couldn't happen within the close of the year, if the FTC had anything to say about it ... which they would.
So lay off the lay off talk. There will be more layoffs. That's part of business. Be patient and wait for the surprise of September.