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AOL Fight Narrows To Two Players
BucksCountyCycleGeek writes "Now that Yahoo! has dropped out of the race to control AOL, the field of contenders has narrowed to Microsoft and Google. While antitrust issues continue to cloud Microsoft's bid, it is getting pretty clear that AOL wants payment in cash and not Internet stock. While Google has worked with AOL in the past, Microsoft's resources dwarf them for the moment." From the CNN/Money article: "Time Warner accepted AOL's stock when the old line media company agreed in 2000 to be purchased by the Internet service provider, a deal that proved a disaster for Time Warner's stock value. Yahoo! executives also had concerns about the valuation Time Warner was seeking and possible difficulties integrating the two businesses after any deal, a person close to Yahoo! told the paper."
AOL seems rooted in two old-fashioned categories:
1. "The Internet is the web," whoever makes the content wins (I call it the super BBS text file repository)
2. "The Internet is about connecting people together through my rose-colored lenses."
Both business markets are not ally valid anymore. Smaller ISPs seem to gain users by not making themselves visible as the middleman. The more you've noticed your ISP, the more I bet you've been frustrated.
Creating web content is better performed by billions of people than by dozens. CmdrTaco edits an article, but people come here for the +5'd comments. CmdrTaco couldn't get many +5's on his own (maybe -1 Redundants).
The future, to me, is how to collect all those billions of opinions and creations and make it specifically friendly to every individual user.
Google is heading in the correct direction. I let most of my domain names lapse because of Google. Yet they're still not there yet.
The ultimate web company has to be able to give you what you want, immediately, but also correctly give you items you need even if you didn't realize you needed them.
*Targeted ads you really want to see.
*Content that may be different than what you're used to, but still informative or useful to you.
*Access to information by only knowing some vague part of it. Find that TV show from a line or two. Find that song or book the same way.
*Compensate content creators somehow.
AOL is none of these things. They're an online newspaper and amusement park. *Yawn* I wouldn't pay $5 for them.
Plus, how many people "hate" the name over their junk mail and bad cancellation policy?
As for Time Warner stock, would you want a part of Time? Warner? Maybe in 1985.
google and aol? anyone else think thats an odd combo...and fairly frightening?
Bottles.
M$: I want AOL
Google: Me Too!
"goodbye and hello, as always" ~Prince Corwin, from Zelazny's Amber series
to have a growing conglomerate ... despite still being profitable it's a dead-end for any potential buyers, the main thing they have going for them aside from their web portal stuff like AIM is a dwindling user base of 56k users when they could've been an expanding userbase of broadband users ... I guess whoever buys them gets millions of $ in profit per month but if the price is something ridiculous like several years of profit at the current rates you gotto wonder how it can be made to grow enough to justify a high price.
I'm not surprised. To me, that says that AOL thinks that buying AOL is going to hurt your stock. If it were a good move, they'd want a piece of the buying company's stock, which would rise after having made such a great acquisition.
Of course, that's not my professional opinion - I Am Not A Stock Broker.
Any chance Google is pursuing AOL just to make sure MS buys them? You know...give'em enough rope and all.
If someone has an AOL account, it means that they don't have a friend in the computer business, in my opinion. Local ISPs almost always give better service, and don't abuse the customer with advertisements. AOL's business depends on customer ignorance, and computer users are rapidly becoming more knowledgeable.
I hope buying AOL is not Google's first huge mistake. Google should offer no more than $6.50 and free soft drinks.
Recently, someone associated with Time Warner (Parsons?) has been putting out a lot of baloney about the value of AOL.
My money's on MS + AOL. I've been saying they'll merge for years. Despite their hatred for each other, they're quite similar. (Maybe that's WHY they've been such fierce competitors?) They both appeal to technologically-illiterate end-users. They both employ nasty business tactics (AOL's usually lean more towards "annoying" on one hand and "shady" on the other; MS's can better be described as "illegal" and "brutal"; all different shades of evil but all evil!). Neither wants to educate their customers. Both want to build 'walled gardens' around the Internet to some degree. And so on.
With spending like this, exactly what are "conservatives" conserving?
If Google ends up owning part of AOL, I would expect them to integrate AIM with Google Talk. Imagine millions of AIM users being forcibly converted to Jabber... *drool*
Google's "Product" is targeted ads (Though they do offer a handful of other services). If Google gets AIM, with millions of users, that is millions of eyeballs looking at their ads for extended periods of time. I wouldn't be surprized (but maybe a bit spooked) if they would run your messages through AdSense every so often.
Microsoft, on the other hand, well... apart from bolstering their MSN messenger network and traffic through their web services (not a source of revenue for them, really), I can't think of any direct benefit for them.
And remember that whoever gets AIM also gets ICQ.
=Smidge=
I have road runner service. If you go out to the office to sign up for a cable modem, you'd never know that the same company owns AOL. They don't push it at all.
I'm a single guy with no kids, and for me, AOL doesn't have much to offer. But I know quite a few parents with small kids who are looking for good parental controls. If Time Warner used AOL's parental controls, enforced them through the cable modem, and pushed hard to make a kid/family friendly service, I'm sure they'd do very well with it.
Every parent of a 10 year old I know is convinced of two things about the net. First, their kids *need* it to be competitive in school. And second of all, it's a terribly dangerous and predatory place for kids. No one has a good answer for those parents. The best people can do is say, "Put the computer in the family room, so you can watch what they're doing."
AOL and Time Warner were in an ideal position to deliver a solution for these people. I don't know why they didn't -- it looks like a case of corporate infighting and stupid internal turf wars, but that's pure speculation on my part.
If either Microsoft or Google buy out AOL, we could quite easily see a closer coordination of IM systems. With Microsoft and Yahoo agreeing to link up their systems not so long ago, this could easily give Microsoft a vantage point over Google if they were to consolidate MSN+Yahoo+AIM.
The comments regarding the worthlessness of AOL's content and services are spot-on, but besides the point. What AOL offers Google is a horde of users. All those eyes can be redirected to Google and their lucrative search and ad system. AOL has been pushing its users outside of its comfortable womb for the past couple of years, and Google can accelerate that process significantly while still offering a familiar subset of services. Google has the vision and the resources to remodel whatever AOL services it deems worthy and, in the case of something like AIM and AOL Mail, fold the service into their similar offerings (Google Talk and GMail). Personally, this would be a great buy - AOL's an ugly chicken, but its drumsticks are delicious.
1) Google holds on to AOL, but overpays and/or issues stock to pay. This causes the stock price to go down because of dilution.
2) Microsoft buys AOL and denies Google the eyeballs. This also causes Google's stock price to go down.
My read on the situation is that closer ties between MSFT and Time-Warner can only benefit both of them - it creates a diversified media/technology conglomerate which not only has the content but the technology to deliver it with all sorts of DRM. A nightmare for the Slashdot crowd, but a dream come true for RIAA-types.
Google's only advantage here is that they're the incumbent player - it's significant, and there are obstacles in front of Microsoft. However it's hard for AOL to turn away from the green stuff.
The providers know that if all it comes down to is an invisible pipe to the Internet, all they can compete on is price and downtime (and in many areas, downtime is hard for them to control). That model makes broadband access a commodity. You may already believe that Internet access is a commodity, but propagating that view is not in the best interests of the broadband providers right now.
Sorry, but Taco doesn't edit anything that I've seen. He posts a link to an article to the homepage. The editors at those respective publications did the editing. Though I, too, visit Slashdot for the +5 comments, I would argue that none of those comments could exist without the far-smaller number of people who did the actual production of the original content (although, admittedly, I am biased.) I tend to agree here, but all this says is that AOL has done a piss-poor job of its original mission, which was creating value for the end user by providing original content through its own tightly controlled channels. AOL's business model should be that of XM Satellite radio. XM is a delivery medium, insofar as it repackages existing content from people like Bill O'Reilly, but it also generates its own original content and it will go further in this direction as time goes on. At its heart, XM is a content company. AOL could have been the same; it could have been the online equivalent of HBO, but for whatever reason it's mostly blown it -- probably because it set its sights too low. It went for the mass market, every-household-is-an-online-consumer market, when it should have realized 1.) that it needed to get on the Web much sooner; and 2.) that the most valuable customers for Web-based services were technically-savvy people, and that they needed to capture that audience before they trying to woo grandma and her digital camera. I don't know. Without getting into specifics, because I don't have them on-hand, from what I've heard Time Warner is pretty much on track as far as where a big media company in America should be right now. There are definitely rough seas ahead for that business, but if anybody's on the ball it's Time Warner.Breakfast served all day!
AOL funds Mozilla developers, so if MS bought AOL, I can only imagine what would happen to them.
First let me state that I believe MS will win against Google. Also let's point out that AOL accounts for 12% of Google's annual revenue, and that is nothing to laugh at ($380million). The NY Times has also reported that MS is the front runner. http://www.newratings.com/analyst_news/article_110 3765.html
So what is at stake and why is AOL so important? Well take a look at these stats (as reported by the NY Times the nation's paper of record).
September rankings
1. Yahoo: 123 million users
2. Time Warner (AOL and related sites): 119 million
3. MSN and other Microsoft sites: 114 million
4. Google: 87.6 million
Combine AOL and MSN and they almost double yahoo and are almost 3 times Google! Advertisers will KILL to get their ads in front at that number of possible people. As far as Google's superior tools... they aren't THAT much better. 87.6million vs 233million is a big difference and lets face it MS has very good developers, lots of resources, and will catch up. They always do.
Now where is the growth? Well, the real crown jewel is getting access to Time Warner's arsenal of media content. Most people expected the next big wave to be media, and AOL is the gateway to one of the biggest deposits on the planet.
The winner of this battle wins more then just bragging rights. If MS beats out Google, it's going to be a HUGE hit for them financially. It's more then just loosing their 12% of revenue each year. It will also mean they will loose their premier advertising title. People will start throwing money at advertising with MSN strictly for the numbers, and that will result in more losses for both yahoo and Google.
This is much more then a warning shot across Google's bow. I see this as a precise incision, not at Google's hear, more like cutting off one of Google's legs. They can live without it, but in a race you do best with both legs.
Reading the comments here, it's not clear to me that people get why AOL is suddenly so valuable and has multiple suitors. It isn't the dialup business. AOL has about 20M customers and that number is falling month over month. So nobody is actually expecting to build a business around dialup (although quite a cash source currently). What Microsoft, Yahoo, and Google want(ed) is:
- AOL's immense demographic information and purchase history etc on a large segment of the population. This is much much more valuable to MSFT and GOOG because they don't currently have much of this.
- AOL's content network. AOL has a large content network that garner substantial number of impressions every day. You might not like their content, but a great number of people do. This is valuable to MSFT, GOOG, and YHOO.
Why is all this suddenly so important? Check what has been driving Internet revenues over the last 3 years (especially Google): advertising. Search engine advertising is beginning to top out in the US, there is only so much more growth to be had there before it flattens out. The next surge must come from advertising on content networks (Adsense, Yahoo Publishing Network etc). Suddenly AOL looks like a big prize: lots of impressions, captive audience and tons of fine-grained consumer data.
Yahoo was never a serious contender in this race, they don't have the kind of valuations that AOL would want, and they have a vast repository of consumer information already themselves so the only value to buying AOL would be to ensure that Google and Microsoft don't get their hands on it.
The logic that you can buy percentages in every part of the computer market is why HP had that disaster with Compaq. Microsoft will be able to buy their way to the top for a little while, but there is a big world out that that never grew up on AOL 56k dial-up. AOL is on the decline- even with MS backing.