[Marketing-Public]Wall Street Journal Article

Albert Ren marketing-public at mozilla.org
Tue, 14 Oct 2003 12:26:15 -0400


Sure would be nice if we could get them to bundle Gecko with this new 
service :)  Alas, I fear they'll give everybody an AOL bundled IE, which 
would just be some sick twisted irony I fear...

Albert

Jay Garcia wrote:

>Sorry to post the whole thing but I don't have the link.
>
>Any impact on Mozilla, F'bird, T'bird ??? Thoughts anyone?
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>AOL to Launch Dial-Up Service
>Called Netscape at a Discount
>
>By JULIA ANGWIN
>Staff Reporter of THE WALL STREET JOURNAL
>
>In the face of increasingly aggressive price competition, AOL Time
>Warner Inc.'s America Online is quietly readying another dial-up
>Internet service that will be cheaper than its flagship $23.90-a-month
>service, according to people familiar with the situation.
>
>To protect the America Online brand name, the new service will carry the
>Netscape name, and it won't offer as many features as America Online's
>premium service, these people say.
>
>For instance, Netscape users will get only one e-mail address instead of
>the seven offered by America Online, plus a home page that includes news
>and a Google search function. The Netscape service, which is expected to
>cost $9.95 a month and will likely be launched early next year, is being
>referred to as "raw Internet access" by some executives at the company's
>Dulles, Va., headquarters.
>
>By making a foray into the discount arena, America Online is making a
>classic consumer marketing move: creating a subpremium brand that runs
>the risk of cannibalizing its core business but potentially fends off
>rivals from snapping up its customers. Over the years, a host of
>marketers -- from Delta Airlines with its Song carrier to Gap with its
>Old Navy chain -- have followed a similar strategy.
>
>The move highlights the intensity of the competition facing America
>Online, which is increasingly finding it difficult to justify the high
>price of its dial-up service. AOL lost nearly two million subscribers
>world-wide in the year ending June 30, 2003.
>
>A raging price war among providers of high-speed broadband services,
>which offer Internet access at speeds that can be more than 20 times
>faster than America Online's dial-up connections, has driven down prices
>at the top end of the market. Last month, the second-largest regional
>Bell company, SBC Communications Inc., dropped the price for its
>digital-subscriber-line service for some subscribers to $26.95 a month
>from $29.95. The largest phone company, Verizon Communications Inc.,
>lowered its price for DSL to as low as $29.95 a month from $39.95 for
>certain telephone subscribers earlier this year. That means many people
>can get broadband from their local phone company for just a few dollars
>more than the price of AOL's slower dial-up connections.
>
>At the same time, competitors offering dial-up Internet service for
>$9.95-a-month have been nipping at America Online's heels. In the first
>six months of this year, subscribers to discount Internet service
>provider United Online Inc. rose 17% to 2.6 million, while subscribers
>to America Online's services fell 6% to 33.3 million world-wide. Rival
>EarthLink Inc. has stepped up the television advertising campaign for
>its $10.95-a-month PeoplePC Internet service in the past three months.
>Julian King, vice president of marketing for PeoplePC, says EarthLink
>believes that discount services will eventually comprise 30% of the
>Internet access market.
>
>Even though the dial-up market is shrinking, most Americans still use
>dial-up service, and the business is enormously profitable for America
>Online, which needs the cash from that business to fund its turnaround
>effort.
>
>America Online's main strategy for keeping its subscribers from
>defecting has been to add more exclusive features to its flagship
>$23.90-a-month service, such as junk e-mail filters and sneak peeks at
>new movies and TV shows. Another strategy has been providing access to
>online magazines such as People and Entertainment Weekly owned by its
>parent, which on Thursday will officially revert to the Time Warner Inc.
>name and the TWX stock symbol it used prior to the 2001 merger with
>America Online.
>
>Efforts to craft a discount strategy have been under way for some time,
>with the company quietly testing a product called "CompuServe Basic" for
>$9.95 a month. It offered the service to customers who called up and
>said they wanted to quit because the price was too high. People familiar
>with the situation say the product was successful but research showed
>that customers preferred Netscape to the CompuServe brand. CompuServe
>was a pioneering Internet service that was bought by America Online in 1998.
>
>Netscape Communications, which was bought by America Online in 1999,
>created one of the first pieces of software that allowed consumers to
>surf the Web. The company lost its technological lead in the
>Web-browsing software market to Microsoft Corp. and fought a
>well-publicized legal battle against Microsoft that was settled out of
>court this year.
>
>"The brand still has incredibly strong awareness, very strong positive
>attributes with consumers," says an AOL executive familiar with the
>situation. "We decided to go with it because the name recognition and
>brand awareness gets us down the road so we don't have to do as much
>advertising up front."
>
>America Online is also hoping that using the Netscape brand will help it
>avoid cannibalizing its own customers. According to people familiar with
>the situation, the online unit was encouraged by the CompuServe test,
>which showed that customers who signed up for the discount service would
>have otherwise quit the service. "The AOL brand is not impacted by this
>at all," the executive says.
>
>Write to Julia Angwin at julia.angwin@wsj.com
>
>Updated October 14, 2003 9:53 a.m.
>
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