AOL: 4.0 and still number one

With America Online nearing a major launch in Australia - and not ruling out doing the business here at some point, some of you might wonder exactly how AOL got to be the world's largest ISP and online service, with 13 million customers. By massive marketing efforts like the famous AOL CD-ROM blitz, is how. Beginning this week, Americans are liable to be receiving an AOL 4.0 disc in their mailboxes -- or cereal boxes - at banks, or even at the gas station.

America Online (AOL) is about two months into the release of version 4.0. That means the famous AOL CD-ROM blitz is on its way. Sometime after today, Sept. 28, you'll probably be receiving an AOL 4.0 disc in your mailbox -- or cereal box, at your bank, or even at the gas station. Maybe, if you're really lucky, it'll be your Cracker Jack prize.

Even though consumers often complain about AOL's bombardment tactics, with more than 13 million customers it remains the most popular Internet service provider in the world. About 7 million people so far have downloaded version 4.0 -- many of whom are new users -- and millions more are expected to install the program via CD-ROM. So how does America Online maintain its market dominance in a world where Internet services, software companies, and Web sites come and go with the flip of a switch?

"No one else has figured out how to sell the Internet to people," says Barry Parr, director of e-commerce strategies at International Data (IDC), an analyst group. "It fills a need and that can't be ignored." That need is all about simplicity and convenience. People who don't really want to think too much about connecting to the Internet go to AOL, whether they're new users or seasoned surfers. About half of all new Internet users sign up with AOL, Parr says.

And it's no wonder. AOL offers Internet access, e-mail, instant messaging, chat, bulletin boards, and an array of Web and media content all in one place. New e-mail features include the ability to attach multiple files and insert pictures in the body of a message, an automatic spelling checker, and new fonts and colors. The service's new toolbar is far more intuitive than the last version's, and navigation is aided by the incorporation of Internet Explorer 4.01 and its drop-down History list and address box.

On the content front, version 4.0 includes four new Channels: Families, WorkPlace, Interests, and Lifestyles. Recently, AOL announced the addition of a new Women's Channel with content provided by Hearst HomeArts, iVillage, Electra, Thrive, and Moms Online. In addition, an Election 98 section has been added to the News Channel. Several recent deals have brought new content to AOL, including a partnership with Salon magazine. Under the agreement, Salon gets premium placement in the Influence and Lifestyles Channels. Articles include news headlines, feature stories, and interviews.

According to a spokesperson at AOL's technical operations in Arizona, version 4.0 is far more stable and easier to use than the previous version. "We've had about a fourth of the calls -- to technical support -- that we have with 3.0," he says. "Many of those calls are about how to install 4.0 and where to find information since it's a whole new interface."

Despite the mass consumerism of America Online, it may not necessarily be the best product out there. "I think you'd be hard pressed to find anything on AOL that isn't also on the Web, maybe even in a better format," says Parr. For example, you could get onto the Web through a cheaper Internet service provider and use a portal site like Yahoo or Excite to access information. At the portal site you'd be able to use instant messaging and chat services, two interactive products that AOL pioneered. You can even sign up for a free e-mail account at most portals.

You might be wondering why people use AOL at all if they could find the same services for less on the Web. The answer is support. In August, just as the number of daily Web page hits on AOL reached a billion, the service launched a new operations center. Called TeraPOP, the center connects users to other networks directly so they don't have to waste time traveling through multiple exchange points. According to AOL, the TeraPOP can move more than 4,000 megabits of information to and from the Internet each second.

The real test of AOL's backbone came when the Starr report was released on the Internet. According to a spokesperson in technical operations, the report drove a lot of traffic to AOL, but the huge increase in visitors did not adversely affect servers and there was no real delay in getting to the file. This was because AOL was able to house the Starr report on its own FTP site, which was restricted to AOL customers. If you tried to access the report on a Web site, you probably had a long wait.

For users not really concerned with the technical nitty-gritty behind AOL's success, the bottom line is still convenience. And even though it might not be the cheapest or most unique service on the Web, the numbers show that it seems to be what people want.

"It's like the difference between driving an automatic transmission and a stick shift," says Parr. "It may not be a superior driving experience, but it's clear that it really works for people."

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