| BUSINESSWEEK ONLINE : JULY 12, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- INT'L COVER STORY
AOL's Case: "Consistent and Unwavering...Nimble and Flexible" (int'l edition) America Online Chairman and CEO Stephen M. Case has successfully navigated the shifting shoals of the Internet business. The $2.6 billion company is one of the first Net ventures to find a profitable business model based on a combination of subscription fees, online advertising income, and electronic commerce revenues. With 17 million subscribers, the online service holds sway over half of America's Internet users. With that market power, AOL is launching into the next generation of Internet services, including the evolution of non-PC devices and broadband, high-speed Net access. Case recently discussed AOL's next moves with Business Week Washington Correspondent Cathy Yang. Here are edited excerpts of their conversation: Q: What's top of mind as you lead your company into the next century? What are your top priorities now? A: We think it's a marathon and not a sprint. There are no specific things we're now obsessing about. It's a continuation of what we've been doing for the last 15 years. It's important to be consistent and unwavering about how to pursue a strategic decision while being nimble and flexible in your tactics. In the last couple of years, we've been able to go with the flow with new technologies emerging and consumer preferences changing, and stay true to our core mission for the medium being pervasive. We focused on making AOL easy-to-use, affordable, and useful, to get more people connected and using it more habitually to drive electronic commerce. Q: Aren't AOL Anywhere and broadband initiatives your newest focuses? A: They are just more expanded initiatives. Even when we went public seven years ago, we talked about a vision of multiple access providers -- wireless, wireline, narrowband, or broadband. In the last few years, the opportunities to commercialize these devices have increased because people want to be habitually connected, and there's more demand for these devices. These technologies are ready for prime time to create a compelling experience on TV and pocket devices. So the notion that was embedded in our thinking for sometime is now coming to life. The same thing for broadband. Our first cable-modem test was five years ago. In broadband, we're supporting a wide array of broadband technology, not just one -- telephony, cable, wireless. We start this summer with DSL [digital subscriber linel and pick up that momentum. What is most lacking with DSL is a significant consumer marketing effort. Because we have millions of members, we're the most likely market to tap for broadband. We can drive DSL adoption rapidly. Q: AOL has been a successful narrowband, dialup service. What advantages and disadvantages do you have in striking the relationships you need with those who will provide the delivery vehicles of the future -- whether it's broadband Internet access or television? A: The big advantage is we are the leading brand with far and away the largest audience. The market for any new services are existing users, and many are on AOL. We have emerged as a leading brand. For people who are comfortable using AOL, they want AOL to be on their TV or pocket device. They don't want to have to create a new E-mail address for that device, a new stock portfolio, or a new tracking service. This fuels demand for AOL Anywhere. People want services available to them pervasively, not just on one device. The difficulty has been, as the Internet takes hold, it's creating a paradigm shift in related industries, including TV, media, consumer electronics. Companies in those industries are rethinking the businesses they're in, thinking about where they are in the value chain. We can help work with these companies in the future. The roles [between industries] are blurring. People think about PCs, as prices drop dramatically, more like cell phones. As more devices emerge that bring PC-like capabilities to cell phones, that's convergence. What's been talked about is now happening on Internet time. The biggest difficulty is to bring along as many partners as we can so that together we can build a bright future. The unsettledness of it makes it hard for them. People are unsure about making decisions. It's not a criticism. If I were in their shoes, I'd wrestle with the same issues. Q: Are you referring to the cable industry? A: I'm talking about everyone. Cable is a little different. They're comfortable with the cable model that they've developed with end-to-end integration [from set-top modem to programming]. The Internet model is more free-form, let the consumer decide. As cable companies use their infrastructure to deliver the Internet, they have to learn the DNA of the Internet. Some are learning it faster than others. Q: What management changes have you made to stay nimble and responsive to market opportunites? A: For us, it's been a focus for a number of years. We've grown rapidly. Five years ago, we were a few hundred people. Now, we're a few thousand. We've made acquisitions, we've launched globally, we have multiple brands. Throughout the company, we've enhanced the management team. Half of the people who report to me directly are new in the last couple of years -- Mike Kelly, our CFO; Marc Andreessen, our new chief technology officer; Bob Pittman [president]; Ken Novak became our full-time vice-chairman last year; and George Vradenberg [who came in as general counsel, now senior vice-president]. The management team has really undergone significant change because we have grown rapidly and acquired companies that brought terrific management. We're quite aggressive in recruiting the best minds in the world, not necessarily in our business, but from other businesse. We want all the Michael Jordans working for AOL. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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