By: Vileta PinkhamBy: Vileta Pinkham

&&

Kelley HamrickKelley Hamrick

America Online’s Mission America Online’s Mission StatementStatement““To lead the development of a new To lead the development of a new

interactive medium that eliminates interactive medium that eliminates traditional boundaries between people traditional boundaries between people and places to create a new kind of and places to create a new kind of interactive global community that holds interactive global community that holds the potential to change the way peoplethe potential to change the way people obtain information, communicate with obtain information, communicate with one another, buy products and services, one another, buy products and services, and learn.”and learn.”

AOL’s Company StrategyAOL’s Company Strategy

To continue investment in the To continue investment in the growth of its subscriber base, growth of its subscriber base, pursue related business pursue related business opportunities often through joint opportunities often through joint ventures and acquisitions, provide ventures and acquisitions, provide a full range of interactive services, a full range of interactive services, and maintain technological and maintain technological flexibility.flexibility.

AOL’s Rapid GrowthAOL’s Rapid Growth

• December 1996, AOL was the easiest, December 1996, AOL was the easiest, most popular and most well known most popular and most well known way to get onlineway to get online

• AOL had 8.5 million member sessions AOL had 8.5 million member sessions a daya day

• 7 million emails sent to 12 million 7 million emails sent to 12 million recipients per dayrecipients per day

• $750,000 per day in merchandise $750,000 per day in merchandise sales sales

Problems With Problems With AOLAOL

• Too many resources offered that are Too many resources offered that are not profitablenot profitable

• Hard to compete in current marketHard to compete in current market• Needs a foundation that can support Needs a foundation that can support

broadbandbroadband• Bad billing practicesBad billing practices• Flat rate feesFlat rate fees• Poor customer servicePoor customer service

StrengthsStrengths

• PersistencePersistence

• AmbitionAmbition

• Attempting to control the mediaAttempting to control the media

• Brand name recognitionBrand name recognition

• Rapid growthRapid growth

• Customer careCustomer care

• Generation of revenueGeneration of revenue

WeaknessesWeaknesses

• The opening up of their cable The opening up of their cable systems to rival internet providerssystems to rival internet providers

• Stockholder premiumStockholder premium

• Local governmentLocal government

OpportunitiesOpportunities

• MusicMusic

• EntertainmentEntertainment

• TechnologyTechnology

• broadbandbroadband

ThreatsThreats

• The introduction of broadbandThe introduction of broadband

• Highly competitive marketHighly competitive market

Company ProfileCompany Profile

AOL emerged from a firm founded in the AOL emerged from a firm founded in the early 1980’s as Control Video Corp., which early 1980’s as Control Video Corp., which aimed to create an online service that aimed to create an online service that specialized in games. specialized in games.

AOL’s Massive GrowthAOL’s Massive Growth

• AOL emphasized communication AOL emphasized communication among membersamong members– Private rooms held up to 27 people and Private rooms held up to 27 people and

created by any usercreated by any user– Conference rooms held up to 48 people Conference rooms held up to 48 people

and created with AOL’s permissionand created with AOL’s permission– Auditoriums unlimited amount of people Auditoriums unlimited amount of people

had a stage and rows of 27 people had a stage and rows of 27 people created with AOL’s permission created with AOL’s permission

Change in PricingChange in Pricing

Originally AOL charged the consumer Originally AOL charged the consumer by the hour but in 1996, AOL changed by the hour but in 1996, AOL changed to a flat rate of $19.99 and AOL’s to a flat rate of $19.99 and AOL’s customer base grew to 10 million.customer base grew to 10 million.

AOL’s connections were flooded with AOL’s connections were flooded with people trying to get on and many people trying to get on and many people cancelled their subscriptions people cancelled their subscriptions due to busy signals. due to busy signals.

Company Profile Cont’dCompany Profile Cont’d

Control video Corp failed to meet strong Control video Corp failed to meet strong competition and Apple withdrew leaving competition and Apple withdrew leaving Quantum holding software it had Quantum holding software it had developed for Applelinkdeveloped for Applelink

Quantum bounced back by offering Quantum bounced back by offering diskettes that contained America online diskettes that contained America online softwaresoftware

AOL has tried to position itself as the first AOL has tried to position itself as the first digital media companydigital media company

AOL OrganizationAOL Organization

•AOL corporationAOL corporation

•AOL networksAOL networks

•ANS accessANS access

•AOL studiosAOL studios

AOL MarketingAOL Marketing

Increase the general Increase the general visibility of AOLvisibility of AOL

Make it easy for Make it easy for customers to customers to subscribe to and subscribe to and experiment with its experiment with its servicesservices

AOL uses special AOL uses special retention packagesretention packages

AOL has been expanding into business AOL has been expanding into business to business markets through to business markets through customized network solutions provided customized network solutions provided to individual businesses and to individual businesses and professional communities and professional communities and industriesindustries

AOL User ReputationAOL User Reputation

AOL has geared towards new users of AOL has geared towards new users of the internet so their users have a the internet so their users have a reputation of not knowing much reputation of not knowing much about the internet.about the internet.

AOL User ReputationAOL User Reputation

AOL also provided its user a way to get AOL also provided its user a way to get on the Usenet bulletin board and this on the Usenet bulletin board and this was earmarked for more experienced was earmarked for more experienced and more sophisticated internet user. and more sophisticated internet user. The bulletin board was inundated with The bulletin board was inundated with requests for porn, bootlegged software requests for porn, bootlegged software and hacking information. AOL and hacking information. AOL discontinued this practice in 2005 and discontinued this practice in 2005 and directed users to log onto Google.com directed users to log onto Google.com for news groups.for news groups.

AOL User ReputationAOL User Reputation

AOL email accounts do not show the AOL email accounts do not show the person’s full name like other email person’s full name like other email accounts do so the recipient is less accounts do so the recipient is less likely to know who the mail is from likely to know who the mail is from and also AOL offered free hours and and also AOL offered free hours and internet trollers were making internet trollers were making accounts and keeping themselves accounts and keeping themselves anonymous. anonymous.

Billing DisputesBilling Disputes

• AOL faced a lot of law suits based on AOL faced a lot of law suits based on improper billing procedures after improper billing procedures after accounts had been cancelled. accounts had been cancelled.

• Class Action suit was also brought Class Action suit was also brought concerning AOL’s procedure of billing concerning AOL’s procedure of billing minutesminutes

Account CancellationAccount Cancellation

• New York Attorney General’s office received 300 New York Attorney General’s office received 300 complaints from AOL users about trying to cancel complaints from AOL users about trying to cancel their accounts. AOL would reward their customer their accounts. AOL would reward their customer service reps to retain consumers and even when service reps to retain consumers and even when the consumer thought they had been cancelled, the consumer thought they had been cancelled, they would keep getting billed. they would keep getting billed.

• On August 25On August 25thth, , 2005, AOL agreed to pay $1.25 2005, AOL agreed to pay $1.25 million to the State of NY and reformed its million to the State of NY and reformed its

customer service procedures. customer service procedures.

Possible SolutionsPossible Solutions

• AOL now offers broadband so they AOL now offers broadband so they can more effectively compete with can more effectively compete with other internet companies.other internet companies.

• Change billing practices and give Change billing practices and give incentives to consumers to stay with incentives to consumers to stay with AOL.AOL.

• Make sure customer service actually Make sure customer service actually cancels a consumer if that is what cancels a consumer if that is what the consumer wants.the consumer wants.

Possible SolutionsPossible Solutions Cont’dCont’d

• Market to a more savvy internet user.Market to a more savvy internet user.

• Upgrade equipment so that all consumers Upgrade equipment so that all consumers can get online when they want and need to.can get online when they want and need to.

• Diversify their holdings and make sure that Diversify their holdings and make sure that AOL has holdings in more technologically AOL has holdings in more technologically advanced companies such as wireless advanced companies such as wireless telephones an telephone companies that telephones an telephone companies that use broadband instead of conventional use broadband instead of conventional phone lines.phone lines.