|
|
 |
Sign Up: Free Daily Tech E-letter
|
|||||
America Online Unveils Low-Cost Service Netscape Product Is Intended to Compete With United Online's Brands
Washington Post Staff Writer Thursday, January 8, 2004; Page E05
America Online Inc. plans to roll out a new, streamlined $9.95-a-month Internet service today under the Netscape brand name, a move aimed at holding onto customers who have been fleeing AOL's flagship service for cheaper competitors. The notion of marketing a value-priced Internet brand was long considered heresy inside AOL's Dulles headquarters, with insiders warning that such a move would cannibalize the company's base of more than 20 million users. But after the number of subscribers for its core dial-up business fell by 2 million, as customers fled for faster or cheaper competitors over the past year, company officials determined that shifting market dynamics demanded a fresh approach. "We see this as critical for the company," said Joel Davidson, executive vice president of AOL Access, who is overseeing the Netscape service. "This segment is big and it is growing." Davidson said the mass market AOL once pursued with its one-size-fits-all strategy matured and divided into distinct segments, including one that is extremely price-sensitive. Within that group, Davidson said, are people who can't afford to pay $20 or more per month for a content-rich Internet service, as well as sophisticated computer users who just want a bare-bones dial-up service that provides them with an e-mail address and an effective way to search the Internet. Davidson said the rapid growth and financial success of United Online Inc., which has nearly 3 million customers for its value-priced Juno, NetZero and other brands, demonstrated the viability of a cut-rate strategy. While United promotes its brands through heavy national television advertising, Davidson must take a more measured approach, given the smaller budget he will have to market the new Netscape service. "You are not going to see national TV on day one on this," he said. To hold down costs, Netscape will be distributed mostly through downloads, rather than direct mail or disks. Its advertising tagline will be, "All the Net You Need." The most immediate low-cost marketing opportunity for Netscape, Davidson said, will be the Netscape.com Web site, which gets 20 million visitors per month. In addition, the service will be pitched to America Online customers calling to cancel their $23.90-a-month contracts. For $9.95 a month, Netscape offers a single e-mail address, unlimited monthly use, local telephone access throughout the country, and a dose of news, sports and entertainment. "Our marketing and customer service folks have not had a product to sell to this particular segment," Davidson said. Davidson is running the Netscape product out of Columbus, Ohio, which is also home to two other low-priced AOL alternatives: CompuServe, which has a cut-rate service that does not include unlimited monthly Internet access, and the $9.94-per-month Wal-Mart Connect, a co-branded product available at Wal-Mart stores. To generate buzz for Netscape, which is scheduled to be unveiled today at the Consumer Electronics Show in Las Vegas, Davidson said the company plans to auction off on eBay 200 of the most popular Netscape.com e-mail addresses, with the proceeds going to charity. The service will also be promoted through online ads on America Online's free instant-messaging service and through other channels. Davidson has a background in cable television, where marketing low-priced basic cable was a precursor to the sale of premium channels and services. He said it won't be long before Netscape subscribers will be offered an array of add-on, fee-based services. One that is likely to be offered soon is a faster dial-up service. Some 15 percent of United Online's subscribers now pay $14.95 per month, rather than $9.95, for speedier dial-up access. Asked how he will measure Netscape's success in a year, Davidson said his yardstick will be how much market share Netscape has taken from United Online. But Mark R. Goldston, chairman and chief executive of United Online, said that projections for continuing growth in the total size of the value category mean there is plenty of room for a number of players. "I don't begrudge them as a competitor," Goldston said. "I do believe the category is going to grow because of this."
About TechNews.com | Advertising | Contact TechNews.com | Privacy My Profile | Rights & Permissions | Subscribe to print edition | Syndication |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
