Starting late this summer, America Online subscribers will be able to send and receive e-mail on Palm computers, the portable devices now used by more than 4 million people, making the country's largest online service accessible to hand-held devices for the first time, AOL announced yesterday.
Owners of older Palms without wireless features will be able to hook their units to telephone lines to send and receive. People who use the newly released wireless Palm VII will be able to get their e-mail, as well as a stripped-down version of AOL's content service, over the air.
With the move, America Online edged forward one more step toward securing its 17 million-person-strong customer base and turning up the competitive pressure in the Internet industry. The deal is a large piece of the online service's "AOL Anywhere" strategy of allowing subscribers to link to the service "no matter where they are," AOL spokesman Tom Zimba said.
To make the service possible, AOL has entered into a strategic alliance with 3Com, the California company that makes the Palms. The units can store addresses, phone numbers and calendars and can process messages handwritten on their screens with a stylus.
How many people would use the service is unclear, although AOL officials said there is a "strong overlap" between Palm users and AOL subscribers. AOL executives said they hope this deal will attract Palm users who aren't AOL subscribers. Analysts agreed that is likely.
AOL shares, which have fallen from a peak of $167.50, dropped $5.87 1/2 yesterday to close at $109.50. 3Com stock rose by 56 1/4 cents, closing at $31.50.
For the most part, analysts called this a smart move for AOL and speculated that more announcements will come as the company drives its "AOL Anywhere" strategy into full gear. Other Internet providers are expected to follow suit. "This industry is characterized by competitive pressure; people are constantly throwing . . . knuckleballs," said Ulric Weil,an analyst at investment bank Friedman, Billings, Ramsey Group Inc. in Virginia. "AOL seems to be accelerating its competitive pressure."
On Monday, AOL announced that it will invest $1.5 billion in General Motors Corp.'s Hughes Electronics Corp., one of AOL's allies in bringing Internet access to satellite-connected television sets, another part of the "AOL Anywhere" plan. Hughes and AOL will jointly develop a television set-top receiver to sell consumers Hughes's DirecTV and AOL TV, which is not yet being marketed, starting early next year.
But Weil cautioned that while the recent agreements with Hughes and now 3Com could alleviate pressure from Internet service providers such as AT&T's At Home network, they cannot be a substitute for broad-band cable-modem service.
These new agreements, however, will give AOL leverage to persuade AT&T to give the company access to its cable-modem service, Weil said.