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Is AOL Still Relevant?

AOL had a good year because of selling more than a billion bucks worth of patents to Microsoft

While Yahoo has gotten lots of attention in the past week with its latest CEO switchover, we now turn to another early Internet pioneer AOL. The company has a new version of their Web-based email software to add to the good news around its quarterly earnings announcement and stock price, which briefly reached a yearly high this week.

Ironically, it was because of one of their lowest rates of decline in revenues that prompted the rally.

AOL had a good year because of selling more than a billion bucks worth of patents to Microsoft. Had they not made that deal, they would have lost more than $30 million for the quarter. Like Yahoo, they are a big company who has lost their way. And no better example of that strategy is the update of their webmail that is being brought online in the next week.

The update is the first major overhaul of AOL mail in nearly five years. In those five years, AOL has bled customers to Gmail and others. While comScore says they have 24 million users, others have put the numbers closer to less than 5 million. Regardless, there are lots of folks with inactive AOL.com accounts. (I probably have four or five AOL accounts, all accounts that I haven’t checked in probably ten years or more.) At their peak, they had about 27 million active users. The company claims that the new user interface will have a cleaner inbox look but it still looks pretty cluttered compared to Gmail and even Hotmail. They also claim improvements to their backend infrastructure to make it faster and more stable. That’s nice but something that they should have been continuously working on.

Probably the most noticeable feature is that Facebook messaging is now integrated with AOL’s Instant Messenger and SMS texts and right on the screen in the same place that Google’s integrated chat window is. Did it really take them five years to figure this out?

Ironically, AOL was a market leader when it came to email in the early days. Back in 1992, it had one of the earliest and most connected email gateways to CompuServe, MCI Mail, AT&T Mail, AppleLink, Sprint Mail and other Internet-connected systems. A year later, it had the first palm-top software client of any online provider. This was back when we all used dial-up modems. They were also the go-to IM network when IM was the defacto teen communications tool. Too bad this generation has since moved on to texting and sexting.

AOL sowed the seeds of its decline by buying up Compuserve, Netscape and eventually Time Warner. It couldn’t decide whether it was a media or a technology company. In the past several years they have bought numerous content properties, such as HuffingtonPost, Engadget, TechCrunch, Patch and my favorite video streaming site, 5min.com. They have more than a billion dollars in cash still on hand, so expect them to buy more content providers. And their ad sales are improving, basically replacing the revenue from all those dial-up customers and people who have turned off their monthly $20 bills for their service.

All of this maybe too late to save AOL’s email department. Regardless of what the Web interface looks like, having an email address at aol.com is akin to moving to a shabby neighborhood where few people tend to their lawns. And while it is great that they have a new webmailer, it isn’t going to bring people back. Let’s face facts: if you’ve got mail, you are reading it somewhere else these days.

Read the original blog entry...

More Stories By David Strom

David Strom is an international authority on network and Internet technologies. He has written extensively on the topic for 20 years for a wide variety of print publications and websites, such as The New York Times, TechTarget.com, PC Week/eWeek, Internet.com, Network World, Infoworld, Computerworld, Small Business Computing, Communications Week, Windows Sources, c|net and news.com, Web Review, Tom's Hardware, EETimes, and many others.

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