Posts Tagged ‘AOL’

When technology changes rip out your bottom line

May 22, 2008

I was inspired by this great article in the only “paper” magazine that I subscribe to (Fast Company). The article is about the fall of AOL and how their tumble into obscurity was marred by general business mistakes which compounded with the eventual loss of the company’s largest revenue generator (dial-up).

I got a call about a month ago from my first tech employer (small ISP in Rhode Island called NetSense). The president of the company and I still remain in contact – he informed me that he was selling off his last PRI line (used to handle large amounts of dial-up customers). Lucky for him dial-up wasn’t his largest revenue generator (his hosting revenue is king).How will new communication channels effect existing channels?

I then started thinking about some of the other services that we use whose days may be numbered. I came up with one rather interesting service: cell phones.

As I have talked about before (here and here) communication is changing. Not only are the ways in which we communicate (Web, IM, E-mail, etc…) changing the channels in which we communicate are also changing (Blogs, Wiki’s, Facebook, Twitter etc…). I think about the ways in which I communicate with people. More and more of that communication is done digitally. I use IM and Twitter exclusively when I want to ask brief questions or touch more than one person at time.

Additionally, VOIP and software programs like Skype are making strong cases against traditional cell phones. Remember the tustle between Apple and Cisco – it was essentially over “who owned the connection”. Once cell phones started adding Wifi and services like Skype became more and more reliable – a traditional “phone number” and the services that companies like AT&T, Sprint and Verizon offer are becoming less valuable.

What I see happening is you will no longer need to “call” someone or send someone an “e-mail” you will simply say to your device (which will be tethered to the Internet) I want to communicate with Ron. Wherever I am and whatever services I have available (Skype, Twitter, IM etc…) we will be connected. I don’t see anyone needing a single number (except for the people that only have cell phones). Our children will be connected in ways we can only imagine and it won’t be with a phone number.

Don’t get me wrong, I love my cell phone and right now I use it for a lot of my communication. What the article made me think about was this:

If you are a cell phone company today (or an investor in a cell phone company) what you should be doing is learning from AOL’s mistakes and should begin planning for the day when they begin to lose subscribers. Are they going to use their channels to deliver new services so they can keep their subscribers or are people going to be sick of paying $45 for a phone and $50 for connectivity services when they would only really need the $50 service fee to have connectivity for their communication applications.