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Issue 3.09 | Sep 1995

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America, Online!


America Online has been on a rocket ride, rapidly becoming the largest online service provider in the world. Now it would like to morph into an "interactive service company" - before Microsoft and the Web eat its lunch.


By Mark Nollinger

SEE ALSO
Archive Category:
Virtual Communities

Online Commerce

Connectivity

Online Business Models

Once upon a time - 10 years ago, to be exact - going online was about as far from most folks' idea of a good time as it could possibly get. Modems were exotic, pricey accessories. Even if you had one, there wasn't a whole lot you could do with it. Information highway? Forget about it - a scattered collection of dead-end streets was more like it. The Internet was just beginning to emerge from the clutches of the Pentagon, and the entire commercial online market consisted of a paltry 500,000 pioneering propeller heads, scrolling text at 300 baud and spending an arm and a leg for the privilege.

Signing on was complicated, expensive, and dull.

So it wasn't exactly front-page news when, in the spring of 1985, a tiny start-up out of Vienna, Virginia, called Quantum Computer Services Inc. announced it was going into the online business. The initial press release - which hardly anyone really paid attention to - promised that QuantumLink, as the service was called, would be "useful, affordable, easy to access, and entertaining." The company vowed to increase popular demand by charging a modest monthly fee for an array of services. Custom software would offer color graphics and sound. In other words, getting connected would be cheap and fun. What a concept.

It took a while, but Quantum Computer Services kept its promise. Better known these days as America Online Inc., the once-obscure start-up has shot past its deep-pocket rivals CompuServe and Prodigy to become the most popular online service on the planet. AOL has increased its membership fifteenfold in the last three years, sending revenues - and the price of the company's stock - soaring. This summer, more than 3 million Americans were sending e-mail, arguing in forums, flirting in chat rooms, and wandering the Net on AOL, with thousands more signing up every day. The service expects to have more than 5 million subscribers online next year.

Under the leadership of CEO Steve Case, a 36-year-old marketing specialist who acquired his corporate chops pushing hair conditioner and fast-food pizza, America Online arguably has done as much as anyone - maybe more - to bring the infobahn to Main Street, USA. But the current numbers are just a drop in the bucket as far as Case is concerned. It's your mom, your dad, your grandparents, your boss, your secretary, your mechanic, and your third cousins back in the hills that he's after - the estimated 93 percent of American households, according to the San Francisco-based research firm Odyssey, that aren't yet signed on. Case sees online services evolving over the next decade into a mass medium engaging tens of millions of people, for whom logging on will become as much a part of everyday life as making a phone call. And he's determined to transform AOL into flashy, interactive multimedia that will lead the way. His ultimate goal: nothing less than America, Online!

It's not going to be easy. These days, it seems like everyone with a server and a modem is also greedily eyeing the Great UnWired, envisioning humongous dollar signs. Analysts project the commercial online market will grow to 10 million people by the end of 1995, a number expected to more than double in the next two years as new players enter the fray. The Number One contender - that little start-up out of Redmond, Washington - has a slight advantage over its rivals: when Windows 95 makes its debut (supposedly by the time you read this), untold millions of PC owners will be able to log on to The Microsoft Network with a mouse click. AT&T; Corp., no slouch itself when it comes to marketing prowess, is also gearing up to push its Interchange Online Network (which already exists as a kind of host network for independent services) to a customer list 80 million strong.

IBM and Sony are reportedly planning new online offerings as well, while the existing players, ranging from CompuServe to Delphi, are redoubling efforts to take AOL down a peg. And the dark horse looming over everything is the Internet itself, which some say has the potential to doom not just AOL, but all the proprietary services, to the ash heap of online history.

Most would find that kind of intense competition overwhelming. Nevertheless, America Online has managed to beat the odds for quite some time now.


Mark Nollinger (marknoll@aol.com) is a Southern California-based freelance writer. His last story for Wired was "Surrender or We'll Slime You," which appeared in February 1995.

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