AOL Devours its Young

…I’m intrigued that AOL opted to use Netscape. Naturally the AOL brand can’t be tarnished by direct association with a value service. And when free-to-air ISPs became the rule in Europe, AOL launched a free service under the Netscape brand [Jupiter European Internet Research]. Very interesting to see history repeat itself here a few years down the road. But AOL has CompuServe, and the Journal article says they even tried using that brand for the value service, but Netscape tested better. Well, duh. AOL’s kind of let the CompuServe brand atrophy. Though “Netscape”‘s lost a lot of its luster too, it’s not surprising that more consumers (at least those who aren’t super net veterans) know and trust Netscape today.

Finally, this move will put MSN in an interesting spot. AOL will have Netscape (and Compuserve), Earthlink has PeoplePC. MSN will be the only premium ISP without a low-cost affiliate. I have a sneaky feeling that won’t stay that way for long.

This is a necessary move for AOL, but still a bold one. They’re going to have to show the Street that retaining someone as a $9.95 value customer is better than losing that person entirely. And that they can build enough of a value proposition around the Netscape ISP that it competes with the other providers targeting the late-adopter segment of the consumer online audience.

[Joseph Laszlo]

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