AOL Bracing for Release, Revamp
At America Online headquarters these days, there’s a mix of excitement and anxiety.
After enduring one of the roughest stretches in the Internet company’s history, employees are preparing to launch next month the latest software version of AOL’s proprietary online service, AOL 8.0. Throughout the company’s Dulles offices, signs encourage workers to test the beta version to help find bugs and remind them that “Members Rule.” A mock construction site in the lobby counts down the days until launch.
But to many, the more important date will come as soon as this week, when the newly installed Chief Executive Jonathan Miller is expected to announce a companywide restructuring.
No more layoffs are expected, but some senior managers probably will be shuffled around, perhaps leading to more departures, according to an AOL official. Miller also may tinker with certain units, such as the broadband division, in an effort to show Wall Street that the company is taking high-speed Internet service seriously.
And the business-affairs unit, whose head, David Colburn, recently was fired, will be disbanded and workers reassigned.
Shares of AOL Time Warner Inc. have plummeted 59% this year amid slowing subscriber growth, an advertising slump and an ongoing criminal investigation into accounting practices and some of the deals struck by the business-affairs unit. Miller is the third top executive to lead the online company over the last five months.
Inside and outside the company, attention is beginning to shift toward the new software release. AOL badly needs to hit a home run with 8.0.
“Given the fickle market and the company’s unclear path to broadband, it’s important for AOL to implement this correctly,” said Denise Garcia, an analyst at Gartner G2.
If nothing else, AOL could use some good news.
The new version includes 100 new features that allow members to personalize the look and feel of the service and update e-mail and chat features. Miller, who took the helm last month, arrived too late to give much input into AOL 8.0, but last week he was briefed on AOL 9.0, which is underway.
“We’re putting the buzz back in the brand,” said Jimmy De Castro, who heads AOL’s interactive services group and does not expect his duties to change in the restructuring. Upon his arrival in April, De Castro--at the urging of David Gang, executive vice president of product marketing--redoubled the company’s efforts on AOL 8.0 to include more sweeping changes than originally planned.
A former radio programmer, De Castro said AOL can no longer get by on just making the Internet easier to use.
“We can’t win on ease anymore. We can’t win on simple. We have to win on features,” De Castro said.
To him, that means programming AOL more like a TV show, whether it’s a Sept. 11 tribute or offering an exclusive performance by Mick Jagger.
Last year’s release of version 7.0 was met with tepid reviews. At the time, AOL still was focusing its energy on signing ad deals and finding ways to partner with its sister companies in the newly merged AOL Time Warner.
AOL officials now acknowledge that the last few software upgrades offered too little in the way of new features. As the No. 1 Internet provider, with about 28 million users, AOL had been afraid to make changes that might upset subscribers, Gang said.
“There was a comfort zone,” he said. “But we’ve put a lot more money and energy into this launch than we have in the past. It’s way better.”
New features include six new themed welcome screens, individual sounds and icons to represent users’ instant messages, tighter parental controls that tell which Web sites their children visit and the ability to search chat conversations by keywords.
In response to member complaints about being unexpectedly logged off, AOL 8.0 features a new reconnect feature that automatically redials and returns users to whatever Web site they were visiting.
If nothing else, the launch of 8.0 has provided AOL employees with a much-needed diversion from the constant management changes and sagging stock price, which has left many employee stock options underwater.
“It’s been a great rallying point,” Gang said.
AOL also is gearing up for another round with Microsoft, which has many features similar to AOL’s on its own MSN service.
MSN’s latest version features new parental controls, a download manager for easier file downloads and expanded e-mail features that permit the use of graphics and photos in e-mails.
MSN, which has about 8 million U.S. users, also is offering a TrueSwitch service to AOL members, helping them close their old accounts, move their address books and e-mail to the new MSN account and even forward mail from their old AOL accounts for 30 days.
AOL fired back recently, announcing that its latest AOL software for Apple computers will no longer include the Microsoft Internet Explorer Web browser, which AOL had used exclusively since 1996. Instead, AOL is using its own Netscape Gecko browser for AOL service on Macintosh machines.
