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Verizon to Buy AOL for $4.4B (wsj.com)
298 points by morkfromork on May 12, 2015 | hide | past | web | favorite | 226 comments

To give you some perspective.

When Time Warner and AOL merged back in 1999, AOL was valued at $166 Billion.

Recently, a woman that I shared an elevator with commented on my laptop - she noticed that I worked at a large tech company. She commented that she too had worked for a large tech company at one time - AOL. I smiled.

She then immediately recounted the day she and her entire floor were laid off unceremoniously. Luckily, that was about the time that we reached her floor.

I too worked for AOL at one time, after they bought Netscape who happened to be my employer at the time. I very quickly took a severance option they were offering. There were also plenty of developers that fell under the iPlanet umbrella working for Sun/Netscape that later felt the axe.

Don't think that everyone who worked at AOL were a bunch of "you've got mail!" chatroom admins.

>Don't think that everyone who worked at AOL were a bunch of "you've got mail!" chatroom admins.

Who in this community would think that??

otoh I don't think anyone who came to AOL that way would say "I worked for AOL". I'd say I worked for the part of AOL that used to be Netscape, or at least "AOL West". I seem to recall saying something like "I work for Sun but my paycheck comes from AOL, for tax reasons...".

AOL was briefly on my paystubs for awhile as well. My first tech job was at Sprynet in the mid 90's, when it was first owned by Compuserve, then Worldcom, then AOL, then Mindspring (when I finally got out,) and shortly after, Earthlink.

Wow, I just discovered Wikipedia has no page for Sprynet. Now just who do I contact about getting that edited?

Small company pages are commonly deleted from Wikipedia, for having no links.

Honest question: why do you say luckily?

No the commenter you're asking, but I've never had a constructive conversation with "those types" - the kind who go out of their way to talk about getting laid off from a tech company.

Of all the ones I've spoken with, it followed the pattern of "BigCo outsourced jobs to those darn Foreigners, and I got laid off, and it will happen to you too!". In particular I worked with a former DBA for IBM at a grocery store in highschool, so I used to hear these tirades. What I never heard was any constructive career advice, or any details other than the outsourcing and cheap foreigners. Now the cynic in me says if low wage, and probably lower skilled workers can take your job, you probably suck. Regardless, it has always struck me a bit like talking to that xenophobic uncle at Thanksgiving type scenario. Nothing good to come.

> probably lower skilled workers can take your job, you probably suck

More probably these decisions are made at a very high level and the individual abilities of these workers aren't even taken into consideration. The real lessons here are never trust your employer, loyalty is a two-way street and always have an exit plan.

Exactly. I was having this conversation with fellow employees. He brought up that they have a 1.5 - 2 year plan to phase out his entire department and moving everything overseas. I was just shocked that he was literally watching time tick by until his job was over. He was been with the company for 8 years. I asked why he stayed and it came down to security. He has kids and needs the insurance.

I hear that while it can be depressing to stay while the department is transferred overseas, companies will often sweeten the deal to make it worth your while- despite the fact they are getting rid of you, they still need the transition to happen gracefully, and to transfer knowledge to the new team.

Damn fine time to push for a raise!

Great point here. Never stop interviewing, always maintain your network connections, and make sure development that you do is associated with your personal brand so that it's portable. There's always a company willing to pay you more, treat you better, give you more interesting assignments, or ALL OF THE ABOVE.

I suppose, but to turn around and complain about how you haven't been able to find work for the past 5-10 years seems to indicate there might be something beyond "I got laid off because of outsourcing."

That something is usually "my skillset became overly specific to my employer, so that once I was laid off, I had nothing of value to anyone else." There's a lesson in that too: even people who were quite talented and hungry in their younger years can find themselves pigeonholed into a corner when they tie their fate to a single big company.

> What I never heard was any constructive career advice, or any details other than the outsourcing and cheap foreigners.

I don't think the purpose of their tirade was to provide you with career advice. It sounds like they were bitter that they invested time and energy in their career and they were resentful of managers replacing them with an option that seemed cheaper. They probably grew up in a time where you could work for a company for life. I bet IBM seemed like a great place to work when they started.

Can't you empathize with them even if you find yourself making better life choices?

Can confirm about IBM. Dad spent the majority of his career at IBM as an engineer working on various mainframe platforms (and some AS/400 stuff later on); he mentioned that in the 70's an IBM check was about as good as gold; they were all promised pensions and that they'd be taken care of out into retirement, hence why there were many "lifers" like dad. The culture back then was such that if you changed jobs every single year, "there must have been something really wrong with you, since you couldn't hold a job down." Fast forward to the late 2000's and IBM had kind of been turned on it's head; Dad was real close to retirement and hoping to get out with a pension while he still could but got cut a year before he could retire, when IBM moved a huge swath of it's big iron resources to Indian firms, which is a hell of a shame. I've met a lot of these guys, and while it's unfortunate that many of them can't adapt, I think there's a serious lesson to be learned here, as they got pretty screwed by their employer. This is the reason unless I have some very personal involvement in something I'm doing, I won't break my back for my employer, I won't work 80 hours a week, I won't deal with someone jerking my chain, because you better bet few (if any) employers will ever do the same for you, and I'd hate to get later into life like that and realize I committed a huge part of my life uncompensated to an organization that didn't ever really care about me. I think that's at the root of what has torn a lot of these guys (and gals) up, is that's not how it was seen 40-50 years ago.

Yeah, I have had a number of reasonable conversations like this with people.

For a lot of people, I think part of the purpose of the conversation is offering a warning (combined with a bit of venting). That they aren't explicitly saying, "And the moral of the story is..." doesn't mean there isn't something that we can't learn from it.

if low wage, and probably lower skilled workers can take your job, you probably suck

The alternative hypothesis is that you are overqualified. You may not have been overqualified when you took the position but now you are. De-skilling is a very real phenomenon in the workplace.

The xenophobic uncle has seen more than you and may well be the wiser man. Sometimes the country on the other side of the border is the enemy.

”Sometimes the country on the other side of the border is the enemy.”

What do you mean by that?

"The xenophobic uncle has seen more than you and may well be the wiser man. Sometimes the country on the other side of the border is the enemy."

Open source has also cut many jobs and devalued salaries, but many don't see it this way. As businesses get more tech savvy (which is happening fairly quickly), they realize that they don't have to pay software engineers to build software any longer. They can take open source, which many engineers and good developers toiled away on for years, and pay what I call a 'software mechanic' considerably less money (and they don't need nearly as much experience) to add features to it. It makes outsourcing very easy and a realistic option.

I predicted this 10 years ago when everyone said free software was the future and Stallman somehow thought that all developers would become government workers (his dream was to have all software "free" and have the government pay developers salaries for the good of everyone).

I just don't understand why people in the tech community try so hard to give all of their leverage away to big companies.

> Open source has also cut many jobs and devalued salaries

The flip side is that open source fueled the web explosion.

Example: you don't need a multi-million dollar IT team to have a storefront, because you don't have to hand-build a framework. How many people here are making over $100k/yr doing computer stuff for a business that wouldn't have dreamed of hiring someone to do computer stuff twenty years ago?

Without open source, we'd probably just have a small priesthood building WebObjects front-ends to mainframes, and only Fortune 500 companies would be able to afford a web presence.

It has commoditized basic software development sure, thankfully there are lots more interesting things to work on top of that.

> Open source has also cut many jobs and devalued salaries,

[citation needed]

Obviously, choosing an open source model limits the opportunities for monetizing software development through licensing fees. I don't see the evidence that it has actually, in fact, "cut many jobs and devalued salaries", however.

> As businesses get more tech savvy (which is happening fairly quickly), they realize that they don't have to pay software engineers to build software any longer.

Non-software business avoided doing that directly even before open source was particularly popular, by paying other people for COTS software licenses, support, professional services, custom development, etc. Having worked in an enterprise firm at the time, while we had large license fees, the hammer to get people to pay them wasn't that "if you don't pay, we'll sue you for copyright infringement for using the software without a valid license", it was "if you don't pay, you lose the support that's bundled as part of your license agreement".

Support, professional services, custom development that's different features desired by the general market, etc., is what most business pay for with software, no matter what the licensing model is. Open source doesn't affect that at all. And the people that can be most effective at selling that, even with open source software, are the people who are actually deeply involved in developing the software. Which is why, even with open source software, the firms that make their revenue selling support to enterprises are still paying core developers on the project -- so, in effect, the end users are still paying for the development of the software, just like they always did. (Of course, open source means that the companies that want to can just get the source and provide their own support -- but many of the big users doing that, it turns out, also and up paying their own employees to work as core developers on the upstream project.)

>if low wage, and probably lower skilled workers can take your job, you probably suck

Or the company is short-sighted, undervalues the skill and experience of onshore jobs and overvalues the $$ they're saving on paper. I bet a buffalo nickel you've never personally seen how offshoring affects a team/department.

[...] you probably suck

It doesn't matter how good you are when your whole department or office is axed. The wheat is thrown out along with the chaff.

if low wage, and probably lower skilled workers can take your job

What actually happened in many cases was executives thought low wage unskilled workers could do your job, and over the course of a few years discovered whoops, no, they really can't. Jobs are then repatriated. Then a few years later some executive gets a bright idea... It seems to be a cycle these days.

I hate this attitude. It reeks of privilege and naivety of the working world outside the speaker's bubble, which is especially ironic considering that its proponents are usually very liberal (and thus love to talk up how pro-worker and considerate of their privilege they are, except when it concerns xenophobic straw conservatives). But I digress, so let me tell a story instead.

My dad was working in $TECH_FIELD for a subsidiary of a multinational megacorp ($BIGCO; you might have heard of them). Said subsidiary had decided to branch out into providing $CERTAIN_KIND_OF_TECH_SERVICES to $OTHER_BIGCOS.

My dad's team was one of the few that got their work done without trying to play "the game" too hard. Almost everyone else in the company would fight them every step of the way, fighting to gain control over a certain aspect of his account (for the power and influence, of course), then never ever doing any work towards it, forcing my dad's team to pick up the slack for everyone else while they took the credit. Say, a team would receive the job of designing $TECH_SOLUTION, but the deadline would loom and my dad's team would never, ever receive the design from the design team for him to implement, so it would end up being all on him and his teammates to design and implement $TECH_SOLUTION.

So it was just under a dozen people with my dad, working their asses off to provide services to this particular account. A friend in middle management let slip once that they were the only profitable account in the entire division, and their customer was the only one happy about the service they were receiving.

After a few years of depressingly poor management and vicious office politics, $BIGCO decided it was time for a change, and brought in a new CTO to turn the ship around. Naturally, said CTO decides that the best course of action would be to lay off almost the entire team working on the only profitable account in the whole fucking division, and replace them with offshore contractors. Only a few months before a critical infrastructural change required by the contract needed to be completed, and just over a year before the contract was to expire. I'm sure you can see where this is going.

My dad was one of the few spared from this show of gratitude, and was promptly tasked with training the offshore workers. Pretty straightforward, right? Employees are just cogs. It doesn't matter if they've spent decades, almost their entire working careers, mastering this field. You can just take any random college graduate and bring them up to speed in a month, right? Better yet, get an offshore one that costs a 10th or a 20th of what a Red Blooded American would demand, and pocket the difference. That's like, free money!

Wrong. Said contractors barely spoke English, and knew less about $TECH_FIELD than I did. As futile as it would be to train a western college grad up to the required proficiency before the deadline, it is downright impossible to do the same with language barrier erected in front of you. My dad and the rest of his team would spend hours on the phone with the outsourced workers, trying to walk them through a process, starting from very basic first principles that anyone with their degree in their field should know, and... silence.

Needless to say, my dad and most of the other remaining members of the team got out of there ASAP. $BIGCO realized their incompetence too late, tucked their tail between their legs and tried to hire back the laid off team members, but unlike most of the stories you had scoffed at, they were all able to get new jobs in the mean time. Service quality plummeted, the customer was appalled when they realized what had happened, and when the time came, decided not to renew their contract. A few months later, $BIGCO decided to get out of $BUSINESS and laid off the rest of the division.


Ok, so what can we learn from this? Let's consider a few (not necessarily mutually exclusive) possibilities:

1. (Some) corporations are mind-boggling stupid, with the foresight of a goldfish, and greed that would make Ebeneezer Scrooge blush. They will happily ruin a profitable business to save a few pennies in the short term.

2. (Some) offshore firms from third world countries know this, and build their business around pulling fast ones on these stupid corporate executives. They tell them everything they want to hear about how the workers in $COUNTRY are just as good as the ones in America, but will work for pennies on the dollar, and so much harder! Then, when they seal the deal, they go out and hire a bunch of newly minted college grads with zero experience in said field, and tell them to play the part while they cook up some nice resumes. Yeah, I said it. It's stupid enough to begin with to fire 75% of a business, leave it in the hands of a few college grads, and expect everything to work out. It's downright suicide when you consider the rampant degree and resume fraud that these offshore firms perpetrate, and how brazenly corrupt many universities from the third world are. And the beautiful thing is, the language barrier makes it extremely difficult for management to tell that anything is wrong until it's already too late.

3. Of course not all foreign workers, or even all foreign workers from the third world, are like this. When people talk about incompetent offshore workers taking their jobs, this is the kind of downright fraudulent practice they speak of, not the honest workers that really are just as good as their western counterparts (and will probably end up moving as soon as they can...)

4. Don't be intellectually lazy and lean on the perception of racism or xenophobia. Said stupid corporations will also happily fire older workers with decades of experience for clueless American college grads, and ruin businesses that way. It never occurs to them that you can train young employees while the old guard keeps things running smoothly, because they're seeking the petty short term profit at the long term detriment to the business. Why?

5. Corporations are managed by psychopaths. They ruin their businesses in these ways because the go-getters all want the short term boost in profitability that will promote them up the corporate ladder quickly enough that they won't have to deal with the consequences. Even if it destroys the company, these psychos will have long since bounced to another job beforehand. Said psychopaths wage wage war in the office. An interpretation that I didn't initially consider of my dad's story was that maybe said CTO or one of his new managers was deliberately trying to justify axing the division by destroying the only profitable team. So it's also entirely possible that in many cases of offshoring, the "incompetent" actions of the corporation at large is really just one person trying to snuff out someone else vying for the promotion they want.


So, all of this giant wall of text considered, my point is that, well, there are a lot of reasons beyond employee incompetence why a corporation might offshore a worker. It's intellectually lazy and downright rude to imagine some straw factory worker screaming "DEY TOOK ERR JEERRRBS" and shut off your brain every time you hear someone complain about the practice.

As for the question of "what about the guy that got offshored and has been unemployed since," I have more stories (some my own, some from others) I could tell, but since I've already overstayed my welcome, I'll be explicit: Economic downturns suck. Getting laid off or offshored during one could very well leave you unemployed for years, during which no one is willing to hire you. Even when the economy picks back up, it's going to look bad on your resume if you spent years unemployed (or employed in an unrelated field). It's even worse if you're older, and ageism kicks in.

In this scenario, you'd probably need to change careers to survive. As programmers, this doesn't sound so bad to us, because we know (knock on wood) that some kind of programmer will be demand for the foreseeable future, and we should always be able to change a technology "stack" or platform or whatever and find a new job doing very similar things. But not everyone is as fortunate as us. For most people, having to change careers means throwing everything away and learning something new. If you need to do that to keep the lights on, you do it, but it gets harder and harder to do so as you get older. So don't be so hard on people that made the wrong choice and picked a career that disappeared from under them.

IMO, shorter comments much more clearly express ideas.

I hate this attitude. It reeks of privilege and naivety of the working world outside the speaker's bubble. But I digress.

team got their work done without trying to play "the game" too hard. Almost everyone else in the company would fight them to gain control over a certain aspect of his account then never ever doing any work towards it, forcing my dad's team to pick up the slack for everyone else while they took the credit.

A friend in middle management let slip that they were the only profitable account in the entire division, and their customer was the only one happy A new CTO decides to lay off almost the entire team on the only profitable account in the whole division and replace them with offshore contractors. Remaining members of the team got out of there ASAP.

Said contractors barely spoke English...

$BIGCO tried to hire back the laid off team members, but, they were all able to get new jobs in the mean time. Service quality plummeted, the customer decided not to renew their contract. A few months later, $BIGCO decided to get out of $BUSINESS and laid off the rest of the division.

yeah man who the fuk has time to read two whole PAGES of words this aint social studies LMAO #yolo ☺☺☺☺☺☺☺☺☺☺☺☺

can i get the sparknotes for your middlebrow hacker news dismissal i got SHIT TO DO SON 💩

Overreacting much? His summary of your comment actually got me interested enough to read the whole comment, which I would otherwise have never read (it's not exactly a unique story).

I would like to add some constructive criticism: it seems like you are idealizing your dad in this story (his team was really the only one in this really big company making any money), which is a very normal thing to do, but it is not needed to make your point. Also, you are dehumanizing "corporate people" by calling them psychopaths. They are not (usually) psychopaths, they have feelings and empathy, but are just very good at rationalizing those feelings away. I think it is important to recognize that they are no different from you or me, since that might prevent you from doing the same thing in the future.

> They are not (usually) psychopaths, they have feelings and empathy, but are just very good at rationalizing those feelings away.

I'm really glad you made this point, and I'll add that we have to remember that most people can be induced to make callous decisions with the wrong incentive structures and the right pressures from their management. In some environments, behavior we might deem callous is merely institutional for others for pragmatic reasons.

All too often, we forget that when building institutions (commercial, government, etc.), it's critical we don't inadvertently construct systems that give people incentives to do the wrong thing. We have to stop labeling normal people as psychopaths and remind each other we can all act callously under normal circumstances. Not exceptional circumstances, but normal pressures from management and colleagues.

Dan Ariely wrote a good book that tries to explain some of the mechanics: http://danariely.com/tag/the-honest-truth-about-dishonesty/

Thank you for the whole post.

AOL might be the ultimate company that missed the boat. They practically owned the internet in America in the 90s and just let the whole thing get away. They had pole position to be Google+Facebook at once.

They owned a closed "Walled Garden" version of the internet. Once the open internet took off, AOL was doomed.

Yes. This. It's a reoccurring battle that all companies that build some kind of infrastructure and offer content/data services on that infrastructure end up facing.

When they built the pipes, there was no data/content, so they had to create it. But now there is so much more content/data that is so much better, and people just want to use these companies as a dumb pipe to get to the good stuff.

We see it now with cell phone carriers and cable TV companies who built infrastructure to transmit data, and also wanted to sell you content/data for that infrastructure. Hence phones from a decade ago full of bloatware and crappy ringtone stores and crappy Brew-based "app" stores, and cable providers who (still) have poor DVR interfaces and pay-per-view and TV packages.

The iPhone's most powerful innovation wasn't a touchscreen computer in your pocket. It was the business relationship with the cell phone carrier Cingular (and then AT&T). It was wedge that freed the device so people could control it (relatively) more, and allowed people to treat the network as a dumb pipe. Its still early, but Netflix, Youtube, Hulu, etc are largely doing the same thing to cable TV.

This goes back further than AOL. You can see it with AT&T, their refusal to allow 3rd party equipment on the POTS network, the rise of Sprint using their infrastructure, and their ultimate breakup.

Every time this battle has happened the infrastructure companies lose and get pushed into "dumb pipe."

I think you're underestimating several things:

1 - aol was quite expensive to use: it was a long time before they introduced flat rate pricing. When I got it in the mid 90s, you paid something like $20/mo for 15 hours (it's been a long time) and then paid something like $2/hour for every hour after that. I ran up a $60 charge and then had to be much more careful about how much time I spent online. Lesson: because aol was so expensive to use, it incentivized people to use raw internet which had much less content at that time. But some local isp offered $20/mo unlimited use pricing.

2 - they basically missed the transition to broadband

Had they realized they were a content business that had to run access infrastructure out of necessity, I think they could have had a shot at owning the internet. Thankfully they messed that up.

> you paid something like $20/mo for 15 hours (it's been a long time)

I don't think it was that much, because when AOL first came out with their "$20/month unlimited plan" (years after the regular ISPs did), I remember thinking "this is great for people like me, but I kinda feel bad for people who only use their connection for an hour a week". I think it was more like $7/month for your X free hours (and I remember they kept bumping the X as more and more people began integrating AOL into their daily lives until they finally said "fuck it, we're going unlimited").

Also, people would get around it by using the crapflood of AOL CDs they got everywhere to register new accounts every month. They really started ramping up the free hours on those... when you got to "100 free hours", it made more sense to just make a new account and use a new AOL CD every month.

I actually did the work to find it: $10/mo for 5 hours then $2.95 / hour. So even 15 hours cost $39.95.


Discovering that I could connect with a browser outside AOL while dialed up kicked off my interest in networking. Unfortunately for AOL, it's also when I discovered I didn't need AOL. I got a cable internet connection as soon as it was available and never looked back.

They had years to invest in the open internet, buy out a successful internet venture, or adopt internet features into their offering.

They failed to do all of the above, and are now in the dustbin of history (and to me, are solely remembered for their acquisition of nullsoft who then created Gnutella - predecessor of P2P file sharing services).

I think they are a great Innovator's Dilemma example. Quarter to quarter and manager by manager they could always do better denying the coming reality.

I'd bet there were plenty of people within AOL who knew they were fucked in the long term, and I'm sure some of those actually tried to change things. But it's extremely hard to do anything that threatens existing revenue streams. Eventually the innovative people leave and you're left with the people who can't see the decline or are ok with trying to squeeze the last few drops of cash from the remains.

And really, in some ways they're only around now because they did manage to change a little. They've collected some decent content brands, which was basically an investment in the open internet.

I read a perfect parallel: real networks employees knew their product was shit. But making it not shit would wreck the company:

   As employees, we weren’t proud of our business tactics, and we griped about 
   them frequently. The topic came up at company meetings, round table 
   conversations with executives, and through a lot of water cooler 
   conversation over email, during lunch, and across the foosball table.
   One day my manager showed me a horrible graph. It was pretty simple: the 
   graph was steady, then it dropped straight down, then after a short period, 
   the line shot straight back up and stayed level again:
   “That’s what happens when we do the right thing”, he said while pointing at 
   the drop, “and that’s how much money we lose. We tried it just to see how 
   bad it was for our bottom line. And this is what the data tells us.”
   “Wow,” I said, taken aback. My employer clearly had two options: “do the 
   right thing” or “be profitable”. That was the position they had maneuvered 
   themselves into through a series of bad management decisions.
   My manager then said, “More than half the company would have to lose their 
   job in order for us to stop these tactics ... so are you volunteering to be 
   one of them?”


Great find. Of course, it's not like doing the wrong thing worked out well for them either:


Now they're worth maybe 10% of what they were when that guy left Real Networks.

The thing that kills me here is that they had more than two options. In the short term, sure, they're stuck. But in the long term, they could have either kept sucking or they could have worked to turn it around.

There's a similar story about the search engine game. Yahoo had a chance to buy better search engine technology, the only problem was it was too good.

If people quickly found what they wanted, they wouldn't spend any time on your page. Time-spent-on-page is how Yahoo measured engagement, and thus ad-revenue. Improving Yahoo's search engine would have threatened existing revenue streams, and Google would be a terrible investment for them, given the metrics in use at the time.

I doubt they had any trouble seeing the decline. The question is what should they have done?

Competing directly with cable companies in wiring up homes for broadband is a mug's game. This was before it was reasonable to do with fiber and they didn't have anything like Google's freighters full of cash.

So they rode it down. That was probably the right thing to do - their dial up business is still there and still profitable. They have some viable properties on the content side, which is about the best you could have expected without having them get into an entirely new business (like search).

I think getting into essentially new businesses is exactly what companies facing the Innovator's Dilemma should generally do. The ad-driven content properties are an example of that, and they're the reason for the merger.

I think companies should remain focused on their core product. If you find yourself in a buggy whip industry the best thing to do, IMO, is to reduce expenses as much as possible and return as much profit as possible to the shareholders. When it's not worth bothering with any more the company should be dissolved.

As an investor I'm perfectly capable of taking my dividend and investing in other businesses - I'd rather not have the officers of a company in which I've invested my money taking Hail Mary shots to preserve their jobs.

I think that only makes sense if you have a completely dead-end product. AOL, for example, had a fair bit of experience in content. They had a lot of strength in networking. They had a zillion users, giving them low marketing costs for new products. They had a strong marketing org and a well-known brand.

Reducing expenses to the minimum would basically value all of that at zero, which I think is rarely the right case. Look at the examples in Innovator's Dilemma, for example. The successful companies kept making technology/market transitions, one after the other.

As an investor you are capable of taking the cash and investing elsewhere. But you are also capable of selling the stock if you really think they have no hope of innovating.

>> They had years to invest in the open internet, buy out a successful internet venture, or adopt internet features into their offering.

None of the big ISP's from the 90's "made it". Earthlink, Netcom, Prodigy... They were all either acquired, went bankrupt, or became DSL resellers. They didn't have any content so they were worthless as broadband took over.

There's only a handful of dot-com's still around from those days. Google, Amazon, eBay, Yahoo... AOL would have ran any of those into the ground had they purchased them, and buying ISP's like XO or Covad wouldn't have worked out well, or buying someone like Sun, Cisco, or SGI would also have been a disaster.

There truly was nothing they could have done.

Hmm .. May be they could have bought sbc/att/Comcast/twc? Given their valuation at that time, they could have bought pretty much anybody.

> Hmm .. May be they could have bought sbc/att/Comcast/twc?

They bought Time-Warner in 2001 for $164 billion to create AOL Time-Warner. The expected synergies of the acquisition largely failed to materialize, the AOL name was dropped from the combined entity in 2003, and AOL was spun back out of Time-Warner in 2009.

Interestingly enough, 2009 also saw Time Warner spin off TWC as an independent entity as well. They technically only use the Time Warner name under license now.

They did buy twc...

Prodigy. That was built between CBS, IBM, and Sears. They wanted an Amazon in 1988 ... Didn't happen.

> None of the big ISP's from the 90's "made it".

AT&T, Comcast, and Verizon are still chugging along, among others. Some of them aren't household names like Level 3 or CenturyLink.

> There truly was nothing they could have done.

It's 1996, sales are terrible, stock price is in the toilet, the newest product line isn't selling as well, and it was very expensive to develop as it moved to a different CPU architecture. Moreover, the operating system isn't getting better, despite numerous attempts to improve it.

There are numerous newspaper articles saying the company should just fold, and return all the money to the shareholders.

There was nothing they could have done to save the company either.

Except, of course, to bring back Steve Jobs; the company was Apple, and the rest is history.

It's easy to decry the obscene amounts CEOs receive in compensation, but the right one would have been able to right the sinking ship that was AOL. Of course we'll never know if it could have been saved, but it's interesting to think about the position AOL was in, back in the 90's.

The big one was the switch to DSL, which AOL didn't keep pace with. I don't even recall if they did start offering DSL. My internet experience in the 90's was interrupted dial-up and busy signals.

DSL changed all that, but AOL didn't want DSL, so they got left behind. Suddenly, instead of AOL being the cool new thing, it didn't just become staid, it become dysfunctional. Instead of wanting to be on AOL and putting up with busy signals, you kept AOL because you were trapped by the @aol.com email they gave you. The rise of Hotmail took away that last excuse.

I don't know about better search technology, but if AOL had gotten into the online catalog business, Amazon may not even have gotten off the ground. AOL had the brand name recognition, and a warchest to fund something that was clearly going to happen, it was just the small matter of who was going to win. Grocery delivery was unproven, but books? Literally any book in print (and even some out of print) is available in a few days, shipped to your house. Sign me up!

Meanwhile, AOL was content to collect money from their dial-up business.

I actually think buying up ISPs to jump start their entry into the DSL market would have worked out well, or at least slowed the downward spiral. It gets them off the shrinking dial-up as into the nascent high-speed broadband market. The purchase of a backbone internet provider, combined with their purchase of Time Warner in 2000 may have prevented Netflix from getting off the ground, and could have jump started the online video streaming business five years faster.

Finally, buying an equipment manufacture like Sun may not seem like it would have made sense, but with the racks and racks of computers they already owned, a vertically integrated and merged AOL and Sun could started the popularization of cloud services, helped along by their online catalog and online video services.

The benefit of writing this two decades years past AOL's heyday is that hindsight is always 20/20. But saying AOL was doomed, and there was no choice in the matter ignores any possible move they could have done along the way.

Compared to $166 billion, the purchase price of $4.4 billion is not very much at all, but that's still approximately $4.4 billion more money than I have.

AOL may not be the household name it once was, but it did manage to pivot away from the dial-up business, and over to the content business. It's just that the content business, even a $4.4 billion one, is a different market than everyone in America paying you a monthly fee to get on the Internet.

We're in the middle of a similar story with Yahoo, and time will tell if Marissa Mayer is be able to right that ship.

> The big one was the switch to DSL, which AOL didn't keep pace with. I don't even recall if they did start offering DSL. My internet experience in the 90's was interrupted dial-up and busy signals.

To reinforce your point, Earthlink did jump into the DSL market early and they're still chugging along.

> I don't even recall if they did start offering DSL.

They did. My parents had it in the early 00s. They'd resell the local phone company's DSL but require you to log into the AOL app in order to actually use your connection.

> but require you to log into the AOL app

I wonder why!

Instead of being about branding or a political decision to require the user to see an AOL logo, there may have been some technical reason for it. Especially given limitations in Windows 95/98.

They did all of the above - you could connect to the open Internet from AOL starting around 1996, they started marketing themselves explicitly as an "ISP + proprietary content" around 1998, they bought Netscape and Mirabilis and several other leading Internet companies. They aggressively dropped their pricing structures to compete with flat-rate ISPs, while their other proprietary competition (Prodigy, GENie) went out of business. In 1997 half of all families on the Internet got it through AOL. [1]

They just didn't do all of the above better than the competition.

A major factor that killed AOL was the shift to broadband in the late 90s. AOL had a huge infrastructure and competitive advantage in providing dial-up access to consumers. As the Internet grew, though, consumers got hungrier for bandwidth, they got hungrier for content, and the relative share of both of these resources that was not owned by AOL increased. It was easy to justify subscribing to AOL when they were $10/month for 56.6K access, your local ISP was $10/month for 56.6K access, but AOL gave you all this extra content. It was a lot harder when you could pay $30/month for 500K/sec ADSL or Cable access that unlocked a whole world of multimedia content. AOL owned none of the infrastructure that made the broadband net possible.

GFiber, Loon, and cell phones risk doing the same thing to Comcast, TWC, and Verizon FIOS now.

[1] http://en.wikipedia.org/wiki/AOL#1990s:_a_new_Internet_age

>> They had years to invest in the open internet, buy out a successful internet venture, or adopt internet features into their offering.

None of the big ISP's from the 90's "made it". Earthlink, Netcom, Prodigy... They were all either acquired, went bankrupt, or became DSL resellers. They didn't have any content so they were worthless as broadband took over.

There's only a handful of dot-com's still around from those days. Google, Amazon, eBay, Yahoo... AOL would have ran any of those into the ground had they purchased them, and buying ISP's like XO or Covad wouldn't have worked out well, or buying someone like Sun, Cisco, or SGI would also have been a disaster.

Isn't that what Facebook does now?

It's exactly what Facebook does. There's always a market for walled gardens, if they can keep up with the change in the free internet.

What, how is that at all different from any of the hugely profitable tech companies today? Apple, Facebook, Twitter, Uber, Airbnb, all of them operate closed platforms.

Coming to a Facebook, Snapchat, Twitter near you…

Tell that to Apple.

And one of AOL's acquisitions, Netscape, was worth $10B when the deal closed in 1999.

No that's backwards. AOL bought Time Warner for $165B. Their valuations relative to each other was 55/45, so actually AOL was valued at more than $165B. But yes in any case, AOL was worth quite a bit more in 2000 than 2015.

At first, I read the deadline as $4,48, mistaking the B for an 8. That I didn't got think twice to interpret this way reveals how far down AOL went, at least in my opinion of it.

and with factoring the effect of inflation in the equation, the picture looks way worse and bleak!

And much of the current value is from acquisitions made since then.

Adjusted for inflation that should be well beyond the GDP of New Zealand.

$228 billion in 2015 $

AOL in a big media deal, Clinton running for office, stocks at all time highs. What's not to love about 2000.


He's talking about the fact he copy-pasted verbatim a tweet someone else wrote.


Because you commented before reading the link.

Which Clinton was running in 2000?

Al Clinton.

I guess you mean Hillary for the Senate

"It's different this time..."

Clinton and Bush.

In 2000 Hillary was running for (and won) a US Senate seat in New York. Also in 2000 George W Bush was running for and won the US Presidency.

You win the internet for today.

While many are seeing this as bizarre, it is not. This is a programmatic and verticalization play. Verizon has been investing in adtech companies and provides the means of distribution. The deal allows them to now own the content as well. As someone in the advertising agency, Verizon has been one of the few telecoms that have enabled advertisers to utilize their data. This deal furthers their ability to tie mobile data with content for targeting and reporting purposes. You also have to remember Verizon is a TV content distributor that may pave way to AOL content distribution and allow true ROI measurement on Linear TV.

It's not the least bit bizarre, but it is EXACTLY what people are (or should be) afraid of. The people who own the pipes should NOT own the content, or they will be incentivized to leverage their monopoly on our computer screens to provide unfair advantages to their content.

The FCC should have drawn a line in the sand and been done with it before the Comcast deal was allowed to go through (but of course the head of the FCC at that time mysteriously took a cushy job at Comcast after completing her tenure). You want to own the pipes, that's all you own.

if so, then why should the pipes be privatized at all? in that case, the pipes should be built out and maintained at a governmental-level and leased back at a uniform/standardized price to all providers.

It makes sense to me that the government should own "the pipes", and then lease them to competing firms, as these are a vital communication infrastructure.

That is called municipal broadband and quite a few municipalities are looking very hard at it.


Because, you want the pipes to grow.

I wonder if that really matters all that much. It could be my limited perspective talking, but fiber seems pretty future-proof. Nothing is faster than light; the only conceivable improvement would be cables that can handle wider spectrum of light.

(The nodes on the other hand, of course, are continually improving)

Ethernet cable is a similar story. NICs have advanced tremendously, but Cat5 (defined in 1991) is still usually all you need.

Fiber is future proof but most people don't have it. The process of getting it is called growth. If it's the case that making the "pipes" a public utility would have hindered growth, then you would never have got fiber.

And 100M ethernet over Cat5e is pretty useless. Standard WiFi these days is 150-300 Mbps. I regret not running Cat6 in to my extension just to be safe.

I would run Cat6a if I was building a house, because it's the latest spec and not much more expensive, but Cat5e is still great. Standard WiFi never gets anywhere close to those speeds, is simplex, and I find a 10Mbps Ethernet (powerline) link handily outperforms a 100Mbps WiFi connection for networked file system access. (Probably either an issue with the simplex or dropped packets)

P.S. Cat5e can still do 1Gbps, just not over quite as great a distance as Cat6. Although Cat5e definitely isn't rated for 10Gbps (nor is vanilla Cat6 for that matter)

Cat5e does do gigabit speeds. You might be thinking of it's predecessor Cat5.

I 100% agree. In my ideal world, the government builds fiber to every house and pulls it back to a central POP where private entities compete to provide service over the top. Thus creating REAL competition and removing the barrier to entry. Unfortunately we've got a lot of people with their heads in the sand that think government is the root of all evil... so I'm working with what I've got :)

The way to do it is to create an essentially non-profit organiation with a very limited charter, which is to provide internet infrastructure only. Then we and huge companies all invest in it (it would still charge for access). It would cost billions of dollars but it would pay off in the long run. So it would be profitable, but it wouldn't be like a company that has to maximize shareholder value and can expand into any business activity.

Because of the charter, it could never be used in a way that is not "net neutral."

Or, you know, we could get a bunch of guys with guns to MAKE us do things according to the demands of special interest groups... and see how that turns out...

or mandate that pipes should have universal access, so that it becomes like a utility (i'd compare it to electricity). If you decide to sell your own brand of toasters, you cannot be allowed to send 'cleaner/better' electricity to your own toaster than to your competition's.

Why not apply that to other things?

Why is apple allowed to sell hardware then dictate who can sell apps for that hardware after it is sold?

Why can google use its search engine monopoly to push chrome, android, maps, etc. etc.?

Neither of your examples are even close to monopolies.

Comcast owns NBC, another content provider. I don't think there are any unfair advantages there.

For those who are wondering why this might be a good investment: AOL still has 2 million (!) dialup subscribers that fork over $20 a month.


I doubt it was for the subscribers. Look at AOL's recent acquisitions in the last 10 years.

Video: StudioNow, 5Min Media, GoViral, Vidible

News: Weblogs, TechCrunch, The Huffington Post

Marketing: Lightningcast, Third Screen Media, AdTech, Tacoda, Quigo, buy.at, Pictela, gdgt, Adap.tv, Convertro, Gravity

One by AOL sunset Gravity, Pictela, ADTECH, Adap.tv, AdLearn, and Convertro (along with subproducts like Adap.tv Marketplace, and AOL's native data platform) into one product. One by AOL is a HUGE product. http://corp.aol.com/2015/04/14/aol-launches-one-by-aol/

StudioNow had been broken off from AOL and repurchased back by the initial investors two years ago, although AOL still holds a minor stake in StudioNow (at the time). [1]

Disclosure: I used to work for AOL StudioNow.

1: http://www.bizjournals.com/nashville/morning_call/2013/01/st...

I feel like this is a perfect reason why this is a bad investment. Anyone who is still subscribed to AOL dialup is honestly probably a senior citizen or technology-illiterate. AOL is not even marketing their dialup service anymore. These people over time will slowly decline until those 2 million eventually hit zero. In fact, you can clearly see the nearly exponential downward trend right on the article you linked. This makes it a nice amount of basically free money for AOL currently, but an absolutely terrible investment for the future.

A significant number of AOL dialup customers are living in rural areas where broadband is just not available [1].

[1] http://www.psmag.com/nature-and-technology/neighbors-still-u...

Even if there's good reason to use it, there's no potential for growth. The only way this can go is down. It's pretty much going to be a race to recoup the investment before all these rural areas are covered by cellular (even 2G would be faster than dialup!) or satellite internet becomes cheap enough.

With 4G broadband this is going to become irrelevant very quickly.

4G is generally available in rural areas?

Yes; Verizon has an offering designed explicitly for rural areas[1], but it's expensive. The linked article is from 2012, and prices have since declined, but the general gist of the service is the same: a big antenna you bolt to your house or a tree and will pull from an existing account-level share plan (if you have one).

[1] http://www.cnet.com/news/verizons-homefusion-now-brings-4g-l...

You still have to be in a 4G coverage zone. I guess we're getting into the definition of "rural." Where I live I have no coverage from any carrier.

People will have better luck with rural telephone companies trying to stay alive then big wireless carriers. Sprint and T-Mobile absolutely suck in coverage area for rural folks.

One example, Steele ND and the surrounding area is served by a small rural telephone company that is laying a lot of fibre (I'm hoping they head North). A 200M plan (no cap) for $45 a month. This is being repeated quite a lot in rural areas with rural cooperatives.

I usually think of where I live as rural due to the distance to a major city (20 miles to Athens, GA), but I do get occasional 4G inside the grocery store. It's more exurban than rural.

Living in the midwest, when you're 10 minutes outside of a major city, you're lucky to get spoty 3G. After 20 minutes you're lucky to get any signal.

The last time I lived in a deep rural area (Norton, KS) there wasn't a good cell option. The cell tower that covered the town was flaky at best in terms of reception. So, I guess your mileage may vary applies in that situation?

If Verizon is trying to expand their wireless offerings into areas where dial-up is currently the only option, then having much more direct marketing access to those dial-up users sounds pretty useful for them.

I don't even have cellphone coverage at my house in West Virginia. No voice, no text, no bars. Not with AT$T, Verizon, or Sprint.

Now coverage maps, AT$T says they have 3g but I get no service at my house, Sprint Map is spot on, and Verizon map I haven't compared.

Yes, an anecdotal example is my parents. They live 45 minutes outside of Columbus, OH and have a Verizon 4G adapter for their desktop. In fact some of the smaller carriers have poor cell/data coverage where they are.

Not right now, but is there a reason why it won't be?

Economics of covering the area. If it costs more to cover than they expect to make in any reasonable time frame, especially if it never breaks even when you account in maintenance, then they won't do it.

don't forget though, AOL owns TechCrunch, Engadget, Huffington Post, and a bunch of other crap, and they have a pretty massive ad platform. Id wager that the ad platform is what Verizon is really after here.......and maybe a nice bonus would be controlling huffington post and getting them to stop writing articles about how shitty comcast/verizon/twc are and how net neutrality is a good thing.....but that is just me being a bit speculative

Or (some of them) may simply live in areas where broadband internet is not available. I've only had it at home for about 5 years, prior to that dial-up was my only option.

I feel like this is a perfect reason why this "may be" a good investment. These people may be switched to Verizon's wireless internet services.

Selling Depends is a big market, there is a lot more cash from adult diapers to be made.

At a cost of $2000 a sub, that's pretty expensive though.

They're going to rake in that much in people forgetting to cancel their AOL dial-up account.

They do have that, but I suspect this has more to do with ads than those customers. If it was about those customers, Verizon would be paying quite a lot for them.

But they definitely aren't being acquired for that reason.

Their respective headquarters are also right down the road from each other.

$4.4 Billion is the equivalent of 7.3 Trillion free hours of AOL service via promotional cd-rom.

Assuming you get 1000 hours per CD, you're saying CDs cost about $1.65.

You could probably get CDs in bulk for an order of magnitude or two cheaper. Assuming the CDs are $0.01, that's 440 trillion free hours. Great deal for Verizon.

On the other hand, with dial up at ~50kb/s, and the top-end Verizon FiOS running at 150Mb/s, that 440 trillion free hours of dialup is only 146 billion hours of FiOS, or $33/hour of FiOS 150Mb/s, or, put in the way that the market usually charges for bandwidth, approx $24,000/month for 150Mb/s bandwidth. That is way more than the going rate for that sort of bandwidth.

For the past couple of years, AOL has been a place where companies go to die. Will Verizon pick up that mantel and continue offering the much needed "Death with Dignity" service for waning tech companies?

Not true at all - HuffPo has grown, Adapt.tv is a big win, 5Min was the foundation for video (they're top 3 now), Weblogs Inc setup content division, etc. I'm sure there are some bad deals done, but they've had a great track record on buying+integrating.

I am working in AdapTV. With AOL, we didn't die but surely didn't improve...

I took a contract at this great place with highly experienced team members which had been acquired by Verizon a year before. I was assured Verizon would not mess with the great thing they had going but slowly, almost all of them got fed up with the changes and left, including our manager.

It was not just our team, almost every week there would be a "bye and thanks for all the fish" email from some higher up.

Just last week was talking to a recruiter who told me of massive layoffs on that place last year.

Thats lil bit worrying case..But unless Verizon wants to kill of Video Ad Management Product "ONE by AOL", this may not happen here. AFAIK Verizon doesn't have anything related on this..

Like Techcrunch or Huffington Post?

Is Verizon competing with Comcast, who bought its own media company (NBC Universal)? Are the big communications companies now competing over vertical integration?

If they invest in vertical integration, that might give them a strong incentive to maximize their investments by priortizing their own media over others, degrading the open Internet.

The answers are yes, yes, and yes.

As content becomes unbundled from the wire, wire-owning companies need to become content companies if they want to avoid becoming a utility.

Today I learned that WhatsApp is 5 times more valuable than AOL - and I never understood either of these companies' market..

Interesting though - that company 'felt' like a giant when I seriously got into using the web and although the article seems to imply that the operations of AOL continue (using the AOL brand?) it's fascinating to see such a company being swallowed.

Sorry, but why do you believe WhatsApp is overvalued? They have an incredible mindshare, it is the only app (besides Facebook), that I see moms and grandmas using on a daily basis.

Heck, my mom talk to me mostly through it. She evens send me emoticons, pictures and voice notes!

It's .. an IM app (and arguably it wasn't a good one/a broken one for quite a while). Like AOL offered? ICQ? MSN? Okay, all dead.

Xmpp? Skype? Lync? Hangout? Telegram? TextSecure? etc. etc. I'm sure I forgot lots of somewhat sensible/popular options.

Basically it's not doing a lot, there are lots of alternatives, I see no way to keep users - or make them pay anything. I mean, I guess they pay with their privacy and/or first-born now that FB owns WhatsApp, but .. I - this is just me, my opinion - fail to see the point.

Plus, I said that I - again, as in me personally - don't understand these companies and what they offer. No need to agree ofc. I haven't been an AOL user, I don't have a FB account or a WhatsApp account. My mom has no smart phone. My dad doesn't use WhatsApp as far as I know. Last but not least: Why would I want to get emoticons(?) or voice notes(??) from my mom? The former is .. useless. The latter? We use my smart _phone_ as a phone for that.

I guess if you don't understand the value something brings to the table, everything is overvalued. I don't understand the value of smart watches. I don't understand the pay grade of football (as in, soccer) players. That doesn't mean that I want to slight the things I mention (or could add to the list), it's just that I am unable to understand these valuations. To see the value, you .. need to find value in something?

The two keys to understanding whatsapp valuation are that they had established ubiquitous cheap all-you-can-whatsapp packages with telecoms in developing markets, which quickly became all-you-can-whatsapp-and-Facebook, and are now being parlayed somewhat clumsily into Internet.org.

The second thing is the growth of messaging-as-platform in markets like China, where everyone is using wechat to query bank balances, order tickets, etc. It's a commercial platform, and to talk to young people in Shenzhen who's primary (maybe only) computer is a smartphone, the idea of having these interactions through a website is comical. It's really something to witness, and totally unexpected for those of us who grew up on desktop computers and laptops. FB is trying to turn messenger into a platform now in the U.S., and they have the whatsapp platform to fall back on or develop in other countries. Whatsapp could have become a threat to FB's growth in developing markets by adopting wechat's platform and timeline features, so the valuation was defensive. Time will tell if there is potential for messaging as a revenue generating platform outside of China/Asia.

The best counter-argument to the valuation is that Whatsapp had something like 20 engineers on staff when they were acquired. It's hard to imagine a future where a global messaging platform doesn't continue to need less employees to manage it. I figure that eventually, such important, but cheap-to-run infrastructure seems like something that will end up being run by a Mozilla/Wikimedia style foundation on donations.

I'm confused. I like your context, the explanation of why IM might be a big deal. I don't have that background and might be using IM in a weird/non-mainstream way and certainly don't get global trends.

But then you say 'wechat'. Note again: I don't use any of these apps. It seems that this is a competitor? How does "A competitor is really successful" translate to "you guys are doing something valuable"? And if you'd say "Well, any IM application with some traction can take away that spot again", how can WhatsApp make sure that a) it is the one to pull that off and b) it won't go away again when the next IM app comes around, and this time it's GREEN! And - I don't know - has cute cat and puppy images as part of the built-in 'emoticons'/icons to distinguish itself from the feature set of the inferior IM apps?

I understand that there might be a huge market for IM applications. I don't understand the market for any _specific_ IM application.

The way I see it? WhatsApp is boring. I can't do anything new or interesting. At all.

I agree with you that the hold of these apps can be surprisingly tenuous, and the history of desktop IM client switching would bear this out.

However, there's also a good argument that mobile messaging was a shift to a new platform (and the inevitable replacement of SMS). There are some fairly resilient network effects, mostly geographically focussed, Whatsapp, iMessage, Wechat. Wechat is just further ahead than the other networks in showing what a messaging platform can develop into, a platform, rather than merely a replacement for SMS. Naturally Wechat has also been sheltered from competition by the great firewall. So Wechat is an indispensable app if you live in China, but in the rest of the world almost no one knows that it exists. You don't only use Wechat to chat with your friends, but also to query your bank balance, pay at McDonalds, and shop online. It's all very weird, because the UX is chat, but if your first computer was a smart phone then it probably feels more natural.

Even though the switching costs between mobile messaging apps seem much lower with mobile and notifications (it's easy to have a dozen installed), it still takes a lot to convince all your contacts to install something new. If these apps become platforms that people get used to using to using to interact with their bank or sirline it beomces harder to unseat..

Consider how just a few mobile apps not being available on blackberry or windows phone makes switching to these minor platforms difficult.

"To see the value, you .. need to find value in something?"

I disagree. I think everyone is capable of empathizing with a market and understanding why something would bring value, even if it doesn't bring value to you specifically.

That's fair. But it doesn't work like that for me.

Now that I think about it, I can come up two reasons:

1) The sums involved. Both for the deals in question (AOL, WhatsApp) or in my football example, the sums are mind-bendingly large. I .. cannot grasp those. Millions are already insane, but billions? I have no clue how to value _anything_ at those levels. Certainly not things that aren't entirely new or special. My gut feeling says "That's far too much" a lot earlier already, more or less regardless of what we're talking about.

2) I guess the market is hard to estimate if you're not only not part of it, you're actively surrounding yourself with people that are like-minded. Sure, every WhatsApp user can tell a story about friends and family getting a lot of value out of it. Of course! In a similar fashion I can point out that none of my family members (as far as I'm aware) use it, none of my friends seems to require it, it .. doesn't exist in my ecosystem and the last person that asked if I am on WhatsApp - about 3 month ago - was a manager at work. I mean.. WTH? "No, and certainly not for work". It's reinforcing the initial position, confirming my bias. "No one uses it, no one needs it".

Then again, maybe that _is_ a lack of empathy. You're the judge. I merely express my disbelief and sense of wonder here, if everyone thinks these values are cool then yes, I'm obviously wrong.

I've never seen a person in the US actually use WhatsApp to talk to another person in the US. I used to occasionally see someone use it to talk to friends who were traveling abroad, but that's mostly been replaced by iMessage or Hangouts at this point.

You answered your own question: In the US.

WhatsApp is huge outside of the US. If memory serves correctly, SMS has always been expensive and MMS never really took off - once the data messaging platform came to be WhatsApp really served that market and has done well because of it.

Whatsapp is hugely popular in many places, just not here:


I've paid for WhatsApp and am in the US. Yes, I originally joined to chat with people overseas, but now it's also the sole messaging service I use with multiple US-based contacts.

AMA I guess, since apparently fellow Americans don't understand WhatsApp.

Ya I never really used WhatsApp but I do use Telegram for my friends (US). Why Telegram over WhatsApp or Kik or whatever? Desktop client, it is nice to be able to reply without pulling out my phone at work.

Well, there's Whatsapp Web, but it oddly requires you keep your phone connected.

Replace "understand" with "care about" and it's a double win - you're closer to the truth, and you aren't condescending in service of defending your favored corporation.

Outside of the US, not everyone has a phone capable of running iMessage or Hangouts. WhatsApp happily runs on feature-phones, because of network effects, many people who can run iMessage/Hangouts and WhatsApp

WhatsApp's user base is largely non-US, so I wouldn't expect you'd see many people in the US using it compared to its actual popularity.

Because on average they only make about $0.05 per user per year [1]. I think they will struggle to grow that figure because messaging apps have very little lock-in. My friend John doesn't want to pay $1 to get WhatsApp? No problem - we can just use Telegram instead.

[1] http://techcrunch.com/2014/10/28/whatsapp-revenue/

According to those numbers each WhatsApp user was only worth $4.66 to Facebook. That means WhatsApp needs to add 3.3 billion users to be worth the extra $15 billion.

has your mom or other people you know ever paid for whatsapp? I know i've never seen anyone pay, just anecdotally.

I've paid for myself and my mother-in-law (you can pay for a contact's subscription)

WhatsApp has about a quarter of a billion (with a 'B') users worldwide.

Trying to emphasize the B in billion when you are just at a fraction of a billion looks pretty stupid. HN gets 1/500th of a billion (with a B) views every day.

how much do they pay WhatsApp each month?

this reminds of a recent episode of Silicon Valley, the eccentric billionaire Hanneman says, "If you show revenue, people will ask how much, and it will never be enough, It’s not about how much you earn but what you’re worth.....”

Initially i didn't see the sense in the Whatsapp acquisition, i think it was purely defensive, as well as the data FB could get their hands on.

"For all phone types, WhatsApp is free to download and try for the first year. After, you have the option of extending your subscription for $0.99 USD per year." from http://s831.us/1JbKMiG

except for the non-trivial part of the user base that bought the "free messages forever" version of the app...

pretty irrelevant. FB is a publicly traded company, and as such, it's pretty easy to see how much a social user is 'worth' in revenue terms. Instagram turned on ads, and so will whatsapp, perhaps. but ya, we have a pretty good understanding what social users are worth when monetized by social ads. And the value is influenced by future growth.

How much does your average TV viewer pay NBC/CBS/ABC/Fox per month?

That is an unfair analogy. Those networks make money from advertising. WhatsApp refuses to show ads.

Facebook has no such compunctions, though, which may be why Whatsapp is worth significantly more to Facebook than it is to Whatsapp.

Approximately 10 cents.

Time to discard every media entity under AOL. You can be damned sure Verizon will be tightening up how wild they get on certain issues e.g. Net Neutrality and anything else that can affect their bottom lines.

Huffington Post, TechCrunch and Engadget how do these fit? Does this mean these might go away??????

Can one be so lucky?

Now that the FCC is involved with internet regulation, why do away with them? Verizon can use them to put out talking points and keep competitors out by getting favorable regulation passed.

I foresee Mike Arrington quitting again (or did he leave again already? I've lost track)

We'll see a Verizon Disrupt soon

I am having an epiphany. AOL, an internet provider and ad company, buys Time Warner. AOL gets spun off into an independent company. AOL reinvents itself as a media and ad company. Verizon, an internet and TV provider, buys AOL.

This is happening after Verizon reinvented itself from a phone company. Merger 2.0 is making more sense than it was the first time, but still, nonsense enough.

This is not about dial-up or media. This is about ad tech. Aol is done a very nice job of acquiring sold assets in this space. I think this is a smart move.

I used to use AOL. Before broadband to the home, AOL had lots of modems and local access numbers. I traveled a fair bit and that was really useful, for my monthly alotment of 3 hours.... This was a while ago (AOL was giving away floppy disk before CDs.)

It was a walled garden, and since most people were on AOL, besides email there wasn't much outside communicating. Frankly at the time there wasn't nearly as much on the web. When AOL unleashed their users on the web it was a big deal.

AOL really got killed by broadband to the home, which they couldn't offer.

I hope that this doesn't turn into a onerous add push at Fios and DSL users. Verizon does some strange things like redirecting missed DNS hits to an ad page.

Another former AOLer here. They tried to make a run at the broadband market in the early aughts by partnering with various telcos (I know; I was part of the team that built the back-end interface with the ISPs), but it was too little, too late. I never understood how AOL thought that would be sustainable in the long term.

A few months after I left the entire billing department saw deep cuts after AOL nixed their monthly subscription fees for dial-up.

Makes me wonder what would have happened if this acquisition was done a decade ago.

Surprised we aren't seeing the Gov jump in with Antitrust laws. Verizon can't have 4G AND dialup! Just not fair

This might be a good investment: AOL still has over 2 million dialup subscribers.

It's not unreasonable for a company that 'owns' the copper going to homes to also manage the dialup internet connections there as well.

Is AOL still an Internet access provider?

Yes, there's a shrinking, but still very lucrative, dialup business. It's provided the capital for Aol's growth into media and advertising these past several years.

Gotta love old people adverse to change, or thinking they still need to pay for email.

Not to mention those people who live in areas still not serviced by any broadband providers. I know, insane, right? I thought everyone lived in cities too!

You can usually get an Edge/2G connection, which is probably faster than dial-up.

In practice it isn't signficantly. EDGE peaks at 384Kbps, but these days if EDGE is the only thing available you generally have a poor connection that gets you about half that before all the dropped packets that halve it again.

Satellite internet can also be had for prices which aren't completely absurd.

What does dialup have to do with email?

You still need connectivity to access free email providers. And for older folk who do nothing other than email, do not have smartphones, but do have a landline... 20 a month on dialup makes more sense than 50 a month for Comcast.

Sure, it sounds ridiculous to us who are permanently connected and do not even have landlines... but to the 65+ community, there really still is a small, shrinking, but real use case for dialup access.

He may have been being more literal than you think. I can name 3 people that were paying for an AOL subscription because they thought they needed to keep it to keep using their AOL e-mail addresses. They all had broadband from their cable companies, they weren't dialing up.

They may have needed it at one point. At the time I quit AOL, there was no way to keep the email address, and they did not provide IMAP access or forwarding. Seriously. They (very badly) practiced the lock-in attitude. I just visited mail.aol.com and realized that things have changed a lot.

As a reminder, AOL bought Time Warner for $180 billion 15 years ago.

With what I know about both companies, they are practically made for each other.

Verizon needs a gullible user base and anyone still using AOL basically is purely gullible.

BTW how does Verizon get away with breaking the law every single day: when they were licensed 700mhz by the US Government (on behalf of the US people) for LTE they were required to not restrict user devices on that band. Go try bringing your own non-verizon LTE device to verizon and see what they say (the answer is always no)

here's the armchair analysis:

AOL was valued at 160+b at it's peak. and it was making lots of money as a "media" company to the point they thought the right thing was to buy Warner.

then they lost the captivity of their dial up clients, and their media business vanished overnight.

Verizon realized they own the pipes and they want aol know how on how to capitalize it to profit from media while it has the audience captivated.

people are finally realizing that having control over the pipes give you control over the content. AOL realized that too late. expect Verizon to fight very hard on net neutrality to be able to monetize their hard earned eye balls. and welcome a new era of mobile bloatware and deals like you already see in south america, where you can get a 100mb data plan only, but traffic to face book and whatsup is free.

so what happens to the digital prophet??

I think Shingy will replace the "can you hear me now?" guy.

Their "get your HoMo on" campaign will implode for sure.

"can you experience us now?"

Anyone else read it as "Verizon to buy AOL for $4.48"?

That would be ridiculously overpriced.

I wonder if that makes Ariana Huffington richer than her ex-husband. Mike H.: scion of wealthy Texas oil family. Former California representative, failed run for Senate using family money. Came out as gay man after loss and now is an indie film producer. Ariana H.: colorful journalist and political analyst retaining native Greek accent. While married she was a conservative, but became flaming liberal after divorce. Started dot.com news site, sort of the mirror image of conservative Matt Drudge. AOL bought her out a few years ago and she is a significant stock holder.

Maybe she'll actually get around to paying all her bills in Santa Barbara this time.

An AOL/Yahoo combo has been widely discussed on the web - I guess that is one less possibly for Yahoo (unless Verizon wants to buy that too.)

AOL merged with Time Warner and now Verizon buys it. How times change.

Still I am concerned about all the consilidstion in the telecom industry...

While I don't doubt that Verizon will be able to convert some of those AOL subscribers to faster broadband service, I suspect a lot of them either can't upgrade, or won't upgrade. The dial-up subscribers are mostly a cash cow ($180/yr each, about 12 years to recoup the investment) and everyone is talking about them, but I wonder if there are other AOL properties that Verizon also values that can help justify the premium they paid.

As people tell their AOL stories, note the other front page post today that Mozilla has released Firefox 38.

Thank you AOL!

AOL stock price is now almost 30% more comparing to previous week. Not a bad move from shareholders.

Shoulda held onto the pitiful amount of stock they gave us.

Considering how irrelevant AOL itself has been to the mainstream internet for some time now that price tag seems awfully high. They do own a bunch of popular bligs/websites though. So maybe that's it.

You obviously unaware of Video Ad Management tools they offer...

So I guess CompuServe is back in one piece again...

That is more than 4K distressed babies.

Funny that WhatsApp is somehow WAY more valuable than AOL is. I feel old.

Whatsapp is worth 19B to Facebook, not to the rest of the industry.

Would that make AOL the first company to provide Fiber and Cable?

Cable I didn't know AOL had ever made it into cable. Or are you meaning dial up over telephone cable?

I think he is referring to Verizon. Now that they are part of the Verizon family AOL can get you online via, fiber, cable or dialup.

Actually, I didn't realize AOL and Time Warner split.

Not only did AOL and Time Warner split, but Time Warner Cable is a separate company from Time Warner.

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