I sold the AOL last week because their service is a commodity and they are not the low cost provider.
Here�s what the company does:
"AOL provides Internet online services such as electronic mail, conferencing, software, computing support, interactive magazines and newspapers, and online classes, as well as easy access to services of the Internet."
1. Electronic mail: This is a commodity offered free of charge from numerous competitors including ISPs and web based hotmail, yahoo, excite and others. 2. Conferencing: This is a euphemism for chat. The chat community that AOL has developed was the most compelling reason to own the stock. Eighteen months ago chat was a novelty. Today the technology is a commodity and most web sites can offer the service for next to nothing. Also, Internet Relay Chat (IRC) dwarfs AOL in popularity. Some of the chat groups are relocating to areas outside of AOL that have better moderation and organization. In the same way that USENET has dimmed because of spamming, AOL chat group members have taken their discussions elsewhere. 3. Software: The maintenance and distribution of their browser software is a time consuming cost of doing business. It is not a reason to own the stock. 4. Computing support: This has been given new life with the Compuserve acquisition but is increasingly an area being served better by web savy hardware and software vendors such as Dell. 5. Interactive Magazines and Newspapers: this is a commodity content area that is expensive to maintain. Valuable magazine and newspaper content is better served by sites such as the Wall Street Journal. 6. Online Classes: This is a commodity content area that is expensive to maintain. Value added non-commodity classes can be found at premium content sites such as the University of Phoenix and ZDNet. 7. Easy Access to the Internet: Faster, cheaper and more reliable access can be achieved through ISPs that specialize in this area. Today, many long distance carriers offer internet access. AT&T has great service and the monthly charge goes right on your phone bill.