AOL innovation may lag after Case's exit
By Paul Davidson
USA Today
Some longtime America Online employees and analysts fear there may be a little-noticed casualty of AOL Time Warner Chairman Steve Case's resignation: innovation.
Case, founder of the AOL Internet division and a Hawai'i native, has been the media conglomerate's technological visionary — a lone, steadfast voice for a future in which entertainment and information zap seamlessly into TVs, PCs, cell phones and other gadgets.
Case espoused that vision, known as AOL Anywhere, even as it disintegrated amid technological snags and scant consumer interest. His planned departure in May solidifying control of the company by old-media, Time Warner executives, could doom hopes that AOL eventually will lead the way to that dazzling promised land, some say. CEO Richard Parsons is known as a practical old media stalwart.
"The only way you get things done is if the person behind it has so much passion that he drives the innovation," says Tim Bajarin, president of Creative Strategies, a consulting group. "If you live in the broadcast world, you can't see past next month's rating books."
AOL downplays such concerns, noting it's placing new emphasis on its broadband service. And CEO Jonathan Miller, a former USA Interactive executive, has experience in old and new media.
The dream was once much grander. When No. 1 Internet service AOL bought media titan Time Warner in January 2000, executives vowed to drive technology by dint of their mammoth assets and customer base.
Before long, interactive TV users would be clicking on a CNN news report to get more information; Time Warner movies and music would be downloaded to PCs. That vision largely has been derailed by cold realities outside AOL's purview. Consumers have shown little interest in interactive TV or third-generation wireless services.
AOL, in turn, has scaled back its AOL Anywhere plans, including Interactive TV, handheld and Internet appliance offerings.
Instead, the company's turnaround strategy, unveiled last month, addresses slowing subscriber growth. AOL is giving members exclusive access to Time Warner content and touting a $14.95 Internet service that subscribers could combine with a third party's high-speed service. Case's resignation allows AOL to "put its head down and deliver the numbers," says First Albany analyst Youssef Squali. It also lets AOL chief Miller "to truly be master of his own destiny" without Case peering over his shoulder, he says.
AOL still plans to launch a music downloading service next month. But its tech initiatives largely revolve around beefier communications features, such as a call alert so members can see who is calling while online and take a message. A unified voice mail/e-mail service is coming later this year.
AOL also is netting marginal revenue from its instant-messaging service on cell phones. "We're taking a much more measured approach" to new technologies, Lisa Hook, president of AOL Broadband, said recently. The change reflects a narrower view of the Web, from multimedia gateway to communication and information tool.
Yet, eventually the world will be ready for newfangled technologies. Then, some say, Case's absence will be felt. He will remain a board member, and "still gets to be a vocal person on the vision side," IDC analyst Jonathan Gaw says.
When new technologies take hold, "We want to be there," AOL spokesman Jim Whitney says.
