Last week, America Online Inc. took minority stake in low-priced personal-computer maker eMachines Inc. By doing so, the No. 1 online service may have just proved that Microsoft wasn’t being disingenuous when it testified in court recently that it feared AOL would try to make Windows obsolete.
EMachines is a joint venture of South Korea’s Trigem Computer inc. and Korea Data Systems Co. Under its agreement with America Online, all eMachines PCs will be loaded with easy access AOL and CompuServe, which is also owned by AOL. In addition, for a limited time — beginning this summer — buyers of eMachines will be eligible for a $400 rebate covering the purchase price of any of its three computers when they sign up for a three-year membership to CompuServe.
The bottom line is that AOL is offering consumers a free computer if they join the existing 2 million CompuServe subscribers.
It’s a slam-dunk
If simplicity equals beauty — then this package is a Mona Lisa. For AOL, the deal lures first-time Internet users from a pool of 40 million U.S residents that plan to go on in the future, according to a study by Intelliquest Information Group Inc. Not only would they sign on to one of AOL’s two online services — but by doing so they become potential customers for the AOL’s plethora of e-commerce offerings.
But the real kicker is what’s not being said…
How easy would it be for AOL and Netscape to also begin offering first-class PC applications such as word-processing and database management via the Internet for a small premium? If it does, in one swift movement, AOL would have successfully challenged the need for the Windows operating system. The next step could be to offer the same type of package bundled with online business applications to small companies.
Under this scenario, suddenly, AOL becomes a one-stop-shop provider for everything a consumer or a small business needs. With this kind of strategy, AOL’s army of 17 million subscribers could double overnight — as could its revenue.
Some may think this type of projection is unrealistic. But if you have followed AOL for any length of time then you know this company has risen from the dead several times. For one, I’m superstitious. Perhaps it’s about time to recognize that Case and company have just leapfrogged to the head of the pack.