The Rise And Fall (And Rise?) Of AOL - InformationWeek

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The Rise And Fall (And Rise?) Of AOL

AOL, which recently abandoned its "pay-to-play" model, is now trying to succeed as a free service in a very crowded marketplace. Can it succeed? We look at AOL's past and its possible future.

AOL -- the company that was once at the forefront of the Internet revolution -- is now at a crossroads. Will the company that was among the first to popularize online chat be able to reinvent itself in order to click with the savvier user of today? Or will it fade away, written off as a company that couldn't keep up with the ever-changing world of technology?

Until recently, AOL was best known as an ISP for those who knew little or nothing about the Internet. Many of its users were attracted to it because of its reputation as a family-friendly starting ground. On the other side of the tracks, more experienced users were often critical of the service, pointing to its "walled garden" approach, the software's tendency to override other applications, and the way AOL made it difficult for its users to quit the service.

But on August 2, 2006, the company surprised everyone when it announced that it would be providing its services free of charge. According to the company, it was just a part of its goal of putting AOL "back on a growth path." And on October 4, 2006, AOL introduced the beta of its new OpenRide software, which offers AOL adherents a new interface with which to check their e-mail, surf the Web, IM their buddies, and check out AOL's media offerings (music, video, etc.).

AOL's new OpenRide software offers easy access to its now-free services.
Click image to enlarge.

It's a complicated history: A company that was once ahead of its time is now struggling to keep up with competition that was born years after AOL began hooking up its first users. And its gleaming image, once held up as an example of a company that knew how to deliver a desirable, quality product to families nationwide, is now tarnished due to poor customer service. Now, having eliminated its fees and introduced a group of new services, AOL is trying hard to catch up.

Begin At The Beginning
To understand AOL's fall, it's important to understand how it rose to such tremendous heights. (For a blow-by-blow account of AOL's history, check out our AOL Pop-Up Timeline.)

AOL would not have succeeded without the Commodore 64 or the Apple II. AOL started in 1983 as an online gaming company called Control Video Corp. (CVC), which was founded by William (Bill) Von Meister.

The Rise And Fall Of AOL

•  The Beginning

•  AOL Is Born

•  Does AOL Get It?

•  Will Work For Free

 AOL Pop-Up Timeline

One year later, the company was in dire financial straits. An investor in CVC, Frank Caufield, brought in Jim Kimsey as a manufacturing consultant and Steve Case came on also, initially as a part-time consultant. Case, Kimsey, and engineer Marc Seriff convinced Commodore Business Machines, maker of the popular Commodore 64, to research the viability of providing an online communications service for its customers in 1984. Until that point, CVC was only providing one online service: Gameline, developed for Atari. When Commodore accepted the deal, CVC licensed software from another online service called PlayNet, and their online service, dubbed Q-Link, was off and running with e-mail, chat, file-sharing, games, and other features.

But while Commodore's management had the foresight to embrace online communications, and to invest in CVC, the computer maker was struggling financially. So CVC, which dropped von Meister and was renamed Quantum Computer Services in 1985, started to look for other partners to expand -- and secure -- its business. Quantum forged an alliance with Apple, helping that company bring AppleLink Personal Edition (ALPE), an online service offering support and community for Apple users, to market.

Then, in 1988, Quantum debuted PC-Link in a joint venture with Tandy Corp. (now Radio Shack), a service for use with IBM-compatible machines (Q-Link was solely for Commodore computers). PC-Link offered news and reference services, and had two levels of service: a basic news and reference service, and one which offered more advanced computer hardware and software forums.

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