AOL unveils new software with focus on broadband

Reshma Kapadia

NEW YORK: America Online Inc. on Wednesday unveiled the latest software

upgrade for its Internet service, emphasizing high-speed data and non-PC

devices, as well as better core features such as e-mail and instant messaging.

The newest version of the client software, AOL 6.0, supports all high-speed

data connections, such as digital subscriber lines, and provides a built-in

multimedia player that lets members access music and video online without having

to download additional software.

The upgrade will also feature HTML e-mail capability that will let users

include graphics with messages. And, it will offer a synchronized address book

that users can access regardless of the device they are using.

Distribution of AOL 6.0 will be much wider than past versions. AOL said it

will distribute software disks in more than 50 retail chains, including Barnes

& Noble Inc., Circuit City Stores Inc. and Target Corp., compared with the

five retail partners used for AOL 5.0.

Dulles, Va.-based AOL will also launch a multi-million dollar television ad

campaign to promote the software upgrade, which has been in a test phase for

several months. Upgrades are usually unveiled in the fall when Internet usage

rebounds after a typical lull during summer months.

"Historically, the AOL brand has carried AOL a great deal. It has

enabled AOL to acquire customers just because it was AOL. With the market

starting to mature, AOL is starting to leverage its new found friendships, such

as Gateway and Barnes & Noble," said Youssef Squali, an analyst at ING

Baring.

The upgrade will also include a shopping assistant, which was unveiled

earlier, that will travel with users and provide online ratings for stores and

comparison shopping information as users browse through AOL's merchant sites.

Some Wall Street analysts have said the upgrade will be one of the near-term

catalysts for the company as it awaits US regulatory clearance for its $108

billion merger with media and entertainment giant Time Warner Inc.

The deal is still pending US regulatory approval. Sources close to the

situation said Tuesday AOL has decided to extend its talks with the Federal

Trade Commission for two weeks beyond the original Oct. 27 deadline. The agency

is said to have voiced concern about the ability of AOL's rivals to access Time

Warner's cable lines.

"It's the same old AOL with nice features to it," said Bruce Kasrel,

an analyst at Forrester Research. "When you compare AOL 6.0 to MSN Explore,

there is starting to be some complacency on AOL's part. I think MSN Explorer is

close enough to right that AOL should care."

Microsoft Corp. has done a nice job in putting together an AOL-like

environment and packaging the Internet over it, Kasrel said. Microsoft is also

set to unveil its new browser revamped MSN Network on Wednesday in what is the

software giant's biggest shot yet at AOL.

"The way we think about our business is that we think about our

customers. We don't worry about what people like Microsoft are doing," said

Jonathan Sacks, senior vice president and general manager of AOL Brand, in a

telephone interview. "A lot of people imitate us. It's the sincerest form

of flattery, but it's not our focus."

AOL 6.0 has been touted as one of the keys to the "AOL Anywhere

strategy" that aims to make AOL services available through devices beyond

personal computers. It comes at a time when the industry is moving more

aggressively into high-speed data services and content.

AOL will soon offer AOLTV, which marries television with the most popular

features of the Internet, through Circuit City stores. The company has completed

its test marketing of the service in eight cities.

In addition to AOL 6.0, the company is also set to introduce AOL by Phone, a

service that uses voice-recognition technology to let members check e-mail, news

and other features via telephone.

AOL is also renaming its AOL.com Web site "AOL Anywhere." Users

will be able to access features and news they use most at the site, whose URL

remains the same at http//www.aol.com.

As the market awaits the completion of the AOL-Time Warner deal, which

company officials expect later this fall, AOL is building its presence in a

variety of areas, including music.

"The question of we building it ourselves or acquire companies is one of

time to market and efficiency," Sacks said.

"We talked a lot about our intentions of a digital subscription service.

We think America is not a bunch of thieves and what we've been seeing in Napster

is that they want a convenient way of getting music. It's not that they want to

steal music. We will make moves in that space fairly quickly."

Executives have said AOL and Time Warner are working together on a

subscription-based online music service they hope to launch next year.

(C) Reuters Limited 2000.