[ih] AOL in perspective

[Vint Cerf]

I asked Steve Case about AOL's ultimately adoption of Internet as a
transport medium. Here is his answer (sharing with permission):

Steve Case
7:15 PM (2 hours ago)
to me

Hi Vint.  When we launched in 1985 we of course had to build everything
ourselves, as the Internet was still limited to non commercial use.  And
the only way to access online serv ices of that era (The Source,
CompuServe, etc) was via the x.25 dialup networks provided by Sprint,
Tymnet, etc   We got started with limited bandwidth (300 baud!) and limited
CPU capability (Commodore 64!) and that forced some design decisions -
including loading graphics onto floppy discs so we didn’t have to transmit
much data, but could have a compelling graphics interface (unlike the other
offerings which were all text only).  We did the best we could with this
“doing our own thing” strategy while we waited for the day that we could
add Internet features (email etc) to our offerings and leverage the
Internet data capabilities to provide a TCP/IP alternative to X.25 (which
we became convinced was more scalable with faster speeds and lower costs).
We also worked for several years to get Congress to commercialize the
Internet, ultimately leading to the Telecom Act.  We were as I recall the
first “online service” to add WAIS, Gopher, etc to our service, when it was
allowed, and also were early and fairly aggressive investors in building
out TCP-IP networks (including buying ANS from IBM so we could build more
network capacity more quickly and be less reliant on providers such as
Sprint, who were trying to milk their legacy x.25 networks and were
therefore slow to invest in TCP/IP).   That enabled us to then be able to
move from hourly pricing to flat rate unlimited pricing which – no surprise
– propelled our growth. And we then started making various AOL features
(such as instant messaging/texting) as Internet features that didn’t
require AOL membership (including AOL Instant Messenger – AIM).  And then
we started buying Internet companies including Netscape and many others (
https://en.wikipedia.org/wiki/List_of_acquisitions_by_AOL).  So the simple
answer to your question is when we started in 1985 we had to do everything
ourselves as it was illegal for us to connect to the Internet, but over the
next decade we were all in – in many ways – to embrace the Internet – and
ultimately AOL’s dramatic growth in the late 1990s was because it was the
easiest, cheapest, fastest way for consumers to be on the Internet, and we
offered a range of other services that were exclusive to AOL – so we were
able to successfully position AOL as “the Internet and a whole lot more”
and leverage to ease of use with branding focused on “it’s s easy to use,
no wonder it’s #1”.   At the time I remember that some (including public
market investors) viewed the Internet as a threat to AOL, but I believed it
was an opportunity, and that’s why we went from being a small company to a
big company fairly quickly (market cap went from $70m when we went public
in 1992 to $160b eght years later when we merged with Time Warner in 2000).



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