Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, January 4, 1994 TAG: 9401040104
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: Knight-Ridder/Tribune
DATELINE: LENGTH: Medium
With the service, called e-World, Apple will compete with Prodigy, CompuServe, America Online and several services expected to go on-line this year. American Telephone & Telegraph plans to announce a service this week, called Personallink, and IBM reportedly is working on a similar service. Apple will find itself at the center of one of the highest-stakes battles in the computer industry.
The companies will compete for broad, consumer-oriented services whose penetration of the personal computer market is a measly 5 percent. By this time next year, there may be twice as many competitors, industry analysts say.
The spoils? An estimated $20 billion in potential revenues by 1997, according to Apple's estimates. But it's not going to be a battle easily won.
"1994 is going to be the year of the network infrastructure war," said industry analyst Andrew Seybold of Boulder Creek, Calif., who publishes a newsletter on mobile computing.
The consumer on-line business was launched in the late 1970s, but only in the past few years has it gained a foothold. Its growth is attributed, in large part, to the industry's fierce price war that put powerful computers in the hands of millions of new users.
More than 4 million people subscribe to on-line services, up from about 2 1/2 million at the end of 1991, according to the Digital Information Group of Stamford, Conn. By 1997, the figure is expected to grow to 5 1/2 million. Sales in the consumer segment of the on-line market grew almost 35 percent last year, according to research conducted by Simba Market Research.
The market leader is Prodigy, the 3-year-old joint venture of IBM and Sears Roebuck & Co., with 2 million subscribers. But because of a combination of flawed marketing and a confusing pricing structure, Prodigy's growth has stalled, while that of other services, such as America Online of Vienna, Va., has continued to grow.
Apple long has coveted the market for on-line services. Several years ago, it expanded its Applelink electronic service to the general public rather than just to Apple employees and business partners. Since then, the service has grown to reach 45,000 outside subscribers and generate $30 million in revenues. But without a range of services and no compelling business proposition for publishers, Apple did little to market the service.
Apple hopes to distinguish itself by offering a more attractive business proposition for information publishers on the network, such as magazines, retail stores, business publications and airlines. Rather than take control of the information once it's placed on the network, Apple will keep control over the appearance and use of the information in the hands of the owners. Each content provider will be able to give its product a distinct look.
Apple will have at least one other clear advantage: a copy of e-World will be installed on every Macintosh and Newton sold. Apple also will have the advantage of marketing directly to its installed base. "The Mac user fits the profile of where on-line use will start," Friedman said.
by CNB