Monday, October 15, 2007

AOL: business is fine, but sorry you are sacked

The pink slips are flying at AOL as the company tries to make a transition from a subscription-based ISP (Internet Service Provider) to an advertisement supported portal company.

Over the next couple of months, AOL will lay off 2,000 people out of a worldwide workforce of 10,000, according to a letter to company employees sent by CEO Randy Falco today, said a report in The Washington Post. These staff reductions begin Tuesday.

In a mail to AOL employees, Falco said, “Importantly, we're taking the business global. We're extending AOL's reach into seven new countries this year while globalizing our product development efforts. By the end of next year, AOL will have a presence in 30 countries. That's a remarkable achievement in a relatively short period of time”.

For all his self congratulation, Falco by expanding into other markets may be over-committing AOL, taking it further down the tube. Outside the US, AOL does not have a strong brand or the stickiness that a portal requires. In the US, a lot of users still swear by AIM, AOL’s Instant Messenger, and some use its email service too.

But in most other countries, instant messengers and email services from Yahoo Inc., MSN, and Google Inc. already have a head start. These are the applications that generally bring users to a portal.

Unless AOL comes up with a new killer application, there isn’t a way they can dislodge the current players in each market. Many countries have their own very strong local players. has a traffic rank of 51 to’s first place, according to traffic rankings from Alexa Internet Inc.

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