|
AOL talks with MicroWorkz
|
 |
June 25, 1999: 12:04 p.m. ET
Low-cost non-Windows PC maker may install AOL software on products
By Staff Writer Randall J. Schultz
|
NEW YORK (CNNfn) - America Online Inc. is in talks with low-cost personal computer maker MicroWorkz, possibly meaning AOL would put its software on PCs that don't use any Microsoft products.
MicroWorkz confirmed the talks are under way but wouldn't specify what issues are on the table, saying only that they aren't acquisition talks. America Online spokesman Jim Whitney said AOL "does not comment on rumors or speculation."
It is unclear whether the talks are centered around putting AOL software on MicroWorkz PCs or whether AOL would buy the company outright.
"It would make more sense to cut a deal to put AOL on the desktop of MicroWorkz products," according to Paul Merenbloom, Internet analyst at Prudential Securities.
"They want to make sure they have a presence. Taking a stake in the company may be another alternative."
Merenbloom didn't believe acquiring the privately-held MicroWorkz would be as good a choice, since AOL could accomplish its goal -- staking out territory on the computers -- without having to pay for the entire company.
MicroWorkz builds sub-$1,000 personal computers, in an effort to capture the market of those who want to do basic computer applications but don't need the computing power of the average PC.
Earlier this week, the company introduced its iToaster at the PC Expo technology trade show in New York. Priced at $200, the iToaster lets users surf the Web, send e-mail and create documents and spreadsheets.
The computers don't use Microsoft's Windows, the operating system used by 90 percent of personal computers. Instead, they use BeOS, a non-Windows operating system created by Be, Inc.
Free PCs from America Online?
News of the deal sparked speculation that AOL may consider giving away these low-cost PCs or offering them at a reduced price in exchange for the user signing up for several years of America Online service, allowing AOL to recoup the costs of the computer eventually.
Still, Internet analysts like Daniel King of LaSalle Street Securities believe a PC giveaway from AOL is unlikely.
"It just doesn't seem to be compelling," said King. "They haven't given me any indication they are thinking about doing it."
America Online already has a successful sales model in place, said King, noting that its current membership is 17 million, making it the largest online service in the world. It has another 2 million members in its CompuServe service.
Giving away PCs may be a more attractive idea in Europe, King said. European Web users usually get their Internet access free, but pay for local phone rates for the time they are online. In such a model, free PCs may be a better way to approach an audience accustomed to free Internet access.
Won't break Windows
Word of the talks seeped into the Microsoft antitrust trial, which closed Thursday. The reports of the talks were made known in the trial by Microsoft lawyers.
Microsoft contends that companies continue to find ways to challenge Microsoft's dominance with its Windows operating system. Case in point, they say, was America Online's $10 billion purchase of Netscape Communications, maker of a rival Web browser.
Still, analysts caution that the talks between AOL and MicroWorkz, even if they come to fruition, likely wouldn't break Windows' hold on the PC market anytime soon.
Instead, said Merenbloom, the deal is merely about AOL looking to incrementally expand into other areas.
Part of that strategy is its expansion into other hardware channels. On Monday, AOL announced a $1.5 billion investment in a Hughes Electronics satellite television subsidiary to beef up its broadband offerings. On Tuesday, it touted a deal allowing its members to receive e-mail on 3Com's Palm hand-held wireless personal digital assistants.
America Online (AOL) and other companies have pursued various strategies to push their products on computers.
AOL teamed up with computer makers to have an AOL desktop icon preinstalled, allowing buyers to sign up right away for its services. They also arranged to get an icon on various Web home pages. In a further attempt to get to users first, AOL signed up for software maker Phoenix Technologies' (PTEC) offer to have its service offered as computers boot up. 
|
|
|
|
|
 |
|
