Microsoft's New Challenger: AOL Time Warner

Strategic Insights -

AOL's acquisition of Time Warner at $165 billion is set to create a formidable new player in the online industry, casting a shadow over Microsoft's long-held dominance. Once Microsoft's arch-nemesis, AOL Time Warner promises to be as powerful, if not more so, in the post-PC era. While Microsoft has been investing heavily in its own Internet offerings, AOL Time Warner's media-centric strategy will make it a strong rival for the company.

Key Takeaways:

  • AOL Time Warner's creation marks a significant shift in the online industry, with a new player emerging to challenge Microsoft's dominance.
  • Microsoft has been investing heavily in its own Internet offerings, but AOL Time Warner's media-centric strategy will make it a strong rival in the post-PC era.
  • AOL Time Warner's deal is not expected to affect the ongoing antitrust case against Microsoft, but it may influence the court's calculations on potential sanctions.
  • Microsoft's senior executive team met to discuss the implications of the merger, with some suggesting it reinforces Microsoft's different online strategy.
  • Microsoft has been improving its online software and services offerings, with a plan to begin an aggressive marketing and recruitment program in February.
  • The company is expected to offer discounts or incentives to switch to its MSN service, potentially changing the economics of the online market.

Statistics:

  • AOL Time Warner's combined revenue for the latest four quarters is $31.7 billion.
  • Microsoft's revenue for the latest four quarters is $20.4 billion.
  • AOL Time Warner's combined market capitalization is $253.7 billion, while Microsoft's is $564.4 billion.
  • AOL Time Warner's combined employees total 82,100, while Microsoft's total employees are 32,902.
  • AOL's U.S. subscribers as of the third quarter are 18 million, while MSN's U.S. subscribers are 2 million.
  • AOL Time Warner's total visitors in November are 54 million, while Microsoft's total visitors are 38 million.
  • AOL Time Warner's combined earnings for the latest four quarters are $1.7 billion, while Microsoft's earnings are $8.3 billion.

Sources:

  • "Microsoft's Antitrust Case: What's at Stake?" by The New York Times.
  • "AOL, Time Warner in $165 Billion Deal" by The New York Times.
  • Jupiter Communications.
  • Media Metrix.
  • "Microsoft's MSN Service: A Deficit of Subscribers" by Forbes.
  • Company reports.
  • International Data.
  • Chart: "Clash of the Titans."