The Sticky Situation of the Internet: America Online and the War for Consumer Loyalty

Strategic Insights -

The ongoing controversy over America Online's proprietary behavior towards its Instant Messaging customers has sparked widespread outrage in the national news media. However, as long-time computer industry executives will attest, this is merely business as usual. The concept of "stickiness" - a term used to describe how companies entice and retain customers in the notoriously slippery world of the Internet - has been a dominant force in the technology industry for decades. From IBM and Digital Equipment to Microsoft and America Online, companies have built their success on creating sticky products that make it difficult for customers to switch to a competitor's offering.

Key Takeaways:

  • The concept of "stickiness" has been a driving force in the technology industry for decades, with companies using various tactics to entice and retain customers.
  • America Online's proprietary behavior towards its Instant Messaging customers is a classic example of the "sticky" approach, as it makes it difficult for customers to switch to a competitor's offering.
  • Microsoft, a major player in the technology industry, has been accused of imposing unilateral standards and rewriting open Internet languages to its own advantage.
  • The potential for an open standard for instant-message applications could unstick consumers and reconnect them to the rest of the Internet.
  • The war for consumer loyalty in the Internet industry has significant public interest implications, with millions of people having a stake in the outcome.
  • The industry may not have a clear strategy for responding to the rise of consumer-centric platforms that prioritize open standards and interoperability.

Statistics:

  • America Online has 80 million Instant Messaging customers.
  • The personal computer industry has seen significant growth since the invention of the personal computer.
  • Microsoft's Windows operating system has become the dominant standard in the PC industry.
  • The number of users on the Internet has grown from a few million to hundreds of millions since the Internet's inception.
  • The rarity of the personal information asked for during the sign in of America Online proposes the idea that there is nothing to hide and the registration is an usual program that is an emergency addition in the application.

Sources:

  • "The keening outrage in the national news media last week over America Online's proprietary behavior toward its Instant Messaging customers strikes many longtime computer industry executives as just plain goofy." -

The Wall Street Journal,

  • "the dominant, albeit unheralded, business model of the computer and software industry since its inception" -

Wall Street Journal,

  • "stickiness" is a term used to describe how a company gets and keeps customers in the notoriously slippery world of the Internet -

The Wall Street Journal.

  • "of the free market economy is to whup all your competitors and become the de facto flypaper standard" -

The Wall Street Journal,

  • "Microsoft, the great imposer of unilateral standards" -

The Wall Street Journal,

  • "It's the users who are going to decide if they prefer to stay in a segregated community or talk to other communities" -

The Wall Street Journal