America Online steers to future despite glitches, explosive growth @

March 06, 1994|By Michael Dresser | Michael Dresser,Sun Staff Writer

VIENNA, Va. -- Every once in a while, Steve Case puts on a "disguise" and goes strolling through an electronic world of his own creation.

Under an on-screen alias, he signs on to America Online, the computerized community he co-founded in 1985, and uses the system as one of his customers might. He scans bulletin boards where people trade the latest recipes and computer tips and drops in on "chat lines" where his far-flung customers argue, banter, console, consult, wheel, deal and sometimes fall in love with people thousands of miles away.

"I want to the extent possible to think what they're thinking and walk in their shoes," said Mr. Case, the 34-year-old president and chief executive of America Online Corp.

As he cruises through the network, Mr. Case passes the electronic equivalents of schools, churches, shops, senior centers, brokerages, libraries, video arcades, dating services, post offices and bars -- gay and straight.

"I'm always intrigued by how people are using these new possibilities," said Mr. Case.

Over the past year, just about anything has seemed possible for America Online. The company's subscriber base has grown at an explosive rate: 300,000 last July, 400,000 in October, 500,000 in December and 600,000 in January. Profits have soared, and the stock price has increased more than threefold in the past year despite some widely publicized technical problems.

From way back in the pack, America Online has emerged as a formidable challenger to the twin titans of the computer on-line service industry, Compuserve (1.6 million subscribers) and Prodigy (1 million). Rick Martin, an analyst with the Chicago Corp., projects that America Online will top 1 million subscribers by September and 2 million in early 1996.

But Mr. Case sees far greater possibilities. "A new medium is emerging," he said. "It's an interactive medium in which the key driver will be participation."

And it will be a mass medium, he says -- not just a niche for technology buffs. Mr. Case envisions a time, not far off, when a computer on-line service is almost as much of a fixture in the American home as the television and the telephone.

Many technology analysts agree. Mr. Martin projects that the on-line industry will grow at a breathtaking pace through the rest of the decade. By 2000, he said, 75 million to 80 million U.S. households will have the capability of receiving on-line services, of whom almost half will sign up for one.

"All the pieces are starting to come together to move this from essentially a niche market to what we think will happen over the next 10 years to turn this into a mainstream market," said Mr. Case.

The youthful America Online president did not create the on-line service industry. Compuserve and Prodigy were both around long before he started the company that would become America Online.

In recent years, however, Mr. Case has emerged as the industry's more visible cheerleader and most aggressive marketer. He has been forging partnerships with content providers at a blistering pace: The New York Times, NBC, Time and Hachette magazines are among the media that have signed up to provide articles and interactive forums on America Online.

The key to America Online's success has been simplicity. Prodigy and Compuserve might have a richer store of information, but even America Online's critics concede that it is the most user-friendly of the major on-line services.

"Steve Case is to this decade what [Microsoft chairman] Bill Gates was to the last," said analyst Kenneth T. Berents of Wheat First Butcher & Singer in Richmond. "The day I met him in 1991, I knew that he was really into something big."

To understand just how big the medium could become, it helps to talk with America Online users.

Hope Dlugzima, a writer in Knoxville, Tenn., said she received America Online software five months ago. "Literally, from that moment I've been addicted," she said.

Now she regularly uses it to send E-mail to a publication she works for in Prague. She's made friends all over the country and found her literary agent on line.

John Cornell, a 32-year-old entrepreneur in Titusville, Fla., runs an invitation-only conference on interactive media twice each month in a private "room" -- which any member can set up for any legal purpose -- on America Online. He said that making business contacts on line carries an important advantage for him because of his youthful features. When people aren't judging him by his appearance, his ideas get a fairer hearing, he said.

The most compelling advertisements for the medium, however, come in the romantic sphere. A search of America Online's Romance bulletin board found about a dozen messages from people who had met their spouses or future spouses on-line -- most after a long electronic courtship.

The man who brought these couples together is an unlikely matchmaker.

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