Monday, March 7, 2005

VON Keynote: AOL Enters Residential VoIP

America Online is set to launch a consumer VoIP service, announced Jonathan Miller, Chairman and CEO of AOL, in a keynote address at VON Spring. Noting that the residential telephony market in the U.S. is valued at over $100 billion, Miller said the time is now ripe to go after the mass market. America Online, which pioneered the mass marketing of dial-up online services a decade ago, is betting that it has a better understanding of what the average consumer wants in an online service. Whereas early adopters are tech-savvy and willing to change services at the drop of hat, the average U.S. consumer values a predictable service that is easy to use, said Miller. AOL prides itself on never needing a technical manual for its services and in keeping any list of instructions to no more than 3 items. And whereas the tech-savvy early adopter is highly price sensitive, Miller said the average U.S. consumer wants a good deal but would question the reliability and value of an extremely cheap price.

America Online also pioneered instant messaging starting in 1996 and today operates an immense IM network. Miller hopes to leverage this strategic asset with the new VoIP service. A unified dashboard will provide easy access to the buddy list, calling features, voice mail and email.

A final strategic asset for AOL's VoIP service will be its relationship with Time Warner. Earlier this year, AOL and Time Warner agreed to better integrate their broadband activities. Going forward, this will include the VoIP product development, said Miller.


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