AOL jumps into wireless Net world

America Online is moving quickly to lock up partnerships with the giants of the mobile phone industry, hoping to keep its brand name at the forefront of the Web.

John Borland Staff Writer, CNET News.com
John Borland
covers the intersection of digital entertainment and broadband.
John Borland
4 min read
America Online's shadow is spreading quickly across the young wireless Internet industry.

A latecomer to the wireless Web, AOL is now moving quickly to lock up partnerships with the giants of the mobile phone industry, hoping to keep its brand name at the forefront of the Web as its subscribers move away from their personal computers as a sole means to access Net information.

As previously reported, the online giant announced several deals today that will put its instant messaging software on millions of cell phones worldwide, See news analysis: AOL sees its future offline also giving millions of subscribers access to AOL content and email on their phones' tiny screens. Those partnerships will give the company a foothold in the mobile world that it couldn't have found on its own, analysts said.

"This isn't the Web," said Eddie Hold, principal wireless industry analyst with Current Analysis, a market research firm. "In the cellular world, the PCS carrier dictates what you get to see on the first screen of the phone. AOL had to partner with these companies."

AOL is playing catch-up to Yahoo, Microsoft and other Web names in the still-fluid wireless Net world. These companies already have some version of their services online, and are now working to expand their footprint. AOL is starting with the advantage of a vast paying audience and an instant message user base that already numbers in the tens of millions, however.

Most of these companies are bringing scaled-down versions of their services to the screens of mobile phones, assuming that consumers will essentially want quick bursts of information, such as maps, stock quotes or email at their fingertips. But so far this is mostly guesswork--the number of subscribers to wireless data services in the United States is still tiny.

According to Banc of America Securities, about 6.6 million people worldwide subscribed to wireless Internet services in 1999, with the vast majority of these in overseas markets like Japan and Scandinavia. Analysts expect this figure to grow to about 400 million by 2003, and close to 1 billion in 2005.

With this kind of tidal wave of paying subscribers on the way, Web companies aren't waiting to stake out territory on cell phones' tiny screens.

Microsoft released the second version of its own wireless portal today, which will give users access to Hotmail email accounts, Expedia travel information and other MSN services. It also struck its own new distribution deals with Nextel and AirTouch Communications, two large wireless phone carriers.

AOL's deals today are the biggest indication yet that it plans to bring a full range of communication and content services into the wireless world.

Among those deals:

  Motorola: The companies will develop a co-branded wireless "smart phone" device, called "TimePort P935" that will support AOL Mobile Messenger. The deal expands on a similar agreement inked last October. The companies plan to ship the product by the end of 2000.

  BellSouth: AOL will offer AOL Mobile Messaging services using BellSouth's Intelligent Wireless Network-enabled devices.

  Nokia: AOL will develop a version of its AIM service for Nokia's cell phones and wireless devices.

  Sprint PCS: AOL will allow Sprint PCS users to access wireless versions of its content and services such as email, news, weather and stock quotes on its Web phone service.

  Arch Communications: A 3-year deal for AOL to use Arch's ReFlex 25 wireless instant messaging technology to power AOL Mobile messaging service. AOL will also offer email and AIM on devices using Arch's technology.

  Research in Motion (RIM): RIM, which produces instant email devices, such as its Blackberry pager, will offer AOL email and AIM to its users. The companies will also develop a co-branded device to offer AOL's wireless services.

Alongside these deals, it will provide content from its Digital Cities service to wireless phone users in 60 cities starting next month, the company said.

"There's no question that we're on the eve of an explosion in consumers' move to wireless and how they use interactive devices," AOL chief executive Steve Case said in a statement. "Our goal is to ensure that this wireless revolution will be both easy and accessible for our members."

AOL is currently the largest Internet service provider in the world, with more than 21 million paying subscribers to its online service

The giants' renewed focus on the wireless world isn't good news for smaller firms that are hoping to see their own boats lifted by the mobile Net's quickly rising tide.

Last week, wireless start-up @Mobile and CMGI-owned Tribal Voice said they had created their own instant messaging software for carriers, similar to AOL's own product. It's ready to install now, the firms said, as opposed to AOL's planned several months to a year wait.

But technology alone isn't necessarily the best argument for striking deals, analysts note. The large carriers are most interested in bringing as many people as possible to their services--and that means taking advantage of the huge draw that names like AOL and Microsoft can give them.

"AOL has great brand recognition," Hold said. "Every minute I'm on the portal the carriers are getting revenue on airtime from me. For more compelling content they can provide me, the more likely they are to make money off of me."

AOL will be fighting the same hurdles other wireless Web companies face. Networks are currently slow, and the interface on cellular phones allows users to see only a few lines of text at any given time. It's also difficult to type responses on a telephone keypad, making technologies like text-based instant messaging of limited use.

But the online company is working to fix that problem with the help of another recent purchase. Tegic Communications, which AOL bought last December, is aimed at finding easier ways for users to input text on cell phones.

AOL chief executive Steve Case will give the closing keynote speech at the Wireless 2000 industry trade show in New Orleans on Wednesday.