AOL to delete outside WebMail email provider

USA.net will lose one-third of its account holders following the online giant's decision to go it alone with its free, Web-based email service.

Paul Festa Staff Writer, CNET News.com
Paul Festa
covers browser development and Web standards.
Paul Festa
2 min read
A leading outsourced email provider will lose one-third of its account holders following America Online's decision to go it alone with Netcenter WebMail, its free, Web-based email service.

USA.net, which has powered WebMail since its 1998 launch, will lose its only major portal customer when Netscape Communications' Netcenter migrates its WebMail accounts to its own service later this fall. Netcenter has 7 million account holders using USA.net-powered email and just less than a million using its new homegrown service.

USA.net says it will be left with 15 million "email seats" after Netcenter's withdrawal. The email outsourcing company has about 3,000 corporate clients, including American Express, United Airlines and Mail Boxes Etc.

The loss of Netscape, which through parent AOL retains what it calls a "very small" investment in USA.net, is a second major blow to hit the email provider in the past year, following the company's scuttled initial public offering in fall 1999. USA.net withdrew that IPO citing market conditions.

USA.net is maintaining a business-as-usual attitude in the wake of Netcenter's departure.

"We don't see any negative effect except that we're losing a great relationship with a long history, and we're sorry to see them go," said USA.net representative Danette Lopez. "I wouldn't say they're necessarily our biggest customer. What we end up losing there is email seats, but we're always replacing them."

Lopez declined to say whether USA.net still plans a public offering.

Netscape said it will extend its USA.net contract through the fall, then let it expire so it can integrate the WebMail product with its upcoming Web browser, Netscape 6.0. Currently available in its second of three test, or "beta," versions, Netscape 6 follows Microsoft's Internet Explorer in integrating a free, Web-based email service with the browser's email client.

Microsoft offered the same integration with IE 5 and Hotmail last year.

"Due to the WebMail account capabilities built into the Netscape 6 browser, we determined that the most effective service we could offer our users was a high-quality WebMail system that is tightly integrated throughout Netscape products," said a Netscape representative. "We determined that the best way to accomplish that was to build and host it ourselves."

Netscape said the integrated browser and Web site would meld instant messaging and address book features.

WebMail recently weathered a gaffe in which about 1 million customers had to change their account names because of name overlaps. Netscape said that problem was unrelated to the planned migration from USA.net.

But some people have complained recently of spotty service from WebMail, saying it has been slow or choked off altogether.

Netscape acknowledged a "service disruption" yesterday morning that prevented some account holders from accessing their accounts, but the company said it also was unrelated to the planned migration.