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AOL 5.0 blitz begins

The company introduces AOL 5.0, the latest version of its proprietary service software, as pressure is building among online giants to grow subscribers at a critical time in competition.

NEW YORK--America Online today introduced AOL 5.0, the latest version of its proprietary service software, as pressure is building among online giants to grow subscribers at a critical time in competition.

Version 5.0 includes new features such as a photo station, an online calendar, a revamped search engine, a shopping channel, and a service for broadband applications. The launch comes more than a year since the release of AOL 4.0. Preview versions of the new software already have been downloaded close to 2 million times, the company said.

The new software looks similar to older versions but has more features on its Welcome Screen. Aside from the signature You've Got Mail icon, new icons have been added, including You've Got Pictures, an online photo service created with Kodak, and My Calendar, created through AOL's acquisition of When.com.

Barry Schuler, AOL president of interactive services, also demonstrated the new AOL Plus service for broadband connections. AOL Plus detects whether users are accessing the service using a high-speed connection. When detected, AOL Plus launches a window, or a "media tower," that offers high-bandwidth streaming media, such as movie trailers, video feeds, and software downloads.

Schuler also presented a number of features for users to access AOL services using non-PC devices. AOL users can access their email on PalmPilot handheld devices, he said. AOL is testing its service on handhelds using Microsoft's Windows CE operating system.

In addition, AOL users can send wireless email alerts or other information, such as stock quotes, to cell phones and pagers. Schuler said AOL will integrate these features into My Calendar in the near future.

Schuler also gave a glimpse of things to come, including AOL TV. The service, which is expected to launch next year, will allow users to access AOL services, such as its instant messenger service or email, while watching programs on TV.

By the end of the year, AOL will release an email text-to-voice service. This allows users to use the telephone to check their email, similar to checking voice mail messages.

In a media event for today's update, AOL chief executive Steve Case called the software release an "important milestone," adding that AOL's service is becoming an "everyday part of life."

Analysts: Not a major makeover
But while executives played up today's release, some analysts pointed out that the changes on AOL 5.0 are not as drastic as changes to previous versions.

"AOL 4.0 was more substantive," David Simons, managing director of market analysis firm Digital Video Investments, said of the 1998 release. "It was a really complete makeover. This was sort of an upgrade. It's like going from Windows 95 to 98."

Simons said he did not expect some of 5.0's new features, such as the online calendar, to become daily habits among users in the way that email and instant messaging are. Online households using AOL want something fast and easy, but an online calendar may be too complex to become popular, he said.

Simons was also surprised to see that AOL did not enhance the features on its email service.

"AOL's email client remains woefully behind the times and out of sync for all but the lowest common denominator of user," he said.

Staving off competition
The release of AOL 5.0 comes as competition for online eyeballs and wallets heats up. Software giant Microsoft recently announced a revived strategy for its MSN Internet service to take on AOL. The company wants to take advantage of its software know-how to create services that appeal to Web users.

Microsoft is looking to blend the line between its popular software products with its Web services. For example, the software giant last month demonstrated a prototype that integrates free Web-based email provider Hotmail with email management software Outlook Express in one product.

Microsoft also is developing a slimmed-down computer terminal to access the Web, called MSN Web Companion.

When asked whether AOL has similar plans to develop any PC-like devices to access the Web, Schuler was vague.

"You can expect to see us in close relationships with hardware folks to develop products that really deliver simple, easy approaches to getting online as these new widgets and gadgets come out," he said.

Others nipping at AOL's heels include Web leader Yahoo, which increases its audience reach monthly and is the most well-known Web search engine, according to audience measurement statistics.

AOL executives have said they want the recently launched AOL Search service to keep members from going to Yahoo or other search engines to scour the Web.

One weapon AOL has added to its search arsenal is Netscape's Open Directory. The service uses volunteers to compile and edit Web links into a search directory similar to Yahoo's. AOL says its Open Directory includes more than 1 million Web sites compiled by 16,000 editors.

Wooing shoppers
Hoping to further convert its members into online buyers, AOL also launched Shop@AOL. The shopping service offers areas where users can buy merchandise from name brands, such as the Gap; a section for personal buying guides; and a product search engine.

Shop@AOL will use online wallet features, which allow users to enter credit card numbers just once to shop multiple times throughout the online service.

The Shop@AOL launch extends to other AOL properties, with services such as Shop@CompuServe, Shop@AOL.com, Shop@Netscape, and Shop@Digital City.