Casablanca, as AOL 4.0 has been dubbed by the company, will be released slowly by the end of the year, according to a company spokeswoman.
Meanwhile, AOL has quietly redesigned its home page on the Web, ostensibly in anticipation of the release. AOL also is releasing Web-based products such as its popular Instant Messenger software, which allows people on the Web to send instant messages to other users.
Casablanca has been in internal beta for a few weeks, and AOL is getting ready to release a broader beta test in the next few weeks.
But it is going to take its time to release the final upgrade, and will do so in parts, to make sure that it works and that it doesn't overburden AOL's system.
And that's a good idea, say analysts who cover AOL.
Seen from one vantage point, it appears AOL is lagging behind its competitor, the Microsoft Network, in releasing new system software. But MSN and AOL are in completely different positions. MSN had to release new software to gain new members and keep its old ones because its old system software was so faulty. The new system software dramatically improves the basics, such as email.
AOL, on the other hand, had software that worked fairly well for its user base, which is full of mainstream and novice members who don't have the time, patience, or skill to put up with a buggy system. Analysts who have seen AOL 4.0 have said they are generally impressed.
But the software isn't going to make or break AOL, at least in the short term.
"If the Microsoft operating system is late, that's a big deal," said David Locke, an analyst with Volpe, Welty. But if AOL is late, it doesn't really affect the outside world or AOL's bottom line since the software is free. "There aren't folks sitting on their hands saying, 'Oh my God. I'd log online if I only had the 4.0 software,'" he said.
For AOL, which is finally getting out from underneath its problems with busy signals and system slowdowns, keeping the system running smoothly is a lot more important than releasing software early, said Kate Delhagen, an analyst with Forrester Research.
While many expected the software to be released sooner than the end of the year, AOL has intentionally refused to set a date for release.
"In a way, they're actually doing something smart by doing an incremental release," Delhagen said. "It's a big client and it's going to suck up a lot of bandwidth to distribute it. I'd rather see them take a little longer and get it right."
The new software will include "Driveway," a push product that will allow users to view AOL offline. It also makes AOL easier to navigate, the company promised.
And perhaps most important to AOL's bottom line, it will continue to put the emphasis on AOL's business partners, and will be chock full of advertising and opportunities to buy, buy, buy.