1. Presented by:-
Shray Jali
LM Thapar School Of Mgmt

3.  Founded in 1985 as Quantum Computer Services
 Offered online services to Commodore business
machines
 WWW came along almost 12 years later
 Company grew at a steady pace
 Acquired MapQuest in 2000

4. Business Unit Type of Business Members Access Acquired or
Developed
AOL Internet Online Service 19,000,000 Subscription Developed
CompuServe Internet Online Service 2,000,000 Subscription Acquired
Netscape Netcenter Internet Portal 17,000,000 Free Acquired
AOL Instant Messenger Web-based communication
Service
25,000,000 Free Developed
ICQ Web-based communication
Service
50,000,000 Free Acquired
Digital City local online content provider 4,300,000 core Free Partnership
AOL MovieFone Movie Guide and Ticketing
Service
150,000,000 hits
in 1998
Free Acquired
Spinner Networks
Internet Music provider 2,000,000 core Free Acquired

5.  Started its international expansion with
Germany in 1994
 Company expanded to Australia, Brazil,
Canada, France, Japan, UK, Sweden and
Hong Kong
 All the joint ventures have been
undertaken with a partner in local
market
 In Japan, AOL chose Mitsui & company
(largest and oldest trading company)

6.  Only 33 % of households have PC, and only 18 % of
households connected online
 The number of online households is expected to grow
significantly
 PC growth in double digits from last 3 years
 The high connecting cost has been recognized as
primary barrier
 Lower access charge are expected to reduce this barrier

7. Niftyserve
19%
Biglobe
7%
DTI
7%
AOL Japan
3%
Compuserve
1%
others
63%

8. Subscriptions
69%
Ads,
Commerce
and other
21%
Enterprise
Solutions
10%

9. AOL
50%
Mitsui & co.
40%
Nikkei
10%
 Feb 1996

10.  Founded in 1941
 More than 60000 employees in 60 countries
 Known as the most traditional trading company
 Mitsui’s strength was in Facilitating large transactions
for commodity type products
 Core competency in import, export and financing
 Mitsui had all the connection and money required

11. JAPAN
AOL
41%
Mitsui & co.
13%
Nikkei
4%
DoCoMo
42%

12.  The marketing strategy initially employed was
based on the strategy that was successful in US
 Mitsui hired all the local employees in marketing
department
 The marketing strategies were
 Bundling
 Magazine inserts
 Direct mail
 Take-one

13.  Pre-installed AOL software on each PC
 X free hours of free trial of internet
 AOL tried same strategy in Japan and tied up with
15 manufacturers
 Partnership with DoCoMo, planned to use internet
via i-mode cellular phone

14.  To shrink wrap each magazine with a CD
 In Japan, magazine companies are tough to do
business with
 AOL issued its own magazine, when there is
major software upgrade

15.  Very much successful in US but not
in Japan
 Lack of available mailing list
 Mailing cost is much more in Japan as
compared to US

16.  Software CD put on display in
places, where potential
customers might congregate
 Computer store Softmap
 Hit rate for take one’s is much
higher than direct mail or
magazine inserts
 Co-Branding

17.  In 3 years, AOL Japan’s market grown over to 3
percent
 Annual growth of new subscribers is 10 to 15% over
two years
 AOL Japan looking at 3 different ways to increase
their market share
 Lower access charge to capture a new subscriber
 Take advantage of technology changes and new
emerging markets (NTT DoCoMo)
 Buy other ISPs

19.  They did not have the structure to deal with a
global internet giant
 Shared partnerships with media entertainment,
telecommunication and multimedia companies
 NTT DoCoMo would have been a better option
which spun off Nippon telephone and telegraph
in 1992 and had the resources and customer base
to help AOL Japan become a successful JV

21.  Previous mishaps and blunders
 John Barber should have ensured
 More diversified employee base
 Use of different marketing strategies in USA & Japan
 Increased Marketing Efficiency
 Take-over small-to-midsize ISPs which
constitute the 63% of market share
 Partnership with DoCoMo to increase the
subscribers

23.  Bundling- Japanese PC Manufacturers were
more active in the ISP business (Fujitsu-
NiftyServe)
 Magazine Inserts- Customer Hit Rate per Yen
was low
 Direct Mails- higher mailing costs and no proper
mailing lists
 Take-ones- co-branding and expensive

25.  Lower the cost of yen/new subscriber
 Promotional activities in schools and colleges
 Loyalty cards
 Subsidized rates for commonly accessed websites
 Capitalize on watershed events
 Live TV with 3G
 Wi-Fi and Wi-Max
 Buy other ISPs
 Value the assets of company with largest subsribers