Lack of synergy

Accord­ing to an arti­cle in the Wash­ing­ton Post, AOL is loos­ing mar­ket share to Road-Runner. The inter­est­ing thing is that both com­pa­nies are owned by AOL-Time-Warner but are not play­ing together. This rep­re­sents a huge prob­lem for the com­pany as it is the most vis­i­ble area of poten­tial syn­ergy between AOL and Time-Warner.

Here’s a crazy thought, why doesn’t the com­pany break it all down into an access divi­sion (prob­a­bly going to Road-Runner) and a con­tent divi­sion (prob­a­bly going to AOL). Using charge-backs, they would trade money back and forth and Road-Runner could keep focus­ing on access (inher­it­ing a lower speed dial-up sys­tem in the process) and focus on con­vert­ing dial-up users to broad­band, while AOL would focus on devel­op­ing con­tent and tools (the AOL soft­ware) that would run on both system.

Obvi­ously Road-Runner has fig­ured out how to sell access and AOL is good at build­ing soft­ware that is easy to use for the aver­age com­puter user. Let AOL get rid of the access layer (the client already does TCP/IP) and focus on improve­ments to IM, mail, and con­tent and let Road-Runner focus on sell­ing access and you have a pretty pow­er­ful combo.