US online sector in disarray


WHILE the Irish online services industry, might still be very much in its infancy, its US counterparts were in major disarray last week. Several major firms made a dramatic exit from the business, amid, fierce competition from industry leader America Online and the Internet.

H&R Block decided to turn its CompuServe unit - the USA's second largest online computer service - into a separate company; and Sears Roebuck decided to shed its stake in the online service Prodigy - which it jointly owns with IBM - to focus on retailing and expansion.

CompuServe also includes Spry, an Internet access and software company acquired in April for $102 million.

Despite the shake out, many industry analysts say that the strongest services, like America Online, will maintain their position.

"Online services are becoming the Internet," says Steve Harmon, of Jupiter Communications. "They already are the leading ISPs (Internet service providers). They are not being eclipsed, they are just adapting."

Indeed, for new users and for consumers at home, America Online is fast becoming the service of choice, with almost five million subscribers. AOL is also angling to expand its Internet offerings, talking with Netscape about an alliance (Netscape makes the most widely use browser for navigating the graphical portion of the Internet the World Wide Web).

But despite the popularity of online services, there are question marks, especially for Prodigy. It is not clear yet what IBM will do with its 50 per cent share in Prodigy - one industry rumour points to AT&T - nor who will purchase Sears' stake. The Prodigy sale could shake up the industry even further, especially if it were purchased by a cable company or a carrier.

THE moves came in a week when a rash of Internet players announced new schemes. Philips is to launch a package lord accessing the Internet via television on the Continent, starting in the Netherlands on March 13th. The package combines its CDi players with a modem and networking software.

In Japan Hitachi said it was considering a simplified personal computer for Internet use at a retail price of around $500. On Wednesday Oracle and VeriFone announced a new Internet payment systems alliance, and on Thursday British Telecom said it was to launch a mass market Internet service.

By coincidence, too, the two largest computer software and hardware companies in the world both realigned their businesses last week in response to the Internet's rapid growth.

Microsoft has altered its online strategy by creating a new Interactive Media division and an Internet platform and tools division. Last week's decision marks a major U turn by Microsoft's, Bill Gates, who said at a press briefing last December that a separate Internet division would be "like having an electricity division or a software division".

Meanwhile IBM has unveiled an array of software and services for linking its four main computer platforms - PCs, workstations, minicomputers and mainframes - to the Net by a common computer language. The company will attempt to open its traditionally closed computer systems to run software from competitors such as Microsoft, Netscape and Novell.

Among its offerings, the IBM PC System View 4.0 will allow an (organisation to manage PC networks through the Internet with a Web browser. The new PC Server 700 models also allow administrators of local area net works (LANs) to turn on the power of unattended network from remote locations. This feature would permit the software on a network of PCs to be upgraded remotely when the computers are not otherwise in use. IBM also plans to make its S/390 mainframe computer systems more accessible to the Internet, in part by making them compatible with Sun's much talked about Java programming language.

The company also launched "IBM infoSage", an Internet online news and information delivery service that delivers individually tailored selections of up to 30 stories twice each business day to subscribers.

ONE of the most unusual online news services was unveiled last month by PointCast: it has unveiled a free personalised Internet news service which is displayed using a PC's screen saver.

Its "SmartScreen" technology automatically begins running news service once a user's computer is not in use for an allotted number of seconds, and shows current headlines, stock quotes, and sports scores on the screen. PointCast is also working with Netscape so that the service can be viewed directly from Netscape Navigator.

The network features six "channels" (news, business, industrial, weather, sports, and lifestyles) from sources such as Reuters and Variety. Other content will be provided by special interest publishers and regional media partners, such as the Los Angeles Times and Boston Globe.

To see a full story on any topic, viewers just click on a headline. They can also activate PCN at their convenience. Initially the service is likely to be used by corporate customers who are logged onto the Internet all day, but the company says home PCs can be programmed to get news feeds at certain times of the day.

For the initial sponsorship period, PointCast has already sold all its ad spaces on the site for $40,000 each. The service will initially be free, though eventually Point Cast will probably charge for some specialised information channels.