RealTime IT News

AOL Targets Internet Holdouts

Targeting the 27 percent of U.S. households that aren't yet online, America Online will offer a low-priced hardware, software and Internet service package beginning next week.

AOL's "Optimized PC" bundle includes a computer, 17-inch monitor and printer for approximately $300, plus 12 months of service from the ISP at $23.90 per month.

To appeal to computer novices, the package comes with color-coded cords, an instructional poster and a video to help make set-up easier.

"We did do a limited test program for the PC a few months ago, the results of which helped in the development of the [Optimized PC]," Jay Esmele, an AOL spokeswoman, told internetnews.com.

There's no time limit for the promotion, which will run through AOL retail partners such as Office Depot, Esmele said.

AOL also hopes to attract more Spanish-speaking customers. In addition to Microsoft's Windows XP Home edition, each comes with AOL 9.0 Optimized service, which includes AOL Latino service.

Fifty-five percent of Hispanic households where English is the dominant language are online, compared to only 20 percent of households that speak Spanish, AOL said, quoting research from the Synovate 2004 Hispanic Report.

AOL also plans to combine three of its brands -- Black Focus, Black Voices and Africana.com -- into a new online destination for African Americans later this fall.

The promotion comes as AOL looks to offset flagging subscriber numbers. During the second-quarter, it shed 668,000 subscribers.

It still has 23 million U.S. subscribers, and the gradually declining dial-up business will be profitable for several years. A rebounding online ad market helped AOL boost revenue 2 percent in the most recent quarter as well, and the company continues to roll out new services.

But to continue to gain from serving ads and selling new offerings, AOL, the Internet arm of Time Warner , must retain a sizeable subscriber base.

The services faces competition from low-priced dial-up ISPs like United Online and EarthLink , as well as higher-end broadband providers including Comcast and Verizon Communications .