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Aol Goes Far East Essay

2078 words - 8 pages

INTRODUCTION Quantum computer service was founded the 24th of May 1985, in United States and was originally providing an online service, the "Q-Link" for one of the first computer: "The Commodore". In October 1989, AOL service launched for Macintosh and Apple II and in 1991 Quantum Computer services adopted a new name: America Online, Inc. Since then they managed to acquire other smaller online business such as ISQ or CompuServe. After four years of service in 1993, AOL was up to 500,000 members providing access to the internet, and offered access to its own online information and services which were aimed at the average American consumer. In 1999, year of the case, AOL service (one of their product) surpassed 20 million members other 9 countries and that was just at the beginning of the phenomenon of Internet. On their home market in 1999, AOL had 21,5% of the market share, but at the same time, on their new Japanese market where 33%of the population had a computer, they only had 3% of the market share. In 1997, year of the establishment of AOL in Japan, this country was the second most powerful economy in the world, with a GDP per capita of $28600. One reason of this poor market share might have been that American Online add entered this market a bit too late, at a time when Niftyserve, BigGlobe, DTI and other Japanese companies had already been in place for few years. An other fact is that in 1997 Japan was in a period of recession and consummation had slow down, compared to the year 1996. These facts and events are not the only cause of this poor 3% of the market share and bad decisions could be seen as an other cause. Was it a good choice to choose this partner? Did they adopt a good JV strategy? What was it? And finally what alternatives have to be taken in order to gain more market share on such an interesting market?1. Was Mitsui the best partner for AOL to enter the Japanese market? If so, why? If not, what kind of company would make a better partner? Why?Japan is still lagging behind the U.S in terms of connectivity. 46 millions households in Japan (15 millions have a P.C). Only 18% of households (8 M) are connected on-line in 2000, the number of PC shipments domestically increase of 12% from 1999. High connection cost to internet but lower access charges.AOL Japan has applied the same strategy than in U.S with "bundling" but PC manufacturers are much more active in the ISP business.It's the case of Niftyserves (which represent 19% of market share) and which is the ownership of FUJITSU (one of the top 3 PC makers in Japan); or BigGlobe (7% market share) and which is the propriety of NEC.And a plethora of small-to-midsize ISP companies which made up the remaining 63 percent market share.But Niftyserve and BigGlobe already had a large stable of dedicated users since April 1997.It would have been preferable for AOL to choose one of these companies for their experience and know-how; or by the fact to buy other...

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