This Web Icon Is Fading Fast

"You've got mail!"

(click)

From: AOL, a Time Warner (NYSE: TWX  ) company

To: You

Greetings, loyal AOL Mail user. Your email service of choice is fading into obscurity as many of your fellow AOLers are jumping ship. Just thought you should know.

Big love,

AOL

Yep, AOL sure is fading fast. While every major rival in the Web-based email game gained ground over the past year, AOL's once-ubiquitous mail service is losing customers.

Provider

U.S. Users

Year-Over-Year Change

Yahoo! (Nasdaq: YHOO  ) Mail

106 million

16%

Microsoft (Nasdaq: MSFT  ) Hotmail

47 million

8%

Google (Nasdaq: GOOG  ) Gmail

37 million

25%

AOL Mail

36.4 million

(22%)

Data from ComScore by way of TechCrunch.

Of course, Web-based mail isn't for everyone. A mail address from work, based on Microsoft Exchange or IBM (NYSE: IBM  ) Lotus Notes, is the main digital lifeline for lots of Americans. Many more are using the address that comes with a Comcast (Nasdaq: CMCSA  ) cable modem or an AT&T (NYSE: T  ) DSL line. Right now, Yahoo! and Microsoft are winning the race to make Web-mail converts out of these untold millions of Web denizens. And AOL is losing, big time.

This is very, very bad news for AOL. As fellow Fool Rick Munarriz said earlier this year, "The problem with AOL is that there doesn't seem to be a whole lot of growth beyond its free web-based email service."

When growth is dead even in that crucial eyeball-magnet department, I don't know how Time Warner expects to make money off this former blue-chip brand. Neither does Rick, and the mother ship is officially giving up on AOL. If you're a Time Warner shareholder today, I hope your investment thesis rests on the company's media assets. If you're hoping for a healthy return from the company's Internet ventures, well, I think you should get out right away.

Your nest egg would be much better off invested in a proven online performer like Google. Big G loves to see new Gmail customers, because it knows how to follow those users offline. Grab a free 30-day Motley Fool Rule Breakers trial pass to read all about Google.

Stock news, financial commentary, and your daily dose of Foolishness: Get plugged in to The Motley Fool on Twitter!

Google is a Rule Breakers selection. Microsoft is an Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. After nearly a decade with Yahoo! Mail, Anders converted to Gmail in 2005 and hasn't looked back since. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (5) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 18, 2009, at 4:15 PM, stockgripes wrote:

    Why is the author alluding to get a gmail account? It could be any other service but AOL.

  • Report this Comment On August 18, 2009, at 5:06 PM, Melaschasm wrote:

    Ironically, www.hulu.com is what AOL Time Warner should have been.

    If AOL would have become the digital distribution portal for Time Warner, the merger might be considered a success, rather than a failure.

  • Report this Comment On August 18, 2009, at 5:39 PM, merchanf wrote:

    I am afraid the same will happen to Google. I went to buy 5 Google phones at T mobile and they wanted 300 dollars and you have to buy a data plan plus storage is extra. Are they High? Instead I bought 5 iphones with data plan with 16 gigs of storage so storage was free and the cost was less. For 299 you can get 32gigs iphones.

    Google needs to split its stock otherwise game over. They are just another company with mediocre growth. Their PE is too low and won't go up because small investor will not touch the stock at this price. Remember they were burned from the 700 plus to the current price.

    Most importantly they need to get growth from youtube revenue. Here is an idea propose to real estate companies and car companies to put their ads in youtube instead of them residing on their own storage. Same for for other companies. Embed these ads in the browser so it is seamless and charge for it based on views. not really cloud but who care add to the top line right? Growth is the key word.

  • Report this Comment On August 18, 2009, at 6:33 PM, TMFZahrim wrote:

    Stockgripes, I'm alluding to Gmail simply because that's the fastest grower of the bunch -- and because Google knows how to make money out of fresh traffi in a way that is alien to Yahoo and Microsoft. That's all.

    Anders

  • Report this Comment On August 19, 2009, at 4:35 PM, buckeyetex315 wrote:

    Anders -

    Your characterization of Google as the fastest growing email provider is misleading. Yes, it is true on a percentage basis. But if you look at the actual numbers, Yahoo added 14.6 million email users vs. Google's 7.4 million additions - nearly twice as many users. It's always harder to keep up percentage gains as the base number gets larger. I think Yahoo did an admirable job increasing their numbers by 16% year over year.

    Of course, your comment about Google knowing how to make money off fresh traffic is spot on.

    Full disclosure: I am an AT&T employee and we have a partnership with Yahoo. This post represents my personal opinion and in no way reflects an official (or unofficial) position of AT&T.

    Regards,

    Brent

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