Internet Firms Fight for Bite of Apple

SAN FRANCISCO (03/28/2000) - Get ready for a rumble. In this corner, with 21 million members and a new version of its Mac software, stands America Online Inc., the world's largest Internet service provider. Its opponent, fresh from its merger with MindSpring and a new partnership with Apple Computer Inc., is EarthLink Network Inc.

What's at stake? The hearts and minds-as well as the business-of Mac users, many of whom are new to the Net and looking for an ISP to call their own.

A Numbers Game

Mac users make up a growing market for AOL and EarthLink to woo. Apple estimates that 93 percent of iMac buyers go online-62 percent are surfing the Web the first day they buy the computer. Those new users need ISPs-and in turn, those ISPs need to offer new users compelling reasons to pick them over rivals.

AOL and EarthLink have long histories with Apple. AOL (800/827-6364, got its start a decade ago designing an online service for Mac users. When EarthLink (800/395-8425, rolled out the first version of its software, the product came only in Mac form.

You've Got Upgrades

Mac users make up about 10 percent of AOL's subscriber base. The ISP giant hopes to build on that with a software upgrade. The company expects to release AOL 5.0 for the Mac by early spring; it may already be available by the time you read this.

The upgrade adds many features already available in AOL's Windows version. My Calendar allows subscribers to track appointments and personal events. My Places lets users customize their Welcome page by adding links to their favorite AOL channels. With You've Got Pictures, AOL members can drop off film for developing at Eastman Kodak retailers and view the digital prints online.

Other features allow users to retrieve deleted mail and switch between screen names.

AOL 5.0 also includes a few Mac-specific features. Mac users can view animated GIF files and play sounds embedded in e-mail from other Mac members. The point is to personalize the online experience for users, AOL spokeswoman Marta Grutka says.

One feature that won't appear in AOL 5.0 for the Mac is the Internet software included in the Windows version. A class action suit filed in February claims the Windows software alters existing files and settings, making it hard to use rival ISPs. AOL, which denies the allegations, says the Internet feature targets Windows users only.

Apple Allies

AOL may have a new version of its software on the way-but EarthLink has Apple's seal of approval. In a deal struck earlier this year, EarthLink became the only ISP in the Internet setup software that comes with any Mac sold in the United States. Apple gets a cut from each Mac customer who signs up with EarthLink, as well as a $200 million stake in the company.

With Apple's cash and immediate access to Mac buyers, EarthLink clearly benefits from the deal. But what's in it for Mac users? To lure new and existing Mac customers, EarthLink has offered a free month of service and a setup-fee waiver.

The ISP is also touting its customer support. Mac users make up about 15 percent to 20 percent of EarthLink's 3 million subscribers, and EarthLink in turn dedicates 20 percent of its tech-support resources to the Mac. (For the record, AOL says its Mac-specific support resources are proportional to the size of its Mac subscriber base.)EarthLink plans to make its current services more Mac specific, CEO Garry Betty says. The ISP expects to update some of its applications to take advantage of the upcoming Mac OS X. It also may adapt its start page to reflect the look and feel of Apple's Aqua interface.

With a subscriber base that dwarfs EarthLink's, AOL isn't panicking over its rival's cozy relationship with Apple. But don't think the leading ISP isn't keeping a close eye on EarthLink and its moves in the Mac market.

"It really does push us to develop new features," AOL's Grutka says.

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