Steve Case looks back on AOL’s turbulent history

MOUNTAIN VIEW, Calif. — America Online co-founder and former AOL Time Warner Chairman Steve Case on Wednesday evening reflected back on the legacy of AOL, including its merger with Time Warner and battles with Microsoft.

Taking the audience at the Computer History Museum here through a history lesson, Case noted high and low points. AOL was founded nearly 20 years ago.

The 2001 merger with Time Warner was intended to meld the broadband cable capabilities and content brands of Time Warner with AOL’s Internet savvy, Case said. But the deal has not worked out as hoped, at least not yet, he noted. The timing of the merger, which began when AOL had a market value of more than $100 billion, subsequently became difficult, Case said.

“I probably wasn’t the right guy to be a chairman of a company with 90,000 employees and the team didn’t quite gel,” Case said. As chairman, Case said he became the logical target of ire. He left as chairman in 2003 but still serves on the board of directors of the company, now again known as Time Warner.

Recalling the company’s battle with Microsoft over online services, Case said the competition prodded AOL to improve service. “In retrospect, the fear of Microsoft killing us was the best thing that happened to AOL,” Case said.

“We were always as a company deathly afraid of Microsoft,” because of its software bundling power, he said.

Then, the browser wars began. “The reality was, [Microsoft] wanted to kill us but quickly decided they wanted to kill Netscape more,” said Case. Eventually, AOL merged with Netscape.

Additionally, AOL believed it needed to move to a flat rate for services because Microsoft was doing so, Case said.

AOL’s rapid growth at one point resulted in customers getting too many busy signals, Case said. The company responded by building out network capacity and responding to customers, or members, as AOL calls them.

 It took AOL nine years to get its first million customers and just nine more months to get the second million customers, said Case. “What really drove us from 1 million [customers] to 2 million to 30 million was [AOL] became the easy way for most people to get online,” said Case. “AOL became kind of the logical place to go.”

At one point, the company was criticized for being the Internet “on training wheels,” Case said. But this actually was good because the company wanted to spread the use of the Internet, he said.

Case also is pleased with the growth of Instant Messaging. “We did the concept of IM and the concept of buddy lists. Those proved to be very powerful communications tools,” he said.

Getting PC companies to bundle modems proved critical for AOL, said Case. When AOL started, only 3 percent of households had computers and fewer than a third of those had modems, said Case. AOL persuaded IBM to bundle modems and position their consumer PC as a communication device, Case said.