Much discussion exists about the digital divide, and how Hispanics are being left behind by the lack of content and access to equipment and services. The AOL news is a great thing for Latinos, especially first generation, who for whatever reason aren’t yet reaping the benefits of being connected to the internet. For less than the cost of equal equipment (PC and color printer), they not only get the computer but a 12-month subscription for accessing the web through AOL.
OK, so now we have an “affordable” computer with internet service for a year, along with an increasing amount of Hispanic-focused information available on the web (a good part of it being provided by AOL Latino)… Now is time for AOL to work on making it widely available (distribution channels) and letting everyone know about it (PR and advertising).
Right now they have one distribution channel (Office Depot); they should be scramming to get as many distributors as possible… Wal-Mart, Best Buy, and the like. Heck, anyone that would be willing and able to work with them!
Advertising-wise, they did begin a major campaign earlier this year, focusing in the Latino market. Not withstanding the quality of such advertising, the sole fact that they were talking to their customers about their product, prior to offering the low-priced PC, signals AOL is in it for the long haul. I expect them to be.
If everything works out on this latest effort by AOL, independently if Hispanics remain as their subscribers after the agreed time, this is great news for both Latinos and all those catering to them. You’ve experienced it yourself; once you are exposed to and acquainted with the vastness of information, entertainment, and ways of communication that you acquire by being online, there is no turning back.
So for AOL, it will depend on how good they are at what they do, from the technical aspects to how relevant is their content, and how much it resonates with Latinos utilizing their services. AOL should try to become such an integral part of their customers' online experience, that it would be a big inconvenience for the latter to change providers once their annual contract expires.
As for all those businesses trying to obtain a bigger piece of the Hispanic pie, the only thing that can prevent this from happening is themselves. Whether they stink at what they do or are not prepared to handle the increase in business, this hopefully humongous inflow of new customers will quickly let it show.
America Online became the biggest Internet service provider in part by stuffing millions of free sign-up discs into mailboxes, newspapers and magazines. Now it's reaching across the digital divide to lure first-time computer users with bilingual service and a low-cost PC.
AOL, which has lost 3.3 million U.S. subscribers since September 2002, plans to focus its offer narrowly on Spanish speakers who don't already own a PC.
The computer system will be available this month at Office Depot stores for $300 with a one-year commitment to AOL's dial-up service at $23.90 per month. The subscription charges bring the total cost to $586.80, which is about $170 less than a comparably equipped Dell.
AOL's offer is aimed at the 27 percent of U.S. households without computers and specifically at Hispanics, who lag the general population in home Internet access but are rapidly catching up.
Thirty-six percent of Hispanics have Internet access at home, compared with 66 percent of the general market, according to the 2004 U.S. Hispanic Market Report by research firm Synovate.
Synovate's Deborah Gonderil said, “Although 12.5 million Latino households aren't online, Latinos are not resistant adopters of new technology, by any means."
Instead, she said, the lag in Internet adoption stems from the fact that 65% of Latinos in the United States are "Spanish-dominant," meaning they speak only Spanish or prefer it over English. And for a long time, she said, there wasn't much interesting Web content in Spanish, and many Latinos didn't have many Internet-connected friends to e-mail or chat with in the United States or Latin America.
Andy Carvin, director of the Digital Divide Network in Newton, Mass., agreed that cost is only one reason Hispanics have been slower to go online.
"The availability and diversity of useful content is certainly a big factor," he said.
AOL Latino, launched last fall, is more than a translation of AOL's English language offerings. Services include prepaid phone cards and money transfers. There is immigration information and an "Ask the Teacher" section to help parents assist children in doing homework.
The sports channel highlights soccer and boxing rather than football and baseball, and the entertainment channel features interviews with leading Latino artists.
AOL had its suppliers configure the computer so desktop icons and programs can switch easily from English to Spanish. The company is including a bilingual poster and video to help set up the computer. And it is offering prominent desktop links to its AOL Latino service. That's important for households where parents speak little or no English and children are bilingual.
"The opportunity is very sizable," said David Wellisch, general manager of AOL Latino. "As more Hispanics come online, that presents a very interesting opportunity for online advertisers."
By bundling its dial-up service with a low-cost PC, AOL is adopting a strategy popularized by the likes of Gillette, which gives away razors to sell razor blades.
Eric Greenman, executive director of partner marketing for AOL, said company executives were betting they could subsidize the PCs without losing money.
Technology analyst Rob Enderle of the Enderle Group estimates AOL is spending as much as $200 per subscriber to subsidize the computer's cost.
"It makes sense because you recoup that [subsidy] over a couple of years and also make money on any transactions," Enderle said. "AOL gets captured eyes, and that gives them more advertising revenues and a targeted audience."
Among the risks is that customers can leave the AOL service after 12 months. They could defect to lower-cost rivals or completely abandon dial-up service for high-speed cable and DSL access, by exposure to the many options available [that they now notice, since it is relevant for them now].
Still the AOL computer faces other challenges, especially picking up more distributors, analysts said. AOL’s Wellisch said deals are in the works to make the computer available through chains other than Office Depot, but he declined to name them.