Re: Sizing the Internet market

[James Waldrop <[e-mail]>]

After several messages between Jim Gleick and I concerning
my previous note, I'm clarifying what I had to say slightly,
since he seems to feel that it could have been construed as
harmful to his company, which was not my intention.

Let me state up front that I do not know how fast Pipeline
is growing.  In conversations with two of Pipeline's competitors
and a conversation with one "innocent bystander" I was given
to understand that Pipeline was not growing as quickly as
some other Internet access providers.  This is what I meant
by Pipeline starting "slowly."  All three people attributed
this "slow start" to Pipeline's fees, specifically its hourly fee.

I do not know how fast Pipeline is growing, nor do I expect
Jim to reveal that to the readers of com-priv, but I am fairly
confident that I can say that Netcom, for instance, is growing
faster.  Since I believe that interface is an important factor
in the success of this kind of business, and since Netcom's
"interface" certainly leaves much to be desired, I can only
conclude that the reason for Netcom's rapid growth is its
low fixed-cost, which is half Pipeline's if one wants
unlimited access.

Why is this relevant?  I want to make it clear that I think
it's important not to overestimate the effect of an interface
or to underestimate the effect of price on the success of an
Internet access company.  Pipeline's growth rate aside,
I think that people are more willing to put up with a poor
interface in an attempt to save money than they are to shell
out a significantly greater amount of cash to pay for a better
interface.

Obviously if a comparable service is offering a better interface
at a comparable price interface issues become important.  But in
a world where a better interface means higher prices, people
would be wise to examine some of the lessons evident in the
experience of the other access providers rather than to assume
that simplistic assumptions will prevail.

James Waldrop

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