Friday, March 14, 2008
AOL Starts Comeback With Bebo
AOL never went away, but the company's first social networking acquisition will put it back in the spotlight. The $850 million purchase of youth-oriented social site Bebo nearly doubles the audience, and more importantly makes the company relevant.AOL now has a curious mix of longtime users who are comfortable with the training wheels that the service provides and Bebo users who never heard of Netscape. We in the digerati may think that Facebook and Twitter are the cool places to hang out, but I still know many people who use AOL for their email and launching pad, and now they will have access to some social functions.
Eden Zoller, principal analyst at Ovum, says the deal is significant also for the relatively cheap price of around $2 per user.
"The $860 million price that AOL has paid for Bebo, seems reasonable and even a bargain in comparison with the $240 million paid by Microsoft a few months ago for just a 1.6% stake in Facebook. It looks like the bubble in the valuation of social networks has burst."
So AOL may be back on track to become more competitive with slumping Google, troubled Yahoo, and trying harder MSN. Shifting from the over 40-crowd to the tween market will be an uneasy shift, but a smart social strategy can bridge the age gap.
Posted By John Gartner at 08:17 AM
Permanent Link: AOL Starts Comeback With Bebo
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