Dial-Up Access Starts to Die;
The Computer Guide for 2015

It's official. Dial-up is dying.

The big three providers of "premium" dial-up Internet access -- that is, access that costs somewhere around $20 a month -- all reported significant declines in dial-up customers in the latest quarter, a steady drop that is expected to continue. As far as we can tell, this is the first time all three reported losses in the same quarter. It will take years, but terms like "handshaking" and "fifty-three-six-k" are headed for the data dustbin.

In its first-period earnings report, released last week, AOL Time Warner's America Online said it lost 290,000 subscribers in the U.S., which accelerated from the fourth quarter, when AOL lost 176,000 subscribers, its first decline ever. AOL blamed a "maturing narrowband universe," and interestingly, the war in Iraq, for slower signups to replace defecting users in the first quarter. Many of these defectors are moving to broadband services.

CONFERENCE CALLS Read the AOL and Microsoft transcripts, provided by Full Disclosure Financial Network.

Over at Microsoft's MSN -- which has been gaining ground on AOL in recent years -- matters were just as bleak, at least in terms of numbers. These losses come even as MSN is running some truly hilarious commercials featuring its chubby butterfly spokesman. In one, the butterfly guards a user's front porch from anthropomorphized spam, pulling a trap door on pitches deemed inappropriate or unwanted. "I have a Webcam," says one trashy spam before dropping into the abyss.

Amid this expensive ad campaign, MSN lost 300,000 subscribers in the quarter, to 8.7 million from nine million the quarter before, when subscriber numbers were flat. MSN blamed expiring multiyear rebate programs and users' shift to broadband access. "The subscriber reduction phenomenon is one we expect to continue," the company said in its conference call.

Now for Microsoft, this is no big deal. MSN's dial-up service has always been a sideshow to Windows and Office. Even Microsoft's .Net, the Keyser Soze of software, has gotten higher billing. Moreover, the rest of MSN -- the portal, search, Hotmail, Slate -- are showing strong revenue growth, thanks to paid search and tight integration of properties.

At EarthLink, the No. 3 provider, dial-up subscribers dropped too -- though this was expected, as EarthLink has been aggressively switching customers to the broadband version of its service (which, as with AOL and MSN, are provided through cable and phone company partners). EarthLink picked up 112,000 broadband subscribers in the quarter but dropped 74,000 dial-up customers. The trend, the company said, reflected "the maturing of the premium dial-up access market and the continued migration of subscribers to broadband access."

The implications of this are pretty obvious -- and, no surprise, bode poorly for AOL, which has the most to lose of the big three. For starters, content isn't king; access is. With few exceptions, surfers will jump boards in a heartbeat if it speeds up their connection. People want fast, always-on access to the Internet so they can find the stuff they really want, which isn't necessarily the Tiger Beat-style content that megaportals too often serve up on their front pages.

Users may hang on to their e-mail address through a cheaper, "bring your own access" plan, but that's no long-term strategy for the providers. Dial-up connections will increasingly become an emergency backup -- or a way to easily get online when on the road. They'll also serve as the cheap alternative for the cost-conscious chatters and dabblers, remaining a source of growth for no-frills upstarts such as United Online, which charges about $10 a month.

Will dial-up ever disappear, or will it adapt to new technological competition, just as radio did with TV? Write to us at realtime@wsj.com, and we'll post your comments this Thursday. If you want to share your thoughts but don't want your letter published, please make that clear.

PC BUYER'S GUIDES, 2004 AND 2015: Our print colleague Walter S. Mossberg just published his annual spring PC buyer's guide, in which he advises mainstream PC buyers which components are vital and which are overhyped, and recommends what buyers ought to spend to get a machine they'll be happy with.

This spring, Walt's checklist -- which you should read here -- includes these minimums: 256 megabytes of RAM, a 40-gigabyte hard drive, 32 MB of video memory, a built-in CD-RW drive, USB 2.0 connectors, and notes that flat-panel screens keep getting cheaper. His recommendations for digital-music lovers include an upgrade to an 80-gig hard drive, FireWire ports, good speakers and a subwoofer.

Seeking a sense of how far technology has come, we looked back at Walt's first PC buyer's guide, published just after Christmas 1991. His minimum recommendations then: 4 megabytes of RAM, a 100-megabyte hard drive, and floppy-disk drives that could handle not only 5" disks but also the new 3" disks. These days floppy-disk drives are no longer standard fare, 100 megabytes hold less than two albums' worth of MP3s, and many a software patch would fill that hard drive and still need more space.

Just for fun, we thought we'd use the latest buying guide as a springboard for making some predictions about what we'll be looking for in 2004 and 2015.

Clearly, the innovation and excitement of the high-tech life is moving out from the PC to the galaxy of peripherals -- digital cameras, iPods, hand-helds, etc. -- that use it as a hub. At the same time, the PC itself is becoming part of a home network of desktops, laptops and peripherals such as digital video recorders. (This has extended elderly PCs' lives; some live on, bereft of keyboards and monitors, as external storage devices on home networks.)

Given the lack of new "killer apps," we doubt that next spring's PC buyers will need faster processors (though PC makers will try to convince them otherwise) or more RAM or video memory. But we do predict that hard drives will keep getting bigger and that any decent 2004 PC will come with an ammo belt of slots for USB 2.0, FireWire and the flash-memory cards used by digital cameras and other devices. We also bet most PCs will come with built-in Wi-Fi capabilities, Bluetooth will be an increasingly common complement to Wi-Fi, and wireless network hubs will be common options for bundling with your new PC. Finally, we predict consumer-electronics devices that can link up with home networks will be hot -- this is a feature TiVo offers now.

As for 2015? Gosh. Will that spring's PCs be as far from today's as today's are from 1991's? If so, they'd have 65 gigabytes of RAM and a 25-terabyte hard drive. That much RAM doesn't seem likely to be used, but you never know: Back in 1991, Jace would have chuckled at fantasies of 512 MB of RAM before going back to bang out a subpar senior thesis on his amber-screened IBM PC Portable. (Which, incredibly, he actually lugged back and forth on planes between Florida and Connecticut.) However, a mammoth hard drive as standard fare wouldn't surprise us. Nor would living in a world in which PCs, consumer electronics, household appliances and even disposable products retrieve and exchange data invisibly and do so anywhere you can make a cellphone call today.

Not that we think the future will be perfect. 2015's Macs will undoubtedly levitate and have holographic displays, while daring Windows PC makers will be tiptoeing into offering boxes that look like stainless steel. We're sure we'll still be hip-deep in spam (probably full-screen video porn), sharing a printer over a PC network will remain as simple as piloting a nuclear attack sub, and rival programs will still be hoarding system resources and seizing file extensions for their exclusive use. But we're looking forward to it nonetheless.

Care to make a prediction for the must-have functions of 2004's PC? How about 2015's? Send them to us at realtime@wsj.com, and we'll post them this Thursday. If you want to share your thoughts but don't want your letter published, please make that clear.

SPAM OF THE WEEK: E-mails claiming you've won something (whether it's a coupon or a cruise) are pretty much hourly events in the spam world. So what was it about this one e-mail from "Customer Support" that caught Jace's eye? It was probably the subject line "You've Won!You've Won!" Doesn't that missing space somehow convey a certain happy-dog-jumping-on-his-master feeling that's hard to resist?

Inside, Jace was greeted with "Hello friend:" and invited to click to see what he'd won. So he did, the cheerful subject line having restored the light of childlike trust and hope to his tired eyes. And what had he won? A $125 shopping spree, courtesy of a gift certificate to be sent to whatever e-mail address was entered in the box. That sounded strangely nontangible, but Jace decided to press on. He also decided a $125 shopping spree would make other people even happier than it would make him, so he decided to make it a gift for his friends at uce@ftc.gov. He even looked up the Federal Trade Commission's correct address in Washington, D.C. and entered it into the browser form.

Done, right? Soon Orson Swindle would be delighted to get his gift certificate, right? Well, Jace had to wait through three screens of offers, clicking dozens of "No" radio buttons. That left him kind of tired, and worried about the status of his gift. Then he saw he'd have to accept another offer to get Orson a nontangible $125 gift certificate. That didn't seem like much of a thing to have won, and nobody likes a lousy gift, so he shut his browser down. No $125 for Jace. No $125 for his friend Orson. Now both Jace and Orson are sad.

A note to YourMailSource.com, the charming folks from Evanston, Ill. who made Jace so happy and then so sad: Yes, I believe this is spam. No, I will not contact you to tell you what you already know, unless this counts. And learn to spell "excluded."

Write to Tim Hanrahan and Jason Fry at realtime@wsj.com

Updated April 28, 2003

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