NEW YORK -- AOL Time Warner Inc.'s America Online unit will slash the price of its slow-selling Mobile Communicator today, in an attempt to make inroads into the emerging market for hand-held e-mail gadgets, Wednesday's Wall Street Journal reported.
The online company, which has 30 million subscribers for its service, first offered the pager-size e-mail device to members last November for $329.95 plus $19.95 a month. But the device, which allows users to send and receive e-mail and instant messages, didn't sell very well, and reviewers criticized it as being too expensive and hard to use.
Now, the company will offer the device for $99.95 plus a $29.95 monthly fee. It also is retooling the software to offer better navigation and faster display of e-mail messages -- one of the major complaints of users of the device.
"Pulling the price of the device down to under $100 will have a very beneficial effect in going into a larger mass market," predicted Lisa Hook, president of AOL Mobile. She said the initial price was aimed at early adopters, who are willing to pay a premium to try new technology first.
Winning the mass market for gadgets is an important part of America Online's strategy to boost revenue by hooking current users to additional services, such as e-mail devices or interactive television. So far, none of these services have caught on in a big way, but the field is already getting competitive.
EarthLink Inc., the third-largest Internet service provider, behind America Online and Microsoft Corp.'s MSN service, recently launched a competing e-mail pager designed by Motorola Inc. for $124.95 plus a $24.95 monthly fee. The most-popular e-mail devices are ones called BlackBerry, which are aimed at corporate users and cost between $399 and $499 each, with monthly charges starting at $39.99.
BlackBerry maker Research In Motion Ltd. also manufactures the Mobile Communicator e-mail devices for America Online.
RIM's co-chief executive, Jim Balsillie, has been quoted in the trade press as saying America Online had made some missteps with the Mobile Communicator, especially with initial pricing.
RIM didn't immediately return calls about Mr. Balsillie's comments.
America Online's Ms. Hook said she is pleased with the device's performance so far and that the changes are simply the next iteration of its rollout. She wouldn't disclose the number of customers that have purchased the device. Analysts estimate that America Online ordered 60,000 units from RIM last year, and it hasn't placed another order.
AOL shares were down 7.8%, or $3.34, to $39.65 in 4 p.m. composite trading on the New York Stock Exchange, while shares of RIM were down four cents to $23.01 on the Nasdaq Stock Market, well off their 52-week high of $132.69.
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