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AOL Signals Strength in NOVA Economic Diversity

August 25, 2012
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To many AOL recalls the sounds of dial-up modems, clunky internet midi files, and of course “you’ve got mail”… which they actually don’t own the rights to anymore. The tech giant went from the #1 web portal to being better known for handing out free frisbees at Staples.

Wait, those were CDs with AOL trial membership?

The merger with Time Warner in 2000 seemed gluttonous for a company whose revenues were in decline, and for years the company has been climbing the hill back from the cost expended on that near lethal corporate decision. Ten years later, Ted Leonsis’ decision may finally be paying dividends as the diversified web portal is forming as a multimedia powerhouse and technology research leader (regardless of the 2009 decision to spin back off of Time Warner).

Haven’t heard about any of the inner workings of AOL? After years of being known for being contributors to the clunky original internet, the company appears to have taken notes from Madonna and reinvented itself. Instead of using the umbrella of AOL for its many projects, AOL has disguised their involvement. For instance, many don’t know that AOL is the owner of the Huffington Post. Many don’t know that AOL is behind the popular Patch local news system (hey they might be competitors in Tysons now but we still think they provide an important service of focusing on news at a neighborhood level).

AOL also owns MapQuest. Yes, I am aware that anything other than Google Maps has evidently become obsolete in the eyes of navigators around the world. How long has it been since you questioned your choice of mapping provider though? Google Maps started off as an eye opening introduction to the world of mass data, but since 2007 their improvements have been cosmetic at best. Take a look at MapQuest when you have a chance, and you will see they aren’t trying to be a competitor of Google Maps, they have a vibe of their own which is inline with AOL’s overall local first philosophy.

Web content aside (not to dismiss one of their biggest revenue and employment functions), they have also been putting a lot of focus on being at the forefront of technology and research. Companies like Google, Microsoft, and Xerox have entire departments whose goals are to create as many new ideas and functions as possible. Even concepts that provide no expansion of current uses are researched. Today’s obscure concept can become tomorrows mega-industry.

Don’t believe me? Look up Kodak’s research into digital photography, a double edged story of how research and development mean everything in industry.

Earlier this year AOL sold $1.056 billion of patents to Microsoft which included many functions that the former AOL considered it’s core business, including search and marketing technology. Many saw this as an end to the battle against the web portal giants Microsoft and Google. With that era ended, it appears the content and production era of AOL has officially begun with a vision that management and investors see has great opportunity.  Beyond organic growth, AOL has also actively partnered with start-ups in our area as investors, leveraging their size. This method could be the nebula of growth for future industries along the Dulles corridor.

It was upsetting, if not oddly muted in 2009, when AOL decided to move its headquarters from Ashburn to New York City. Employment from AOL in Loudoun remains strong, but as AOL rises it is unclear whether the company will consolidate to New York, or add positions in Ashburn. Currently, AOL employs just over 2000 of their 6000 employees in Northern Virginia, and more through their content creation services.

AOL has cleared away just about all long standing debt from the Time Warner merger. They have received an equivalent cash flow as from a public offering, without requiring dilution. While revenue is down currently, the new lean future vision combined with those funds will go a long way to refining capabilities.

As AOL grows our area must remain a partner in that growth to ensure jobs produced can be retained in our tech corridor. The company provides a beacon of light to what a diversified, federally independent Northern Virginia could look like.

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