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March 9, 1996

Internet, On-Line Service Use on the Rise


LOS ANGELES (Reuter) - A growing number of Americans are dialing into online computer services to access the Internet, according to a pair of surveys released Thursday.

Odyssey, an independent market research firm that tracks consumer patterns, said Internet use in the United States doubled in the last six months while another study said subscriptions to U.S. online services surged 64.4 percent last year to nearly 15 million users.

Both surveys underscore what many computer experts had already been forecasting -- demand for online information is exploding even if sales of personal computers are starting to slow down.

"The World Wide Web's momentum will cause subscriber growth rates to spike throughout 1996, especially as online companies continue to migrate their proprietary online services to the Web," said Paulette Donnelly, editor of the Electronic Information Report, a Wilton-Conn.-based publication that tracks online service subscriptions.

Among consumer online providers, EIR said America Online Inc. led the market, ending 1995 with 4.5 million subscribers, or triple its 1.5 million subscribers at the end of 1994. H&R Block Inc.'s CompuServe Information Service followed, doubling its subscribers to 4.0 million subscribers in 1995.

Prodigy, the joint venture of Sears, Roebuck & Co. and International Business Machines Corp., lagged behind its rivals with a 16.7 percent increase to an estimated 1.4 million subscribers, the report said.

Odyssey, which is based in San Francisco, attributed much of the growth in online services to a growing awareness of the Internet, the world wide computer network that can link users around the globe.

According to Odyssey's January survey, nearly a quarter of all U.S. households equipped with computers are "surfing the net" the phrase used to describe users who access the world wide web and flip through various "pages' of information.

Odyssey said more than half of those accessing the Internet from home are doing so through one of the commercial online services.

Awareness of the Internet has skyrocketed in the last six months. Last July, Odyssey said only 45 percent of households with computers were aware of the Internet. By January, that figure had jumped to 73 percent of computer households.

The growing popularity of the Internet is changing what is important in selecting an online service.

"Quality of access to the Internet has become a major issue for consumers choosing a commercial online service," said Odyssey President Nick Donatiello.

"The other major factor is ease-of-use."

Donatiello said because commercial services like CompuServe are better known, they have a distinct advantage over other Internet service providers. But Internet companies are quickly catching up.

The Odyssey study is based on responses from 2,000 consumers.

A separate Odyssey survey on PC usage showed that 35 percent of U.S. households now have computers -- a three percent increase since July 1995.

Odyssey said the average PC owener spends about 11 hours per week in front of the terminal, up by two hours since last summer.

Donatiello said contrary to the opinions of many analysts, the market for home computers is still strong.

In fact, he said intent to buy is stronger now than a year ago or even six months ago.

"Of course, it remains to be seen whether PC manufacturers can capitalize on this interest," said Donatiello.

"Our research indicates this could be a year-round business, but many marketers insist on focusing their promotional efforts exclusively on the fourth quarter, holiday season."

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