Why AOL Let AIM Die Even Though Everyone Loved It

As a company, AOL has made some horrible decisions. Slightly worse than its merger with Time Warner—one of the biggest disasters in American business history—was its decision to let its incredibly popular messaging client, AIM, wither and die. This is why that happened.

In a story at Mashable, AIM developers Barry Appelman, Eric Bosco and Jerry Harris portray the program as AOL's neglected stepchild. AOL never embraced AIM—despite it amassing millions of users and predicting a number of internet functions—for one main reason: it didn't make AOL any money.

In its heyday, AOL was a subscription service, charging users hourly and then eventually monthly fees in order to access the internet. AIM, on the other hand, was a free service, and was seen as relatively worthless by company executives. One of the engineers explains it this way:

"AIM was never really embraced by AOL because of the innovator's dilemma, what I call the cash cow dilemma," Appelman said.

The "innovators dilemma" is the idea that companies become too focused on things that currently make them money and fail to develop technology that will keep the business thriving in the future. AOL was unable to see that its business model would soon become obsolete and that its entire worldview of the internet was backwards.

Now, users themselves are currency: Facebook, for instance, bought Instagram for a billion dollars simply to gobble up its user base. In February it purchased the worldwide messaging app WhatsApp for $19 billion for the same reason. AIM was essentially WhatsApp at one point, and it might have continued to be had AOL nurtured it.

According to Jason Abbruzzese, the article's author, this is not lost on AIM's developers: WhatsApp came up a number of times during the course of his conversation with them. Meanwhile, the rest of us have migrated to Gchat or wherever, while AIM is merely a carcass left to be picked apart by nostalgia vultures.

[via Mashable, image via Getty]