EarthLink's choice: just fade away
Rolla Huff, the CEO of Internet service provider EarthLink, has made a choice many in Silicon Valley find incomprehensible: He's no longer bothering to get new customers. Here, the moment you stop growing — no, the very second your momentum falters — you're instantly written off. But the reason why EarthLink swung to a $54 million profit in its first quarter was simple. Its new dial-up customers — yes, people are still signing up for dial-up — simply weren't worth its while, and EarthLink stopped spending money to market service to them. Huff has also pulled the company out of the municipal Wi-Fi market, selling some networks to city governments and shuttering others. He's similarly disentangling the company from its Helio cell-phone joint venture, a half-billion-dollar fiasco. All of that doesn't leave EarthLink with much of a future.
Yet the cost of dial-up continues to shrink, which means EarthLink can continue to squeeze its current customers for healthy profits, possibly for some time to come. It's not innovative, not sexy. It's not why founder Sky Dayton started the company; it's not a business plan anyone from the Valley would propose, or a job an engineer here would sign up for. SoMa Web designers are offended by the notion that anyone's still accessing their sites through a 56-Kbps modem. EarthLink is not following the set pattern: Set the world on fire, or flame out fast. For the Valley's groupthinkers, the fact that EarthLink still exists, collecting monthly checks, is an idea that must burn.