AOL's announcement to split in two is a great decision on focus, but seems very late. When AOL started, they created the best online experience by controlling the access, content, "browser", content development platforms, and commerce tools. It was an all-in-one play that allowed them to do things that others could not do in a simple way for the customer. Today, all of those elements have splintered and become industries of their own and have all become easier. There is less need for a single integrated platform. AOL's best attributes have always been about great experiences for the end-user customer, so how can they leverage that today?
One challenge in focus is that AOL still has two big segments of customers. Older email users who started on AOL because it was easy to use and never switched to other web email services like gmail or hotmail. Then there is a second segment of young customers who got to know AOL through Instant Messenger. These two segments are going to want completely different things from AOL and somehow they will need to figure out what their "hooks" will be going forward. Google has played it well with broad applications like search, maps, and posting videos capturing the bulk of Internet users.
AOL will need to look closely at the needs of it's customers and find the gaps, find the things that are still difficult on the web, and create a great customer experience out of those. That job will be tough if they try to both hold onto their old email user customers and take forward the AIM (instant messenger) customers they built up as well. Two very different segments.
Media management in the home and the fight for the digital living room is still a place where competitiveness standards, tricky technology integration issues and no single platform may provide an opportunity. Although that space brings in new players even still such as Apple. In fact, Apple may be one of AOL's toughest competitors. The iPod / iTunes move to simplify and mainstream online music downloads is exactly what AOL did for web browsing in the 1990s.
To succeed in a big ideas to big results transformation, AOL needs to focus … especially since the competition this time around if fiercely with Google, a potential Microsoft / Yahoo! combination, and Apple all vying for the hearts and minds … and clicks … of the same customers.