How does it feel to throw a product launch and have nobody come? Just ask AOL. In November 2010, the company unveiled Project Phoenix , a platform intended to rev up its doddering email business. Once synonymous with email--and mailbox-cluttering installation CDs/drink coasters--AOL had been lapped by free-mail rivals Yahoo, Microsoft, and Google , and an @aol.com email address had become the tech equivalent of an AARP membership card. The goal with Phoenix was to turn that around by offering Gmailesque features such as threaded emails and built-in chat, plus new functions like the ability to update your Facebook and Twitter statuses. The company even offered alternatives to the unhip AOL domain name: @ygm.com ("you've got mail"), @games, @wow, and @love. And to maximize its usefulness, Phoenix let users aggregate any external email accounts into their AOL inbox.
Phoenix landed with a thud. Existing AOL Mail users didn't see a compelling reason to switch to the platform, and--perhaps because it looked so much like Gmail--neither did many other people. (At its peak, Phoenix had 30,000 users; currently it's chugging along with 15,000 devotees despite the fact that AOL no longer officially supports the service.)
Now, with less fanfare, AOL is trying again with a platform called Alto , which launched on October 18. But unlike Phoenix, which merely tweaked the email experience, Alto is a complete reimagination of it. And here's a real shocker: AOL produced Alto through the kind of speedy, agile development process you'd associate with a startup, not a $3 billion corporation that defined web 1.0.
Alto is the product of a deliberate strategy change in the wake of the Phoenix fail. David Temkin, AOL's SVP of mobile and mail, split AOL's email operations into two tracks. One group continued to work on upgrading existing AOL users via incremental improvements that were unveiled this July. The other team, working under the radar even within the company, had license to create a truly disruptive product. "Email hasn't had a serious rethink really since Gmail came out," says Temkin. "We wanted to take a swing at that and not be tethered by the existing 20 million or so people using AOL Mail. The idea was to create without scrutiny and questioning."
Temkin assembled a cross-functional team of about a dozen developers, designers, and product managers, led by Joshua Ramirez, a senior director for product management of AOL Mail and Alto. Both Ramirez, a 37-year-old who had previously logged time at Apple, eBay, and Yahoo, and Temkin, 45, a veteran of Apple and Palm, brought fresh eyes to the project, having joined the company after the Phoenix launch. Drawing on insights gleaned from ethnographic studies of Phoenix users, they aimed to keep what people liked (aggregating multiple email accounts, for instance) and remedy what they didn't (multiple accounts also multiplied inbox clutter and email anxiety).
First proposed in April 2011, Alto was slated for a beta launch the following October. "What allowed us to move so quickly was having design, development, and product constantly talk in real time," says Ramirez. "It wasn't your typical waterfall process, where you define requirements, the developers build it, hand it off to QA, and 12 months later you have a product. This was continuous development." Key details were ironed out during an off-site hackathon, in August, at a rustic retreat near Monterey, California. Says Ramirez, "We packed three weeks into six days."
Visually, Alto won't be mistaken for its competition. "We wanted a product that could attract people from across a coffee shop," says Temkin, who relied on design director Bill Wetherell to create a user interface that passed "the 15-foot test." Alto is a web-based client that looks like a mashup of Twitter  and Pinterest , with incoming mail showing up in a vertical feed along the left side of the page. Abutting it is a thin column of icons for basic functions (compose a message, find a contact). The right two-thirds of the window is dominated by rows of tiles called "stacks." These are the source of the platform's unique look, as well as its innovative functionality. "We wanted to provide a post-foldering approach to organization," says Ramirez. (You can create folders in Alto, but AOL's studies show that few consumers actually use them.) The stacks update dynamically and work continuously, automatically sorting incoming messages, which also appear in your main feed, into five default groupings: daily deals, social notifications, retail, photos, and attachments.
These piles reflect the most common categories of email received by AOL accounts--and the fact is that even in the Facebook era, email remains the de facto beast of burden for photos and attachments. Notes Temkin, "No one's going to send bills to your Facebook account, and you're not going to get financial statements sent over text messages."
Alto uses a visual search to display the content being delivered: Click on the photos or attachments stack and you get an instant array of thumbnails displaying its contents--no searching or opening of messages required. Users can also create custom stacks for subjects like travel, work projects, or family by setting simple rules for sorting by sender, domain, or keywords. There's even an option to have certain types of messages bypass the inbox altogether, instead sending them right to a stack for periodic checking. Explains Temkin, "By sifting through bulk mail, you end up with the things that really matter in your inbox."
From studying Phoenix, the Alto team knew that while people like to aggregate multiple accounts, they didn't want to set up a new account in order to do so. With Alto, users can simply log in with an existing Gmail, Yahoo, .mac, or AOL account. (At least initially, Alto won't support POP3 email.) This is a platform meant to streamline your routine, not add to it.
Still in development is Alto's business model. Mail is a key driver for AOL's media properties--the default entry point for AOL Mail users is the AOL Today page, which links to top stories from the Huffington Post, Patch, and other AOL brands. Temkin insists that connecting users to content won't be as central to Alto, though there will eventually be a "top stories" stack containing news clippings that link to, say, HuffPo articles. "We're looking at ways of monetizing this product," he says. "Unlike AOL Mail, we'll likely implement premium features that you pay for on a subscription basis. AOL Mail is a purely advertising-supported product. Alto is optimized for acquiring email users who are open to a new experience."
Even if Alto grabs those users, Macquarie Capital analyst Ben Schachter says it's not likely to elevate AOL's fortunes in the short term. Although its stock price has more than doubled in 2012 and the company posted its smallest revenue decline in seven years in the second quarter--thanks largely to a $1 billion patent sale to Microsoft--AOL's revenue from display advertising on its media properties was basically flat, and its subscription-access business continued free-falling, dropping another 13%. "Efforts like new mail or video are interesting," says Schachter, "but AOL hasn't proved it can make them into meaningful businesses. Changing people's email habits is a tough thing to do."
Six weeks before launch, a calm and confident-seeming Ramirez and Temkin are focused on software bugs, not business plans, making sure that the "minimal viable product" that early adopters see this fall "works well, is beautiful, and addresses the main case uses of email," says Temkin. "We're a big company and we want to rebuild a reputation for innovation. I feel we have an infinitely stronger product than we did with Phoenix--but it's best to speak softly and carry a big demo."