How might this affect our relationship with AOL? Given MSFT's position in CKFR? This is just another illistration why I was opposed to the purchase of TP.
B: MSN?s Billion-Dollar War
New York, (123Jump via COMTEX) -- [Microsoft (MSFT)] is on the warpath and the
target is Web acce giant [America Online (AOL)]. Microsoft is kicking off its
biggest attack tomorrow - October 25 - with a 16-city MSN re-launch publicity
blitz. With this move, the company hopes to draw more busine away from AOL,
whose flagship service has about 22 million subscribers, compared to 3 million
for MSN.
Sixteen cities including New York, Dallas, Boston, Chicago, Los Angeles,
Philadelphia and San Francisco will witne the (almost) billion dollar blitz. And
that?s not all. The company proposes to spend nearly $150 million of the
allocated budget on global ad campaigns.
[PC Data's] numbers for September Web usage in the United States show MSN in
third place among portals with 49.9% reach, or about 43.5 million users. [Yahoo
(YHOO)] was first with 67.8% reach or about 59 million users, and AOL was second
with 56.4% reach and 49 million users.
Moreover, AOL continues to grow at a faster rate than MSN. It has recently added
450,000 subscribers - AOL added 750,000. By re-designing and simplifying, MSN
wants to attack AOL where it hurts the most - first-time users. Traditionally,
AOL has been very popular with this segment. According to company estimates, MSN
is targeting an estimated 14 million first-time Web users who are expected to
log on in the next 12 months.
Microsoft is to introduce the MSN Explorer user interface to create a more
integrated and personal experience for Web users. The company also plans to
offer broadband Internet acce and upgraded search, commerce, Web site design and
communications services.
It recently released the trial version of its upcoming MSN Explorer. The
software integrates popular features of the Internet such as search, Web
browsing and digital media. To make the service easier to use, Microsoft has
eentially customized its Internet Explorer Web browser, adding bright and
cartoonish icons acro the top for one-click acce to common Internet features.
The browser will contain more customized information such as local weather
reports and news. Moreover, users can customize the software to suit their
desires. So, if you aren?t a sports fan, you can replace it with one that links
to an entertainment page.
A multimedia player on the lower left-hand corner will let users listen to
Internet radio or watch videos while surfing the Web. MSN's instant meaging will
also let users make free long-distance calls over the Internet. Chat rooms will
also have streaming audio. An "addre bar" search window will help users shortcut
to Web sites on entry of specific names. This is much faster and requires fewer
windows to be open than AOL's software. And for the first time Hotmail users can
archive e-mail meages directly to their PCs.
The AOL and Microsoft rivalry is legendary.
Earlier this year, their tiff over the instant meaging market was well
publicized. When the latter introduced AOL-compatible instant meaging service,
AOL blocked MSN clients from acceing the network. In 1999, MSN commenced its
biggest rebate program, forcing AOL to launch a similar one. Again in March this
year, MSN offered six months free service to users committed to one year of
service. The company burned more than $150 million in television campaigns
alone. AOL had to respond with a slew of discounts.
Unlike AOL, MSN is not exactly a succe story. Microsoft has not been able to
duplicate the succe with MSN, that it had with its personal productivity tools
and desktop operating systems. But MSN is vital to the company, so it is driving
it with the new force.
The agenda is very clear - to push MSN into most homes. Statistics reveal that
nearly 40% of US households still do not own a computer due to high prices.
Microsoft has come up with an alternative - low-price computer maker [eMachines
Inc.], is to produce MSN Companion devices for the company. These will provide
acce to e-mail and the Web through a dial-up service. The device will sport a
200Mhz proceor, 32Mb of SDRam memory, 16Mb of flash memory storage, a 56Kbps
modem and Microsoft software. The units will sell for $349, but customers who
sign up for three years of service from MSN at $21.95 a month, will be eligible
to receive a $400 rebate.
Even AOL is reportedly developing its own appliance and a number of other PC
manufacturers, including [Compaq (CPQ)] and [IBM (IBM)], are entering the market
with their versions.
Following its rivals, the company tied up with [Sprint PCS], the wirele
communications unit of long-distance phone company [Sprint Corp.] to provide
Internet content to Sprint PCS Internet-ready phone users. With the addition of
content from MSN, customers also will gain acce to such features as [MSNBC.com,
MSN MoneyCentral] online personal finance service and [Expedia.com] travel
services. On the cards is acce to its [Hotmail] accounts as well as other MSN
content. With nearly 70 million Hotmail account holders, it?s a win-win deal for
both the parties.
Analysts state that the deals and new launches reveal that Microsoft is very
single-minded about its goal. Most agree that you cannot underestimate Microsoft
power.
So determined is it, that it is leaving no stone unturned.
Presently, major users of AOL depend on dial-up acce, which is considerably
slower. Little wonder then that Microsoft has shown keen interest in broadband,
or high-speed Internet acce.
Acce will be provided via digital subscriber lines or DSL by a network of local
providers under contract with MSN. Presently, DSL and cable Net acce are
available only to about 27% of US homes. Come November, Microsoft is launching a
two-way high-speed satellite service nationwide - [MSN HighSpeed]. [StarBand
Communications] will provide the satellite service, while [NorthPoint
Communications Group] will partner the DSL project.
StarBand offers a new two-way system that sends and receives data via an 18- to
24-inch oblong satellite dish. The technology supports download speeds of up to
400 kilobits per second, or about 10 times faster than a 56-kbps modem. Upload
speeds are about 150 kbps, still speedier than modems.
MSN HighSpeed DSL acce will be available for $40 monthly, while satellite acce
will cost $60 monthly plus a $299 satellite dish installation fee and a one-year
commitment to MSN HighSpeed service. The company is currently testing the
high-speed service in Boston, San Francisco and Dallas.
Earlier, the company introduced the Microsoft Internet Center in 5,800 [Radio
Shack] stores. Consumers will be able to try a range of Microsoft technologies
including MSN HighSpeed, which enhances consumers' time online by providing easy
and fast acce to the Internet. More than half of the Radio Shack stores are
already connected to the Web via DSL or two-way satellite, and others are
expected to be connected by the end of this year. Not to be left behind, AOL
plans to offer [Hughes'] satellite service to many of its million subscribers
this fall.
So, will it be worthwhile to switch your account from AOL to MSN? Tomorrow?s
launch will answer that question.
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