Microsoft takes on AOL with new MSN, Net offering

Scott Hillis

SEATTLE: Microsoft Corp. on Monday said it will revamp its MSN online
offerings later this month and has signed new deals with major telephone
companies to offer high-speed Internet access as the software giant goes head to
head with rival AOL Time Warner Inc.

Microsoft will offer MSN over digital subscriber lines (DSL) through
partnerships with Verizon Communications, BellSouth Corp. and SBC Communications
Inc., Chief Executive Steve Ballmer told a conference call. The new deals will
offer high-speed access to 90 per cent of DSL-capable US homes by early next
year, Ballmer said.

MSN is in a race with AOL, a unit of AOL Time Warner Inc., to sign up users
to fast Internet services, like DSL, that can deliver features like quality
video and audio. MSN, with about 7 million subscribers, is dwarfed by No. 1 AOL,
with 31 million subscribers. AOL declined to comment on the MSN moves. It has
focused on using an extensive cable television network for fast service, but
also has the same DSL phone deals as Microsoft.

Microsoft said high-speed MSN will cost less than $50 a month, and new
subscribers will receive two months free, a free DSL modem and free
installation. "Literally every subscriber will become up for grabs as they
move from narrowband to broadband," Ballmer said.

DSL deals easier

MSN Vice President Yusuf Mehdi said the charge into DSL did not mean
Microsoft was ignoring other fast Internet options, like cable or satellite.
"The DSL market was the easiest set of partnerships for us to put together.
On cable, we're hoping that open-access cable really comes to bear," Mehdi
told Reuters.

MSN already offers high-speed access through a partnership with Qwest
Communications International Inc.

The MSN update, called MSN 7, becomes effective Oct. 25, the same day
Microsoft launches its new Windows XP operating system, and will include changes
to Web sites like the MSN.com portal and services like its free Hotmail
electronic mail. "We know we're the No. 2 guy in the market, but we're
working hard and working harder," Ballmer said. "We're able to level
competitive heat on AOL Time Warner."

The biggest new feature will be support for a new Microsoft service called
.NET Alerts, which sends information, like traffic conditions and travel
itineraries, to an e-mail account, instant messenger, or mobile telephone.
"MSN is really a pillar on which we are building the next generation, if
you will, of Microsoft. In some ways, MSN represents the consumer productivity
application for the 21st century," Ballmer said.

New look for MSN.com

Other changes to MSN include giving a new look to MSN.com and beefing it up
to run 30 per cent faster. Additional content will include news clips, music
videos, and 3-D tours of houses that are for sale, optimized for fast Internet
access, MSN product manager Lisa Gurry said in an interview.

MSN Explorer - essentially a custom browser with bright, cartoon-like
controls, built-in links to Microsoft services and an integrated digital media
player - will feature easier setup, a more organized look and new sections for
games and horoscopes. Hotmail will let users compose mail offline, offer better
junk mail filters and editing tools.

Microsoft's messaging software, called MSN Messenger, will also get a
makeover to include Internet telephone calls and .NET Alerts. Alerts let users
sign up to receive information through MSN Messenger, e-mail or a mobile phone.
Initially most Alerts will be offered by Microsoft and include traffic reports
through its Carpoint auto buying site. Other companies like auctioneer eBay Inc.
are also creating Alerts.

(C) Reuters Limited 2001.