July 16, 2002 9:00 PM PDT

MSN previews next Net service

In its never-ending campaign for Internet dominance, Microsoft showed off a test version of its latest online service to take on industry rivals America Online and Yahoo.

Called MSN 8.0, the service packages Internet access with an enhanced Web browser that integrates elements of Microsoft's desktop software with its other Web services. The service, targeted at people accessing the Internet from home, is the latest incarnation of Microsoft's often circuitous quest to win over AOL subscribers.

MSN 8 essentially weaves elements from its desktop software products, such as its e-mail software Outlook and its Internet Explorer browser, into its Web services. Other additions include controls for parents to monitor or restrict their children's Internet activity and stronger junk e-mail filters.

"We are targeting someone who is enthusiastic about the Web," said Bob Visse, director of marketing for MSN.

Microsoft would not disclose how much it plans to charge for MSN 8, which will officially launch in the fall. It currently charges $21.95 a month for its MSN 7.0 product, which includes Internet access and MSN Explorer, a juiced-up browser that integrates other MSN Web services such as Hotmail and Messenger into its interface.

However, there are hints that the company is at least considering charging more for MSN 8 to compete with AOL's $23.90 a month. When it launches, Microsoft will begin to charge for MSN Explorer. Currently, people can download MSN Explorer for free off the Web or through its ISP (Internet service provider) MSN Internet Access.

By charging for MSN 8, Microsoft mirrors a similar program by AOL that allows people using rival ISPs to also gain entry into AOL's proprietary service for $14.95 a month. Microsoft executives said they have not determined pricing solely for MSN 8 but said the company would charge less than AOL's $14.95 "Bring Your Own Access" plan.

Microsoft also said MSN Explorer will strike deals to sell MSN 8 as the default front end for other broadband Internet access providers. Microsoft recently struck a deal with Verizon Communications for MSN to become the front page of the Baby Bells' DSL (digital subscriber line) service.

Executives said Microsoft will continue to offer DSL service through Qwest Communications and will consider expanding into cable. The company is in negotiations with AT&T Broadband for carriage.

Catching up to AOL remains the elusive goal for Microsoft, which has revised and re-revised its Internet strategy since waging an intensive campaign against AOL in the mid-1990s. MSN currently has about 8 million subscribers, 300,000 of whom subscribe to premium Web services such as extra Hotmail storage. However, much of Microsoft's growth has come through expensive deals with PC manufacturers and retail chains such as Best Buy and RadioShack.

Microsoft has incorporated in-store promotions to drive growth, such as offering rebates or heavily discounting multiyear subscription plans.

AOL remains the largest ISP with 34 million subscribers as of March 2002.

 

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