September 25, 2002 9:00 PM PDT

Microsoft unveils MSN 8 perks

Microsoft on Thursday plans to announce hardware discounts and additional services for MSN 8 broadband subscribers who are buying the company's networking products.

Last week, the Redmond, Wash.-based software giant unveiled new wired and wireless networking gear for connecting to cable and DSL (digital subscriber line) broadband services. Microsoft hopes the hardware, combined with its pending MSN 8 online service, will help it rapidly launch a nationwide broadband network.

As part of its promotion of MSN broadband, Microsoft plans to offer a discount by about 20 percent on its MN-500 Wireless Base Station. The product offers 802.11b wireless networking, or Wi-Fi, which connects computers to the Internet or local network without wires at speeds up to 11mbps at a maximum range of 300 feet. The discount means consumers would pay around $120, instead of $150, for the MN-500.

In an unusual move, Microsoft also will provide home networking technical support to MSN 8 subscribers as part of their normal monthly fee. Typically ISPs (Internet service providers) only offer support for one PC connected directly to the broadband service, which can dissuade consumers from networking computers together to share Internet access.

So far, Microsoft is partnering with Qwest Communications International and Verizon Communications for its broadband service, which sells for around $40 or $50, depending on the speed of the connection. Microsoft estimates it will have broadband available to 90 percent of customers in 70 markets when MSN 8 launches. The upgrade is expected to come as early as next month.

The emphasis on broadband and home networking comes as Microsoft seeks to increase the infrastructure needed to deliver digital content using Windows Media Player Series 9. There, some analysts believe Microsoft has moved ahead of competitors such as America Online and Yahoo.

On Tuesday, for example, Peter Gabriel's new album "Up" debuted in Windows Media Audio surround sound format as well on CD. Consumers can preview the songs until Oct. 1 or immediately purchase the new release, both via Web download.

"I think you are going to see (Microsoft) capture more share in the broadband market and capture more eyeballs," said Paul-Jon McNealy, a Gartner analyst.

Microsoft faces challenges
Thursday's discount comes after a Commerce Department report that painted a dim picture of U.S. broadband adoption.

The Commerce Department found that only about 10.4 percent of U.S. households--or about 11.2 million--had broadband access even though more than half the households have Internet access. By contrast, 51.7 percent of households in South Korea and 19.7 percent in Canada have broadband access.

The percentage of U.S. broadband subscribers contrasted sharply with service availability. The study found that most regional Bell companies, for example, offered DSL to anywhere from about 60 percent to 80 percent of customers. Cable access is available to about 75 million households, according to the study.

Still, despite slower-than-expected adoption, new broadband subscriptions soared 400 percent between June 2000 and June 2002, the study reported.

To spur broadband adoption, which would have wide-ranging economic benefits, more compelling digital content is necessary, the study concluded. The Commerce Department cited a Brookings Institution study that estimated rapid, widespread adoption of broadband could add $500 billion annually to the gross domestic product by 2006.

"Content...is king," the study stated. "A majority of consumers will sign up for broadband when value-adding applications and services are readily available, easily understood, and offered at reasonable prices."

 

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