Microsoft Promises Billion-Dollar Fight With AOL - InformationWeek

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Microsoft Promises Billion-Dollar Fight With AOL

Having previously crowned America Online its No. 1 competitor, Microsoft will spend $1 billion to grab some market share from its rival. As part of the battle, Microsoft has unveiled an updated MSN, its consumer portal, and a massive marketing campaign to promote MSN.

Most of the $1 billion will go into retail promotions that Microsoft declined to detail. It did say it would earmark $150 million of its MSN marketing budget for TV ads. The MSN update is important for Microsoft, as the company--and its rivals--posit a future in which online computing and desktop apps interact more seamlessly.

For example, Microsoft says it's working on software that will eventually let MSN and others automatically program local applications. An E-mail and calendar package could pass data about earmarked dates to online shopping sites, which would in turn flag users about specials on those days.

AOL would just as soon be the one building and distributing those apps--not Microsoft. The Internet service provider, which is in the process of acquiring Time Warner Inc., claims 25 million subscribers, compared with 3.5 million MSN users. In an unrelated move, AOL Wednesday released version 6 of its software, which includes Web-to-phone features that let subscribers listen stock quotes, weather forecasts, sports scores, and the like by calling a toll-free number. They would go online to select the information they could dial up.

Microsoft, meanwhile, is showcasing a new Web browser that lets users access online services such as bill payment, E-mail, and instant messaging, with a single mouse click. Microsoft's consumer-software and device businesses are its fastest-growing revenue source: sales of PC games, WebTV, MSN Internet access, and handheld computers were up 31% during the first quarter, ended Sept. 30, to $479 million.

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