MSN impossible?

One year on, is Microsoft's online service any nearer its goal ofbeing the market leader, or is it still just an ISP wannabe? GeofWheelwright investigates

MSN, the Microsoft Network, is a year old, but it is still finding its feet. When Microsoft unveiled MSN in the summer of 1995, the online service had already suffered some growing pains. It had been the subject of controversy with the US Department of Justice - due to its exclusive inclusion in the installation procedure of Windows 95 - and seemed an ambitious attempt to clone the success of Compuserve and America Online.

But at the launch, Microsoft talked more about Internet links for MSN and how it could be a filter through which users could both find great Web sites and get information about those suitable for family viewing.

There was lots said about MSN providing Net access, how the use of Exchange would give MSN an edge, and how much money the firm was pouring into the unique content it would be hosting on MSN.

Fast forward to December 1995 when Microsoft made its big public commitment to the Internet, and chairman Bill Gates declared the company was 'hard core' about the Net and the Web. It was announced that MSN would now become something the industry had never seen before - an Internet online service.

This coincided with news that MSN would eventually move to the Web, and that users would no longer need to use proprietary access software in order to become MSN members. MSN would become accessible via any standard Web browser, and members would be required to use MSN as their Internet service provider if they did not wish to do so. Pricing would be structured so users could sign up for MSN with or without Net access included.

Equally important was an announcement, also made in December, that MS was entering into a deal with the US-based NBC television and radio network to create a new entity - MSNBC - that would operate a 24-hour cable television news services and online news information service available exclusively on MSN. This would be the jewel in the MSN content crown and define much of the way the content side of the business was treated thereafter.

Once that announcement was made, it should have come as no surprise that MSN would be restructured: that's exactly what happened when the Internet-related reorganisation of Microsoft took place in February. One of the most significant moves was the splitting up of the MSN content business and its ISP function.

The latter became part of the consumer group - a sensible move, since most of MSN's content is aimed at consumers - while the Internet side of MSN moved to the platforms group.

These moves signalled another change to the MSN strategy. By spinning off the content from the ISP business, Microsoft enabled other parts of the company to seek deals with other ISPs to help it reach a larger goal: seeding the market with the firm's Web browser software, Internet Explorer.

For as along as Microsoft was seen as a hardcore rival to the likes of Compuserve, America Online (AOL), as well as the hundreds of independent ISPs all over the US, it was unlikely that it would be willing to enter into deals to offer its own browser to its users instead of Netscape's.

And as long as that happened, Microsoft would find it very hard to crack the all-important browser market.

So in March, the firm announced a deal with AOL during the Microsoft Professional Developer's Conference in San Francisco. It marched AOL boss Steve Case into the conference hall to address the 5,000 or so programmers that had come to hear about MS' plans for developers wanting to create Net applications. The AOL deal was interesting from an MSN perspective as it ended MSN's monopoly in the Windows 95 installation routine.

While MSN would continue to be one of the options you could install in W95, there would also be an online services area where you could choose to install support for AOL. In return, Case agreed to end his efforts to have the Justice Department force Microsoft to take MSN out of the installation routine. AOL now offers customers the use of Internet Explorer 3 as a default browser.

A similar deal with Compuserve has since been struck, and dozens of other smaller agreements have been made with individual ISPs that want to offer Internet Explorer, rather than Netscape, as their bundled browser.

Meanwhile, Microsoft has continued to build new content deals for MSN.

This summer there was a lot of noise about the launch of MSNBC - which really came into its own during the Olympics and the Republican and Democratic party conventions - the publication of political magazine Slate, and a deal with Paramount to create an official Star Trek Web site for MSN members.

The content deals were interesting as they either involved the creation of content areas on MSN's Web site or the creation of private Web sites that you needed MSN to access. The strategy was to offer lots of free stuff on the site that both members and non-members could enjoy and that would serve to promote other private MSN areas on the Web that users could only enjoy when they signed up for membership.

For dealers trying to sell systems including W95 and a trial subscription to MSN, the changes MSN has undergone in its first year are quite significant.

First, and probably most importantly, it is now a cheap way for users to get Web access right out of the box. Microsoft has worked very aggressively to get Internet access up and running in all the major markets over the past year. Its UK Internet access came online in May.

So users only have to dial up MSN with the software included with their computer, enter their credit card number and they can instantly have Net mail and Web access without tons of paperwork and waiting for passwords sent to them by post. Customers that buy notebook systems can also be sure that they will be able to access their MSN accounts via local phone numbers when they travel to the US - thereby eliminating the possibility of long-distance charges when they simply want to check their email.

But this also means MSN will not be the only choice. Starting this autumn, people who buy new PCs will be able to choose other ISPs from the Windows 95 installation system, and support for those will be just as seamless as it is for MSN.

Another key issue is that people selling systems that do not use W95 (notably the Apple Macintosh) will soon be able to offer customers the possibility of MSN membership. Until now, MSN could only be offered to W95 users, since its access software only ran on W95 and the Exchange client was required to check MSN email. When MSN moves to the Web, all that changes, and users be able to use Internet Explorer and light mail client to get on to MSN's private Web areas and use it for Web access.

For independent ISPs, the unhooking of MSN from Microsoft's browser effort is also significant. By offering the browser 'free forever' to users, MS forces ISPs to ask why they are bothering to pay a licence to Netscape when they could simply offer Internet Explorer for nothing.

And this is what MS is counting on, now that it is no longer hitching the success of Internet Explorer to MSN.

Despite all of this change, it should be said that MSN as an ISP has accomplished some amazing things in its first year. If it was any other company than Microsoft that had done this, it would be regarded as a roaring success story and its founder referred to as the next Bill Gates.