Sparring Software From 'Net Giants

A model walks the runway in a short dress at Donna Karan's Fall 2007 show Feb. 4, 2007 in New York. Stars Wearing Donna Karan
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In a drive for dominance in the online market, America's two leading Internet access providers Wednesday showed off new versions of software.

America Online Inc. unveiled the newest version of its AOL software, which includes a new feature that allows people to get certain online information through the telephone.

And rival Microsoft Corp took the wraps off its refurbished MSN Web service, backing the offering with a $1 billion war chest in its biggest effort yet to topple AOL.

AOL said Tuesday it had reached the 25 million subscriber mark. MSN has a much smaller share of the market—about 3.5 million subscribers—but it is waging a campaign to cut into AOL's subscriber base.

To try to sign up more people for its access service, Microsoft will pitch MSN in 10,000 retail stores and handing out free copies of the new MSN Explorer browser, which people can use apart from the access service.

MSN will be supported with a new $150 million global marketing campaign, and total funds spent on the service would hit about $1 billion over the next year, including marketing, retail partnerships, cross promotions and rebates.

But analysts still weren't sure Microsoft had done enough to try to gain back ground it lost to AOL earlier in the Internet revolution.

The new America Online offering — AOL 6.0 — will allow subscribers to go online and preprogram the basic information they want available over the phone, like stock quotes, weather forecasts and sports scores. Those subscribers will then be able to dial a toll-free number to hear the information over the phone.

"It's sort of the ultimate incarnation of our AOL Anywhere strategy, because telephones are everywhere," said Jonathan Sacks, a senior vice president and general manager for AOL.

The service will be available for free for about six months; after that, AOL will charge a small fee in addition to its monthly subscription charge, Sacks said.

The new AOL also revamps its instant message service. Sacks said changes were designed with teens in mind, given that teen-agers are the most prodigious users of the product. The new AOL allows users to send about 110 different icons, like smiley faces and flowers, along with their text messages.

AOL 6.0 will instantly find files downloaded off the Internet; before, a file would be loaded into the hard drive and a user might have a hard time finding where it was placed, Sacks said.

The new MSN, which includes a colorful new Internet browser as well as content updates, is also MSN's first step toward carrying out Microsoft's broad .NET strategy to make it easy to swap data across its software and services.

The new browser, which has been available in a test version for months, includes a colorful interface with cartoon-like icons and a built-in media player for watching video or listening to music on a computer.

MSN includes Microsoft's Internet access business as well as a line-up of consumer sites uch as the MoneyCentral personal finance page and the eShops online shopping service.

"What AOL has done, I think, is a good job of making it easy. What we are doing is providing a whole new experience on MSN, taking all these individual best-of-breed services and integrating them," Deanna Sanford, lead product manager for MSN marketing, said in an interview.

Analysts gave MSN's new-look service good reviews, but questioned whether it would be enough to challenge AOL's market dominance.

"It's a stunning site," said Rob Enderle, an analyst with technology consultancy Giga Information Group. "If they'd done this back in 1995 when they'd first launched, it would've been a horserace, but they are coming after this awful late."

The new MSN is also the start of what could evolve into a new look for Microsoft's consumer products as the company moves toward its .NET model of tying services together and selling them as a subscription rather than as stand-alone software.

According to CBS MarketWatch, Microsoft dropped a quarter-point in Wednesday trading to $61-1/4, while AOL slipped $1 to $47.02.