| BUSINESSWEEK ONLINE : AUGUST 9, 1999 ISSUE | ||||||||
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| NEWS: ANALYSIS & COMMENTARY
Portal Combat: Microsoft vs. AOL The online giants slug it out in the battle for Net supremacy The long-simmering hostilities between America Online Inc. (AOL) and Microsoft Corp. (MSFT) went public on July 22. That's when Microsoft launched a strike deep into AOL territory by glomming onto ''instant messaging,'' a technology popularized by AOL that lets Web surfers send quick notes to one another. Microsoft's MSN online service announced an instant-messaging setup that not only lets its customers zap notes to one another but also allows them to chat with AOL members. AOL, which has erected a digital roadblock against the MSN links, calls Microsoft's move tantamount to hacking. Far bigger battles are looming. Microsoft has singled out AOL as its most important rival, and both companies hope to dominate as computing moves squarely onto the Net. The key strategy for both will be to establish powerful Web portals that are tightly linked to their software ''platforms'' and Internet services. BUSINESS WEEK has learned that both titans are quietly preparing such offerings for release by yearend. AOL's effort will be spearheaded by Netscape.com, a new service built around an expanded version of Netcenter, Netscape's Internet portal, sources say. At Microsoft, insiders say, the company is working on ways to link its desktop software to the MSN service and Web portal. Both companies hope these portals on steroids--with all sorts of software-like services and content--will persuade business users and consumers to do all their online chores in one spot. The companies bring different strengths to the contest. Microsoft starts with its near-monopoly in corporate PC software as it tries to capture more consumers. Services from MSN will be linked to features of Windows and Office 2000 software, which are standard equipment on many PCs. AOL, in contrast, hopes to leverage its Netscape brand and browser, already popular among consumers, to reel in more business users. ''We don't think the world is looking for just another generic portal,'' explains Barry M. Schuler, AOL's president of interactive services. By creating Netscape.com, AOL is creating another new channel in cyberspace--in addition to its core service, CompuServe, Digital Cities, and ICQ, which enables international chat. The latest flavor is aimed at daytime Web surfers who log on from work and at Net aficionados who are too sophisticated for AOL. Netscape.com will be sold with Internet access, giving AOL its splashiest Web brand. Simultaneously, Netscape will release a new browser with direct links to features on the Netcenter portal, such as online shopping and entree to cyber-meeting halls. VIRTUAL BAZAAR. The new Netcenter site will benefit from a major makeover. During business hours, the site will be focused on workplace needs. Business users, for example, could use Netscape's new browser to directly connect to new virtual communities that AOL will create, such as a virtual bazaar to sell and exchange goods and services. But after working hours, the site will take on another personality entirely, morphing into a leisure-oriented hangout, drawing on the programming already offered by AOL. ''We are trying to provide a Web service that can help workers manage their business and personal lives in one location,'' says an AOL executive. Microsoft, meanwhile, intends to emphasize services over content. Just as the company combined different PC applications to create its popular Office software, it will stitch together several separate Web-based technologies from MSN with features found in Windows and Office 2000. For instance, Microsoft wants to allow users to create virtual communities by combining video and audio clips, chat, E-mail, and Web pages; a Boy Scout troop leader, for example, could use these features to create an online forum to plan a backpacking trip. Like AOL, Microsoft also hopes to create Web-based business marketplaces. ''We are going to focus on what we do best, which is integration and applications,'' says a Microsoft executive. Whatever Microsoft and AOL do, the coming showdown should be a doozy. This is one fight that neither company can afford to lose. By Michael Moeller in San Mateo, Calif., and Catherine Yang in Washington, D.C. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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