10
- August, 2001 More than ever, AOL's Netscape and
Microsoft's Explorer are in direct competition over their
key products, including Internet access, Web browsers,
instant messaging, interactive television, Web
authentication services and Web-based
calendars.
"They both want to own
the soul of the Internet consumer," said Bill Whyman,
president of Precursor Group, a consulting firm in
Washington. "So they are both trying to control the key
consumer applications, such as e-mail and
chat."
One of biggest threats to AOL is
Microsoft's MSN Explorer, a colorful, consumer-oriented
Web browser that rips a page out of AOL's playbook. MSN
Explorer, which will be bundled into the new XP operating
system, looks and feels a lot like AOL's proprietary
service, with one-click e-mail access, instant messaging,
shopping, a music and video player and other features
that traditionally have been packaged into
AOL.
"MSN Explorer is the AOL
killer," said a lobbyist for a leading technology
firm.
Microsoft's new Messenger
service is another worry for AOL, the current leader in
instant messaging with 100 million users. Automatically
installed in the XP operating system, Microsoft Messenger
will allow one-click teleconferencing (for users with
cameras) and the ability to quickly transfer or
collaborate on files and applications. Two users may
simultaneously view the same document on their screens
and transfer it back and forth.
AOL's efforts to invade
Microsoft's turf have been less successful, though they
remain a threat.
The company toyed with the idea
of developing an AOL PC with an operating system that
would rival Windows, but decided such a strategy would be
impractical.
Instead, it has been developing
a variety of Internet appliances that do not rely on the
Windows operating system. Last year, AOL and Gateway Inc.
unveiled a nearly $500 Internet device that runs off of
the Linux operating system.
In 1999, AOL bought Netscape
Communications, whose Navigator Web browser provides the
only real competition to Microsoft's Internet Explorer.
AOL's contract to use Internet Explorer as its default
Web browser (in exchange for an AOL icon on Windows)
expired early this year, and negotiations to extend the
agreement fell apart.
That gives AOL the freedom to
make Netscape Navigator the default browser for its 30
million AOL subscribers. If all AOL users switched to
Navigator, Microsoft Internet Explorer's market share in
the U.S. could drop as low as 70% from the current 86%,
while Navigator's share could double to 30%, according to
WebSideStory, an Internet analysis company.
AOL has not said whether it
plans to change browsers, but it is testing the idea with
users.
Representatives Are on the Front
Lines
AOL and Microsoft also are
cranking up their propaganda machines. Each has
designated a spokesman to respond to the almost daily
barrage of charges.
At Microsoft, the chief
spokesman is Vivek Varma, a former Democratic aide and
attorney who previously worked for the company's top
in-house lawyer. His counterpart at AOL is John Buckley,
who joined the company from Bob Dole's 1996 presidential
campaign.
AOL's none-too-subtle public
relations strategy is to label Microsoft a "convicted
monopolist" as often as possible. Microsoft's tact is to
portray AOL as hypocritical for engaging in similar
practices.
"The strategy for both is to
focus on how big and bad the other one is, to paint the
other as the leading monopolist," said Blair Levin,
analyst at Legg Mason Inc. in Washington.
The rivalry has crept into the
companies' marketing and advertising. Earlier this week,
AOL Time Warner and Microsoft had dueling news releases
about their digital photography products.
On Tuesday, AOL announced it was
expanding its You've Got Pictures partnership with
Eastman Kodak Co. The same day, Microsoft held a press
conference in New York to show off the photo features of
its new XP operating system.
Adding tension to the event was
the fact that Kodak, which has partnered with Microsoft
in the past, has been openly critical of XP's photo
features, which it says allows Microsoft to set up a
tollbooth between Kodak and its customers.
Microsoft launched a $50-million
campaign this spring to woo AOL subscribers to its MSN
online service shortly after AOL announced that it would
hike its rates 9% to $23.90 a month. And last week, a
Microsoft-funded group ran an ad in Roll Call, a Capitol
Hill newspaper, blasting AOL Time Warner for its
heavy-handed lobbying.
Meanwhile, each company has
dispatched lobbyists to whisper to legislators that the
other is the greater threat to consumers.
AOL has pressed the Senate
Judiciary Committee to hold hearings on the launch of
Windows XP. Microsoft resisted, arguing that Congress
should stay out because of the pending antitrust
litigation.
AOL won that round, and hearings
are likely this fall. But Microsoft is trying to make
sure AOL also gets a turn on the hot seat.
And yet another front seems
about to open.
By acquiring Time Warner, AOL
became the second-largest cable operator in the U.S.
Microsoft has made considerable investments in cable
companies as well, including AT&T Corp. and Comcast
Corp. Now AOL and Microsoft are jockeying for more of the
fat pipes that will connect Internet users to high-speed
and potentially more costly services.
Last month, AOL opened
exploratory talks about buying AT&T Broadband, which
is scrambling to avoid selling to Comcast, which made an
unsolicited takeover offer.
A day after the talks were
revealed, reports surfaced that another player might
intervene to block the AOL offer. The potential spoiler?
Microsoft.
////
Respectfully
,
Bernie
Schwartz,
Editor/Legal
- TVI Magazine
By MEG JAMES, TIMES
STAFF WRITER. LA Times, July 31, 0001
com/websidestory
