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Company Unveils New MSN Software

Internet: Microsoft is hoping Next Generation will boost online membership.


SEATTLE — Microsoft today will up the ante in its high-stakes gamble to resurrect its struggling consumer online services.

After more than six months in development, executives will introduce new software that aims to make it easier for Web novices to use the MSN Internet service.

The new software, which is called Next Generation MSN, is part of Microsoft's attempt to grab market share away from Web access rival America Online.

The redesigned software will integrate popular features of the Internet such as Web browsing, digital media and search functions into an easy-to-use format that will include bright icons and one-click access to common Internet features, Microsoft officials said.

"We want this to be extremely approachable, but we also want people to be able to grow with it," said Yusuf Mehdi, MSN's marketing vice president.

While facing the threat of a government-mandated break-up of the company, MSN executives also face pressure to turn around the flagging Internet access service and show that it can challenge industry leader AOL and the popular Yahoo Web portal.

AOL counts about 22 million subscribers, dwarfing MSN's 3 million users.

MSN officials are releasing the new software one week before Microsoft discloses details about its Next Generation Windows Services initiative that aims to merge the Windows operating system with the Internet to create new online services.

Rick Belluzzo, the former Silicon Graphics and Hewlett-Packard senior executive hired last year to revive the MSN division, is one of the key strategists in Microsoft's emerging Web services vision.

Over the last year, Belluzzo and his MSN group reportedly have spent more than $1 billion making the Web site easier to use and faster to search. Some of the Web services for shopping, such as CarPoint and Money, have become leading Internet sites. And with 65 million users, its Hotmail is the No. 1 e-mail service.

Earlier this year, Microsoft launched a $150-million national advertising campaign to promote the MSN brand. Deals have been cut with discount retailers such as Best Buy and Radio Shack to push MSN Internet access to first-time Internet users, including free access to the Internet for six months.

The cornerstone of bringing these separate Web services together is the Next Generation MSN software. By integrating all of these services under the new software program, Microsoft executives hope it will make MSN's services more accessible and appealing.

But analysts say it's still too early to know whether Microsoft's strategy will pay off, and MSN's two-pronged approach has yielded mixed results. For Internet access, MSN is clearly behind AOL and is making little headway despite an advertising onslaught that has netted 500,000 new Internet subscribers in eight months, analysts say. The development of specific Web sites and services, however, is showing some strong growth when compared to AOL and Yahoo, said Brian Goodstadt, a financial analyst for S&P Equity Group.

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