Microsoft expected to pair Windows 95 with Network

November 21, 1994|By Seattle Times

Mix together a pinch of CompuServe, a dash of America Online and a dab of Internet, throw in a few herbs and spices of your own, and what have you got?

The Microsoft Network, Microsoft's already controversial on-line information service.

Chairman Bill Gates showed off a test version of the new program last week at the fall Comdex show, the computer industry's largest trade show, in Las Vegas.

The three-minute demonstration raised as many questions as it answered.

What clearly emerged was that Microsoft Network, expected to be included with Windows 95 when the latter is released by the middle of next year, will give the Redmond, Wash., company a distinct advantage over other information-service providers and Microsoft's software competitors.

The advantage, in fact, has raised concern by some in the industry that with Network, code-named Marvel, Microsoft would able to compete unfairly.

The matter should receive Justice Department scrutiny, they suggest.

In any case, among its features, Network will include "chat" services popularized by America Online; Internet access to e-mail and news groups; news, sports, stock and weather reports; software libraries and Microsoft on-line support and product information, Mr. Gates said.

Some services, such as family "edutainment" and small business tools, may be charged in addition to the monthly fee.

Although it's early to draw conclusions about Network's impact, three aspects will make Microsoft an instant powerhouse in the information-service field, expected to become a $2 billion industry over the next five years:

* As part of Windows 95, Microsoft Network will be preloaded on virtually every Intel-based personal computer sold, a figure averaging 40 million units a year today.

Consultants expect the system to prompt users to sign up on screen and offer incentives for subscribing.

If Network is available only by buying Windows 95, it might be viewed as anti-competitive; antitrust law prohibits tying purchase a product in one market to a product in another market to gain predominance.

People are going to scream that this thing is tied too closely to Windows 95, said Tim Bajarin of Creative Strategies, a San Jose. Calif., consulting firm.

Asked if he saw Microsoft Network as monopolistic, Prodigy spokesman Brian Ek responded: "We ship on 30 percent of computers. Microsoft will have 100 percent. All we ask is for a level playing field."

* Microsoft can use Network to acquire marketing information about its users.

That information could then be used to sell other Microsoft products, and to sell those products directly to consumers without going through regular retail channels.

Although it currently takes too long to transmit major software programs over telephone wires, a company spokesman acknowledged that Microsoft may try to offer such software over faster-transmitting coaxial (TV) cable next year.

Direct selling could enable Microsoft to undercut competitors' pricing by forgoing packaging and distribution costs.

* Although Microsoft did not specify pricing for the network, the company is expected to charge at or below competitors' rates. A monthly fee as low as $5 has been cited -- about half charged by most on-line services.

During a question-and-answer session following his talk, Mr. Gates became testy at suggestions Microsoft will monopolize the on-line market. Asked why America Online co-founder Steve Case had complained, Mr. Gates said it was perhaps because "he doesn't like us to compete with him."

Mr. Gates said Windows 95 users will not be required to sign up Microsoft Network as their information provider, only that it will be available as an option.

Other systems also will run under Windows 95, he said, pointing out that America Online was demonstrating a version for Windows 95 in the Microsoft booth at Comdex.

Mr. Gates also said those who provide information to be made available on the system, including newspapers, magazines, software makers and others, will receive tools to develop their wares for Network.

"We expect over time to have a broad set of content for this service," Mr. Gates said. "We want to give developers immense flexibility" in putting together applications.

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