Msn: Online And A Bit Off The Mark

For the past several months, the established online services have thought of themselves as Romans facing the barbarians at the gate. Microsoft Corp., a high-tech Alaric the Visigoth, was on the brink of bursting in and stealing their customers.

Now that Microsoft Network (MSN) is no longer just a scary rumor, everyone can breathe a bit easier. An early look at MSN reveals that Microsoft's ability to make the service an integral part of Windows 95 is no substitute for the years of online experience enjoyed by its leading competitors, such as CompuServe Inc. and America Online Inc.

MSN feels like a work in progress. I found that its jumble of screens was harder to navigate around than those of competing services. The opening "MSN Today" screen, in particular, gives you no clear indication of what you're supposed to do to find information in the system. The Exchange E-mail program, derived from software designed for corporate mail systems, is awkward and very slow, especially on computers that have just 8 megabytes of RAM. The service makes heavy use of photo-quality graphics. You get some beautiful screens, but you have to spend a lot of idle time online watching those pictures download.

Microsoft won't disclose how many people have signed up to pay $4.95 a month or $39.95 for the first year. It says only that the enrollments are in line with expectations and that the total is fewer than the 500,000 members that the company set as an initial limit.

In one sense, Microsoft has built a network for tomorrow. Borrowing a phrase from hockey great Wayne Gretzky, MSN marketing director Bill Miller says: "We're skating where the puck is going, not where it has been." But the service has to run on the computers and phone lines of today, and the strain shows. People with fast Internet access, whether through a direct network connection or a digital phone line, will see a dramatic improvement next year. That's when MSN joins CompuServe and AOL in offering access indirectly through the Net.

The problem of content won't be solved so easily. Except for NBC Inc., which provides news, sports, and entertainment, MSN has had trouble lining up high-profile, exclusive-content providers. For example, only 12 hardware companies, including Dell Computer Corp. and Zenith Data Systems Corp., sponsor forums providing technical support for their products on MSN, compared with dozens on CompuServe. One reason for this, Microsoft officials say, is that many companies involved are concentrating on getting material onto the Internet's Wide World Web.

NEW GAME PLAN. The result is a shift in MSN's business strategy that focuses less on exclusive content and more on providing navigational help for Web surfers. "We will add editorial value to the Internet," says Naveen Jain, senior technical marketing manager for MSN.

Many of the most interesting areas reachable through MSN, such as ESPN SportsZone, are just links to the Web. But similar Web links are also available on AOL and Prodigy Services Co. CompuServe will offer access to the Web from its main service before yearend.

The increasing pervasiveness of the Internet might suggest that the days of the proprietary online service may be numbered. But Microsoft clearly does not think so. Neither does AT&T, which has just launched its Interchange Online Network ($4.95 per month, plus fees for such exclusive services as the Washington Post's Digital Ink and computer publisher Ziff-Davis' ZD Net).

For the time being, the commercial services have an important role to play. Information providers have not yet found a practical way to sell a wide range of goods on the Internet, nor have advertisers supported them strongly there. And as a latecomer to the online service business, MSN has a way to go to prove that it's more than just a pretty new face.

    Before it's here, it's on the Bloomberg Terminal.