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CNET News.com: Microsoft struggles with WebTV pricing

Jul 16, 1999, 16:50 (7 Talkback[s])
(Other stories by Stephanie Miles)

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"To gain a foothold in the potentially lucrative market of selling online services and goods through the television, Microsoft has pushed WebTV aggressively, even offering manufacturers subsidies on their production costs to build a base of WebTV subscribers... To keep its manufacturing partners appeased and the retail distribution channel happy, Microsoft essentially pays these companies to stay in the market..."

"...this business model is in stark contrast to the leverage the company enjoys with its partners in the PC market. In that segment, Microsoft charges manufacturers relatively high, take-it-or-leave-it prices for its software and then lets them duke it out against each other in the marketplace."

" 'Subsidization has always existed,' [analyst with The Envisioneering Group, Richard] Doherty said. 'Microsoft is using its clout to compete on a level other companies can't. WebTV is doing something that other Internet start-ups can't do.' "

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