“The IM battle is only the beginning. Microsoft is set to
wage an all-out battle for Net access.”
“It is unclear whether Microsoft’s latest attempt to tackle AOL
will be more successful than prior efforts. … Microsoft says it
is more serious this time. Chairman Bill Gates and President Steve
Ballmer have generously funded the new plan, formulated in the past
six months, in large part as a protective measure for Microsoft’s
core software business.
AOL’s dominance in online services gives it the opportunity to
become an alternative software ‘platform,’ threatening the
dominance of Microsoft’s Windows operating system. Internal AOL
documents disclosed in Microsoft’s antitrust trial indicated that
was exactly AOL’s intention.”
“Microsoft has already launched its strategy to help drain
profits from the Internet-access business. The company’s deals with
retailers and PC makers to offer customers bounties of $400 in
return for three-year MSN service contracts has boosted sign-up
rates by 50%, the company says. The company also has tested a price
point of $9.95 a month and is considering offering free service to
consumers who commit to a certain level of spending with
Microsoft’s electronic-commerce partners.”
“Microsoft also is pondering plans to consolidate the fragmented
Internet-service market and broaden its cut-rate offerings. … To
finance such efforts, Microsoft is considering the creation of a
‘tracking stock’ to reflect its Internet-related businesses.
Because the stock market has valued such stocks based on revenue,
rather than profit, the tracking stock could absorb large losses
without hurting the value of Microsoft’s core businesses, said
analysts.