Microsoft moves to revive MSN

Plans include a revamp of the MSN search and directory site, which is now live; the introduction of a Web portal targeting small businesses, called "bCentral"; and a distribution scheme to popularize the recently launched MSN Messenger Service.

MSN also plans to launch a group of services and software tools for Web site and software developers.

Brad Chase, vice president of MSN's consumer and commerce group, said MSN is implementing its new search engine with technology from Direct Hit, RealNames, and AltaVista today for its U.S. site. Users of MSN's international sites will get the upgrade later.

MSN search results now correct common misspellings and typos and offer in a separate box the top ten most commonly selected results through technology from Direct Hit.

MSN also recently started adding search information refined through the work of a few hundred human editors at both Microsoft and partner LookSmart. Those editors examine common search queries to provide more tailored results for those terms. For example, searches on "Pokemon" now turn up an MSN page on the popular game.

In an effort to attract small businesses to its Web properties, Microsoft plans to launch bCentral, a trial version of which will be available September 30; the final version will launch two or three weeks from then, Chase said. The site will aggregate MSN's small-business offerings, which include advertising network LinkExchange, travel Web site Expedia, and headlines from MSNBC.

bCentral will go head to head with Netscape's Netcenter portal, whose successful focus on business users was said to have been one of the main reasons America Online acquired Netscape early this year. Other portal sites, including Yahoo and Lycos, recently have bolstered their small-business offerings as well.

In the works is a plan to make Microsoft's Office software applications, which include common productivity tools like those for spreadsheets and word processing, available through bCentral. The site also will offer MSN Internet Access, as well as Web site building, hosting, and domain name registration.

"The vision is that over time, the type of information and tools that you get from bCentral will be integrated with the Small Business Server software suite," Chase said.

Also today, Microsoft filed with the Securities and Exchange Commission to take its Expedia online travel-bookings service public. The stock sale is part of Microsoft's plan to take advantage of soaring stock prices at Internet-related companies, Bloomberg reported.

Looking ahead
Chase said that in November, Microsoft will launch a user interface upgrade to MSN, including personalization based on zip codes, a more prominently placed search bar, and sign-in to MSN's Passport system for universal log-in and shopping services like credit card information.

November also will bring an upgrade to the shopping channel, highlighting its comparison shopping technology and its soon-to-be-launched Passport Wallet service for automating credit card and other purchasing information.

In one demonstration at today's conference, Microsoft showed how Passport has been integrated into its shopping site technology from CompareNet, which Microsoft acquired in March.

Chase also showed prototypes of new implementations of the Hotmail and Outlook Express integration, first introduced with the launch of IE 5 in March.

Microsoft's online strategy has been slow to take off since its launch in 1995. Originally envisioned as an online service combining Internet access and content to compete with the likes of AOL and CompuServe, MSN has found its subscription base stalled at roughly 2 million subscribers, according to Jupiter Communications' estimates.

By contrast, AOL has seen its subscriber rolls skyrocket to roughly 20 million, including the 2 million accounts it acquired with CompuServe in 1997.

But Microsoft has been stepping up its MSN efforts. Last month, the company tapped SGI chief executive Rick Belluzzo to head Microsoft's consumer and commerce group, which includes MSN and WebTV.

Belluzzo said MSN has a lot of potential, but he acknowledged that even with today's announcements the site had its work cut out for it.

"We have the ingredients of a breakthrough," Belluzzo said in answer to a reporter's question between sessions. "But we have not articulated a breakthrough."

Belluzzo said MSN needs to operate more efficiently, noting that "a lot of people" are working on this part of the business.

Belluzzo also said Microsoft will continue to put new applications on the Web. Microsoft has found itself in an awkward postition regarding the proliferation of free, Web-based applications that compete with the products Microsoft traditionally has packaged and sold for use with desktop computers.

On the one hand, Microsoft wants to protect its lucrative software applications sales. On the other, Microsoft has to compete on the Web by providing those applications for free.

"We have to work on that within the company," Belluzzo said.

In July, Microsoft abandoned one of its key MSN properties, selling the city guide portion of Sidewalk to Ticketmaster Online-CitySearch.

MSN's focus: software services
Apart from the announcement that the Expedia travel service will spin off, the morning's announcements and demonstrations focused on comparatively minor alterations in existing MSN services, as well as partnerships with content providers including WebMD, in which Microsoft has an investment, and Women.com.

The scope of the announcements is indicative of MSN's current strategy of focusing on software-based service improvements.

"We're treating software as a service," Chase said. "That's how we're thinking about our business going forward.

"We can take our experience with software and services and provide something that others can't," he added. "We have some things we provide that are very unique."

Chase cited the integration of Outlook Express, Microsoft's email reading and management software for the computer desktop, with Hotmail, its Web-based email Web site. Other examples he gave were Microsoft's shopping and Web-page-building software.

In addition, Microsoft previewed a non-PC browsing device called the "MSN Web Companion." Designed to browse the Web but not to run standard desktop applications, the Web Companion will run on Microsoft's slimmed down Windows CE operating system for handheld computers, television set-top boxes, and other non-PC devices.

A trial version, manufactured by a yet-to-be-announced computer hardware maker, will be available in desktop and laptop incarnations by year's end, the company said.

Microsoft is turning to its software expertise in an attempt to exploit its strengths in the face of the AOL online service juggernaut. AOL executives have said that they consider AOL a consumer-oriented media company, not a software company. For example, AOL has said that it acquired Netscape not for its browser software, but for its base of business users.

Later today, Microsoft will discuss its pricing model for MSN Internet Access. In recent weeks, reports have fueled speculation that Microsoft will undercut AOL with free or deeply discounted Internet access.

MSN already offers some deep discounts for access.

But MSN product manager Deanna Sanford tried to cool speculation in advance of the announcement.

"Low-cost or no-cost access is something we're evaluating just like a lot of other things," Sanford said. "But the fact that we're looking at it has been made to be more significant than it really is."

Bloomberg and News.com's Jim Hu contributed to this report.