The company will extend the free six-month deal to consumers who sign up for a one-year contract, according to executives. Customers will not begin paying the standard $21.95 monthly fee until the seventh month. The limited offer expires June 30.
"It's an aggressive offer, there's no doubt about that," said Alan Alpert, an industry analyst at Gomez Advisors, an Internet consulting firm. "People always try things for free. The question is: How many users will they retain?"
Monthly fee dial-up ISPs have found themselves sandwiched between the increasingly popular free ISPs, such as NetZero, Freei.net, 1stUp and Bluelight.com, and high-speed, or "broadband," Net providers. The broadband services, which primarily use faster cable modems or digital subscriber lines (DSL), have quickly offered competitively priced high-speed services at roughly $40 per month.
Those two competitors have left traditional dial-up Net access providers looking for the right mix of price, content and service to attract new customers. MSN Internet Access currently claims 2.5 million active users.
"We'd be psyched if 1 million new people tried MSN this year," said Deanna Sanford, lead product manager for MSN. "This tested extremely well in focus groups."
Microsoft is not new to the discounted Net access game, having last year unveiled rebates of up to $400 on the purchase of a PC in conjunction with a three-year commitment to MSN. Company executives attribute 500,000 new subscribers over the past four months--record growth for MSN--to the rebates and, in part, to a $150 million advertising campaign that began mid-February. The advertising campaign is among the largest consumer campaigns ever undertaken by the company.
Microsoft's new low-cost Net access push also is being bolstered by a major marketing effort. The $40-million promotion, which began with television spots Sunday, will include online advertising and more than 13 million CD-ROMs containing the necessary software. The campaign is MSN's largest campaigns ever, executives said.
Although Microsoft's Internet efforts have been oft-criticized as lackluster, the company believes it now has the content, service and executive stability to make MSN a serious challenger to larger ISPs, particularly America Online, the leader with more than 20 million customers.
"We haven't done as good a job as we could have at educating people what MSN is," Sanford said. "We've got all of the pieces of the puzzle. Now is the time to go out and tell the world about it in a big way."
Microsoft also is cheering a recent bump in traffic to its MSN.com portal property. The Web site has increased its reach among Internet users by 12 percent during the past six months, according to Media Metrix.
MSN.com now claims 39 million unique visitors per month, up from about 30 million at the end of the year, Sanford said, adding: "We've reinvigorated MSN."