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MSN to offer Net computer

With the introduction this week of MSN Web Companion, Microsoft puts its spin on the network computer concept of an appliance-like device for Web access.

With the introduction this week of MSN Web Companion, Microsoft has put its spin on the network computer concept of an appliance-like device for Web access. But unlike that ill-fated scheme, observers are cautiously optimistic that Microsoft's device will find a niche.

Microsoft is keeping details about MSN Web Companion under wraps, but the company has said the upcoming device will run a scaled-down version of the Windows CE operating system and is intended to act as a simple Internet access appliance.

MSN Web Companion will not run local software like a typical computer, but will offer applications and services provided as part of the MSN service.

MSN Web Companion will take the form of a notebook or desktop computer, and because it will be based on Windows CE rather than on full-blown Windows, it can be turned on and off instantly, Microsoft said.

Several analysts speculate that MSN Web Companion will cost as little as $100, with the price subsidized by Internet access fees. The device will begin user testing by the end of the year, the company said.

As previously reported, MSN will eventually be the Internet service for all Microsoft Web properties, including desktop and handheld computers and potentially even its WebTV interactive television service.

In other words, MSN Web Companion is "an Internet appliance that looks an awful lot like a network computer," according to a report from Merrill Lynch vice president Chris Shilakes.

Originally conceived by Oracle chief Larry Ellison, the network computer was envisioned as a Windows-killer--a limited-function, low-cost device running applications hosted by more powerful server computers. But with the advent of the sub-$1,000 computer, the idea fizzled, and the concept of thin-client computers and distributed applications was put on the back burner.

"This is a new kind of thing," a Microsoft representative said. "It's solely a Web companion device.

"The network computer is designed to be a replacement for the PC," the representative added. "This is not designed to be a replacement for the PC--it's only designed for email and Internet surfing."

Microsoft's struggles to gain acceptance for Windows CE, MSN, and even WebTV are not new. The decision to combine three sagging business units might not result in a sum greater than the individual parts, analysts say. Both MSN and WebTV have failed to meet the company's expectations for subscription growth, while Windows CE has struggled because of software bugs and consumer complaints.

Furthermore, an Internet device focused on providing MSN service may very well cannibalize WebTV and Windows CE sales.

Like other Windows CE devices, such as the Jupiter device (which resembles a mini notebook) and the palm-sized PC, MSN Web Companion is designed by Microsoft but will be manufactured by third parties, who can ostensibly add features. The device will be distributed to customers who sign up for the MSN service, although Microsoft may also make it available at the retail level.

"Technically it's not that much of a stretch for them, but it's certainly one of the first actual information appliances to hit the market," said Kevin Hause, an analyst with International Data Corporation, who hailed the announcement as a sign of things to come in the computing industry. "What we're going to see in the future is a continuum of computing devices--it's not going to be one size fits all."

In addition, Microsoft is testing more applications to connect users to the Internet, including more typical Office programs like Word and Excel, sources have said. The testing has occurred on the WebTV platform, which will eventually be based on the Windows CE operating system.

"The future of MSN will include it being a source of applications that people can essentially rent access to," said Greg Blatnick, an analyst with Zona Research. "This is part of the overall concept and plan for Windows CE."