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MSN woos CompuServe users

MSN is hoping CompuServe's focus on businesses will help drive consumers toward its own service.

Microsoft Network is hungry for CompuServe's leftovers.

In a direct mail campaign quietly launched last Thursday, MSN began sending free-trial disks to some of CompuServe's current and former customers. The online service also set up a technical support line specifically to help CompuServe users make the switch to MSN; some of the operators are rumored to be past CompuServe subscribers. MSN's help section even has a CompuServe-like interface.

CompuServe boasts 2.9 million subscribers at present. MSN, which claims 2.2 million subscribers, is hoping to increase its numbers by winning over CompuServe's home subscribers. MSN is betting that these customers are feeling abandoned since CompuServe refocused on businesses.

"We know that there are a lot of people that used CompuServe for consumer services as opposed to business services. With CompuServe's refocus on the business users, we want people to know that MSN is a good alternative for them," said Ed Graczyk, product manager for MSN.

Even though CompuServe is now trying to attract mostly business users--its original core market--the campaign to grab CompuServe's remaining consumer subscribers could hurt the struggling online service.

"MSN failed to understand that CompuServe's subscriber base consists entirely of consumers, only ours are more sophisticated consumers than MSN is designed to serve," said Steve Conway, vice president of corporate communications for CompuServe. "About 60 percent of our base are business, professional, or technical users; about 40 percent are other sophisticated consumers."

Still, the move could be bad news for CompuServe, an analyst said.

"It's nothing less than an attack on CompuServe. It may be a bad PR move because Microsoft gets a lot of flack for being this overbearing corporation that is trying to take over the world," said Steve Mitra, a senior analyst for Jupiter Communications.

"But MSN does have the kind of consumer content CompuServe's audience would go for," he added.

Microsoft has used such tactics--quite effectively--in the past. For example, the company was able to wean WordPerfect and Lotus 1-2-3 users over to Microsoft Word and Excel with a similar strategy.

Starting later this week, MSN will also roll out ads on the Web specifically to promote its services to CompuServe members.

"It's a relatively small campaign targeted at people who are CompuServe users," Graczyk said. "Certainly, it's an acquisition vehicle for us, but we're not running ads in the middle of the Super Bowl like some people." CompuServe says it doesn't feel threatened by MSN's recruitment play. MSN's services simply don't measure up, Conway said.

"If you go to microsoft.com and view the pitch to CompuServe subscribers, you see that MSN claims to have 100 forums, less than one-tenth our number. And if you visit those forums you see that the vast majority are lightly populated and are not managed, as CompuServe forums are, by experienced subject-matter experts," Conway said.

"In sum, MSN is trying to capture demanding, sophisticated consumers with a comparatively immature, mass consumer-oriented product," he said.