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Redmond Web strategy turns again

Does the new home page code-named Microsoft Start indicate a start from scratch for the company in its media strategy?

To its detractors, the code name of Microsoft's new home page is a telling one: Microsoft Start.

Analysts and rivals who voice public doubt about the software company's move into the content market say Microsoft is essentially starting from scratch when it goes into the home page business.

Microsoft has decided to reshuffle the deck in its content strategy, creating the new site that incorporates a search engine built by Inktomi, free email by newly acquired Hotmail, and its online service Microsoft Network, as first reported by CNET's NEWS.COM.

But even critics know what Microsoft is capable of doing when it puts its mind to something. All one has to do is look at Netscape Communications' falling market share in the Web browser business it once dominated.

"Whenever Microsoft moves into your space you always have to be concerned," said Andrea Williams, an analyst who covers interactive content for Volpe Brown Whelan. "With their resources, they might not get it right the first time, but eventually they will probably get it right."

Enter Microsoft Start, an effort to create a popular home page destination bringing together the best of the company's online offerings (Microsoft owns the URL "www.start.com"). The site is slated to go into private beta testing February 9 and is expected to launch in late summer or early fall.

But just having the ingredients for success--money and power--does not necessarily mean Microsoft will come up with the recipe for success. The company has already gone through several incarnations in its Internet policy strategy and has yet to gain critical mass or lead the industry the way it has in the software business.

"Microsoft seems to have done OK in the content arena when they've brought with them some partners, like NBC," said Allen Weiner, principal online analyst for Dataquest. "The things they've done on their own, like Sidewalk, have had a lot of glitz but no heart. They need to dig down a little deeper and bring some passion to this business. Part of it is that most of their content divisions are filled with technology people."

Weiner added: "One has to wonder when they will realize that money and technology alone will not make them an excellent content company."

At the same time, neither he nor others were willing to count out the software behemoth. "Depending on Microsoft's budget and tolerance for pain will be what determines if they're successful in this business," Weiner said.

Even while some competitors publicly dismiss Microsoft's media efforts, they are undoubtedly watching its moves carefully. These opponents include some of the best-known names on the Internet, such as Yahoo, Excite, America Online, and even browser rival Netscape.

And Microsoft is making decent headway in some areas: Microsoft Network has more than 2 million members at last count, along with "home.microsoft.com." The company also has launched well-received commerce sites such as online travel agent Expedia and auto site CarPoint.

Also working in Microsoft's favor is cash. Executives have said repeatedly that the company is willing to lose hundreds of millions of dollars in the content arena to establish itself.

No one--not even Microsoft executives--are saying they want to actually win the race. But they do want to secure a position in the top three or four.

While people might think that Yahoo, the leader in the home page space, would be shaking in its virtual boots as news of competition from Microsoft emerged, executives there were doing nothing of the kind, according to Jeff Mallet, chief operating officer at Yahoo.

In fact, in the strange world of the Net where enemies often join together in partnerships, as did Yahoo and Microsoft, Microsoft's move could oddly end up up benefiting Yahoo.

While Microsoft will certainly compete on the home-page front, it also will distribute Yahoo's channels, part of an agreement the companies announced in October to carry each other's content.

"We were expecting this and hoping for this. They're friend and foe," Mallet said. "We expect there to be only a handful global comprehensive services. Microsoft is in a position to be one of those four or five or six."

When the odds are cast that way, some believe that Microsoft has an excellent chance.

"Microsoft has a bunch of strategic assets that they finally want to pull under one roof and make a business out of," said online analyst Kate Delhagen of Forrester Research. She disagreed that Microsoft will have to start from scratch to gain recognition in the mainstream media market.

"They've got pretty good market share out of the box," Delhagen said. "The question is how will distribution unfold over time."