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Microsoft taps Compaq to attract Net subscribers

The companies announce a three-year deal promoting the MSN Internet Service on Compaq's Presario home PCs, the latest pairing of a PC maker with an online service provider.

Microsoft and Compaq Computer today announced a three-year deal promoting the MSN Internet service on Compaq's Presario home PCs, the latest pairing of a PC maker with an online service provider.

The alliance is part of Microsoft's strategy to lure subscribers to its online service using offline marketing efforts. In addition to today's deal with Compaq, Microsoft has struck partnerships with RadioShack and other retailers to promote the online service, which still lags behind America Online in terms of subscribers.

By signing with Compaq, whose Presario line of home computers is consistently among the top sellers to consumers, MSN is gaining access to millions of home PC users.

The deal is part of a growing symbiosis between PC makers and Internet service providers. These partnerships, which often involve heavily discounted computers for customers who sign up for Internet access, are the result of the continuing price declines for both PCs and online service contracts.

But the pact may have more important implications for Compaq. The PC maker has a stake in CMGI, which owns Web portal AltaVista, and has previously used UUNet as its backbone provider for the service. Beginning this summer, Presario PCs will be preloaded with the " powered by MSN" service, according to a statement from the PC maker.

A Compaq spokesman said the deal with Microsoft will not affect the company's existing relationship with AltaVista. Rather, MSN's presence on the keyboard will only apply if a Presario buyer signs up for the co-branded ISP.

"The user has the ability to program the keyboard to anyone they want," said Kevin Kyle, general manager of Internet services for Compaq's consumer group. "Only if a consumer chooses to go to powered by MSN will the keyboard keys change to go to that service."

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MSN services including Hotmail, Search and MoneyCentral will be hosted by Compaq servers, the companies said. Although the deal mainly centers around the Presario line, the two companies will work together on wireless devices, including the MSN Web Companion.

"By making MSN services easily and instantly available through the world's leading supplier of consumer PCs, we can achieve our goal of transforming the Web into a highly personalized experience for people every day," Rick Belluzzo, vice president of Microsoft's consumer group, said in a statement.