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Microsoft rolls out Sidewalk N.Y.

Unlike its first site in Seattle, Sidewalk's Big Apple effort faces fierce competition from other online city guides.

Microsoft today rolled out the second of its Sidewalk local entertainment guides, this time in the Big Apple.

But this Sidewalk guide has something that the first Sidewalk market didn't: lots of competition.

Microsoft rolled out the first Sidewalk on its home turf of Seattle amid great hype April 3.

But now Microsoft will be competing with everyone from The New York Times to CitySearch New York.

The New York market will be a good test for the software giant, which has been hiring away talent from local newspapers to put out what it considers to be top-notch arts and entertainment sites.

Microsoft is banking on people who want to get entertainment information from the Net and has put its resources in helping New Yorkers filter the information overload about entertainment possibilities in the world's most entertainment-centric city.

The focus is not only on providing information about what to do and where to go, but also on helping the user make decisions, said Cella Irvine, general manager of Sidewalk New York. And that, she insists, will be one of the essential ways in which Sidewalk differentiates itself from the other existing services.

"We thought of Sidewalk as your virtual entertainment buddy," she said. "We're focused on helping people make decisions."

The well-funded Sidewalk project, as previously reported by CNET's NEWS.COM, is among the most ambitious of the local city guides trying to siphon off advertising money from telephone directories and newspapers. But the big bucks behind the venture do not guarantee its success.

Analysts agree that only a few of the players--ranging from newspapers to phone directories to search engines and beyond--can make it.

Certainly Microsoft has more than enough cash on hand to allow it to persevere for a while. But several other players--such as America Online's Digital City and DiveIn also have large corporations backing them. And they're not likely to back down from a fight.

The players also argue however that there is enough money so each player need only grab a very small percentage of the whole pie to make money.

"Local advertising spending in the United States is north of $65 billion," said Tom Cullen, president of US West Interactive Services' DiveIn, which has launched sites in ten different cities where US West either has a strong telephone or cable presence. "A very small percentage of that would be enough to keep a number of sites moving."

Cullen added that while local sites are racing against each other to cement their positions in the new market, they're all competing as a group against some formidable adversaries: newspapers, television, radio, and even the yellow pages.

"The real competition is the traditional means by which people access information," he said. "The whole thing is based on the assumption that the consumer adoption rate of the Internet continues to grow."

But others argue that the money won't be enough to support more than one or two players in each market.

Bill Bass, an analyst at Forrester Research, for instance, predicts that Microsoft will dominate, but at a cost.

"They're going to lose a boatload of money on this," he said. But because they're Microsoft and have the staying power, he said, they'll be able to sustain the loses and turn the service into a money maker, augmented by other services, such as its online travel service, Expedia.

Newspapers and television stations also will be able to survive in the market. But he predicts other services will lose their shirts.

"This is going to be a bloody massacre," he said. "It's not a huge pie."

Whether local services are successful could have a major impact on the development of the Net, said Van Baker, an analyst with Dataquest.

"We think local content is hugely important," he said. "Ultimately local content will be one of the drivers for Internet access via television."

Consumers, he explained, are much more likely to access services that offer complete entertainment guides, such as Sidewalk, on their televisions.

"If it's a couple clicks away on the television to find out what's going on, it's easier to do that than to go through the recycle bin and find that entertainment section that came out last Friday," Baker said.

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