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More stores offer Microsoft's $400 rebate plan

The software giant fires the latest salvo in the Internet service market share war when it announces that two stores will feature the MSN rebate.

Microsoft today fired the latest salvo in the Internet service market share war when it announced that Office Max and Office Depot will begin to offer $400 rebates on PCs when customers sign up for three years of MSN Net service.

The deal comes amid an escalating contest between Microsoft and AOL to gain friends and influence people in the retail world. Both companies have been cutting deals and showering incentives on large retailers, Web sites and even PC makers in an effort to turn these companies into sales outlets for their respective services.

Office supply stores such as OfficeMax have been expected to line up with ISPs.

"You'll probably see a whole new set of ways to attract customers," said Stephen Baker, PC analyst at PC Data last week. "CompUSA, Sears, the office stores, the warehouse clubs, Fry's, Microcenter--they are some pretty decent people you want to hook up with."

Under the program, customers that buy a Windows-based PC from OfficeMax or Office Depot receive a $400 rebate if they agree to a 36-month subscription with MSN. The rebate can be applied to the purchase price of a PC or go to other merchandise.

The rebate deal is similar to one offered by CompuServe, which is owned by AOL. CompuServe will phase out its current rebate programs by next year. However, a spokeswoman stated that other offers were likely.

PC-ISP bundles and discounts have been one of the major forces driving the PC market this year and have boosted sales beyond the predictions of most analysts.

Financial details on the OfficeMax and Office Depot deals were not disclosed. However, these deals so far have been fairly lucrative for retailers. Microsoft has agreed to invest approximately $100 million in Radio Shack and $200 million in Best Buy in similar deals.

Likewise, AOL earlier this year signed a wide-ranging development and marketing deal with direct PC maker Gateway that included an $800 million investment in the company. AOL also made an investment in Emachines. Details on marketing deals between AOL and Circuit City and Wal-Mart have not been disclosed.

"This is an extremely affordable way for families and small businesses to purchase a new PC through trusted hardware retailers and get online through our award-winning MSN Internet Access service," Deanna Sanford, lead product manager for MSN Marketing in Microsoft's Consumer Group, said in a statement.