Microsoft Corp may take its battle with America Online Inc into the low-cost internet access market. Rob Bennett, marketing director for the consumer and commerce group, told Reuters that the company is looking at a lot of different pricing models to breathe life into the moribund Microsoft Network. We’re totally committed to getting as many people online as possible, and access if a key way to do that, Bennett said. Shares of internet service providers, including AOL, dropped in the wake of the announcement.
In the past few weeks, AOL and Microsoft have quarreled fiercely over access to the buddy lists used in AOL’s instant messaging service, but observers describe that squabble as a sideshow to the access war. Some estimate that as much as two-thirds of AOL’s revenues are derived from the $21.95 per month fee it charges its subscribers for unlimited access to online services and the internet. Free access providers like NetZero Inc are already beginning to erode those revenues. Microsoft’s arrival on the market could pose AOL a serious threat.
According to the Wall Street Journal, it was chairman Bill Gates and president Steve Ballmer who came up with the cheap access plan. The point is not so much to make money from subscriptions as to drive traffic to the transaction services which Gates and Ballmer believe will be the core of Microsoft’s business in the future. The Journal added that Microsoft considered buying or partnering with EarthLink Network Inc, MindSpring Enterprises Inc, Compaq Computer Corp or Dell Computer Corp to realize its ambitions as a service provider.
