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MSN vs. AOL

While MSN turns up the pressure, AOL responds

Sometimes it’s tough reporting on tech. It’s so often overshadowed by events that have little to do with technology. This week, they caught the sniper and a courageous senator from my home state–Senator Paul Wellstone–was killed in a plane crash along with his wife and daughter. Before I get to the story of the week in the tech sector, let me just express two thoughts on those events.

First, my niece and nephew living in the Beltway are finally free to do their after-school activities, to play and have recess and be kids again. The thought that a couple of men could disrupt so many innocent lives is a frightening commentary on our vulnerability. Let’s hope we can prevent this in the future without violating too many individual liberties in the process. I welcome your thoughts on how to do this, especially through the use of technology.

Second, in memoriam. I remember sitting up ’till the wee hours of the morning 12 years ago to watch this little college professor beat one of the most powerful men in Washington. It was one of the last great upsets in politics. He’s been one of the courageous few who stood up for what he believed in, against enormous pressure otherwise. While I didn’t always agree with him, I have always admired the way he conducted his office. My hope is that he inspires other senators and congressmen to do what’s right, despite having money waving them away from serving their constituents who can’t buy political influence.

Now, the tech story of the week. Did anyone else find the commercial of a skinny guy with butterfly wings popping out of cocoon and running around a little odd? I’m talking about the launch of MSN 8.0 this week. Obviously, Microsoft is spending a lot of money to launch this thing in hopes of luring more users away from AOL. Whether this is money well spent is the question. We haven’t had the opportunity to review it, but no matter how good it is, it seems to me it’s not going to fly as well as Microsoft hopes.

Everyone knows AOL is in a tough position and there may be an opportunity to capitalize on that. But the window is closing fast. After shaking up its management team, AOL is finally capitalizing on the synergy between the media company and the service provider. AOL 8.0 moves the Internet in the direction of radio and television by offering streaming services such as dozens of radio stations not found on the Web. Expect more of these content relationships in the future as AOL morphs into just another channel for Time Warner’s media empire to reach users.

The other difference between the services is broadband. Neither player is in a great position to offer broadband service to their users, but AOL is in a better position, thanks to the deal that gives it its own cable company–Time Warner Cable, Inc.– with nearly 11 million subscribers. (The deal was necessary for the AT&T/Comcast merger to achieve regulatory approval.) While Microsoft is heavily invested in AT&T Comcast, that does not give it the leverage that having your own cable company does, especially since the aforementioned deal gives AOL opportunities in AT&T Comcast as well. I expect this advantage will help AOL continue to hold off MSN.

The two trends are related, in that the new rich media content exclusive to AOL will require a broadband connection. For dial-up users, MSN will have the advantage because it’s cheaper and can be more stable on Windows systems. Plus, AOL dial-up users can’t take advantage of the new audio and video features on AOL 8.0 or subsequent versions anyway. But broadband is the future of Internet use, at least in the distant future, and AOL is better positioned than MSN. These facts weaken the impact of the launch of MSN 8.0. And when I see a two minute spot during the World Series oddly promoting MSN 8.0, it leaves me scratching my head.

James Mathewson is editor of ComputerUser magazine and ComputerUser.com.

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