Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 23, 1995 TAG: 9507250044
SECTION: BUSINESS PAGE: F-2 EDITION: METRO
SOURCE: ROB WELLS ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium
Microsoft, the computer software developer launching Microsoft Network, is wading into a highly competitive, fast-growing field pioneered by other information providers that have shown they know how to exploit technology.
``They're going to be going up against three major services with an embedded base of loyal customers,'' said Rod Kuckro, editor in chief of Information & Interactive Services Report, a Washington-based trade publication.
On-line services allow computer users to send electronic mail to friends, shop for items such as compact discs or flowers from home, or join group discussions on topics ranging from auto repair to France's nuclear testing policies.
About 8.6 million people subscribe to commercial on-line services now - and it's growing. In the three months ending June 30, an average 14,000 people a day joined a commercial on-line service, Information & Interactive Services Report said. Numerous companies, from AT&T Corp. to Apple Computer Inc., are working on major introductions in the business.
The potential growth is enormous: about 17 percent of all households have a modem in their personal computer, but only 8 percent have joined on-line services, said Peter Krasilovsky, senior analyst for Arlen Communications in Bethesda, Md.
``I think the market is going to grow a lot for the next several years,'' he said.
As it grows, the industry is rapidly changing, with a number of major takeovers and strategic investments this year. The industry is trying to position itself as a major service for home entertainment, along the lines of cable television, as well as communication.
The spotlight on the industry comes as Microsoft plans to link its proposed Microsoft Network on-line service with release of the new Windows 95 operating system software later next month. Operating system software controls a computer's basic functions, allowing the PCs ``brains'' to talk to printers and other devices.
The Justice Department is investigating complaints that Microsoft's inclusion of the on-line software in Windows 95 amounts to an unfair competitive advantage.
America Online, Compuserve and Prodigy Services Co., the leading commercial on-line services, say novice computer users have a much easier time finding the Microsoft Network software in Windows 95.
Yet, experience in the market suggests consumers may not necessarily flock to a new on-line service just because it comes preloaded on computers.
Since June 1994, Apple Computer Inc. has been loading its eWorld on-line software on most Macintosh computers for the consumer market - at least 3 million computers during that period, according to Dataquest, a computer research group in San Jose, Calif.
Despite those sales, eWorld has attracted only 100,000 subscribers.
Although Apple's subscriptions pale to those of industry leaders, it's dangerous to count out eWorld - or any service. Technology is changing so quickly that innovations can launch a company quickly.
Prodigy Services Co. - overshadowed by America Online's 10-fold growth in the past two years - got back into the game by unveiling a new, easy-to-use software package to surf the Internet's World Wide Web.
``It gave them a new lease on life,'' said Kuckro of Multimedia Publishing Group.
To gain access to new technologies, the major players are making numerous strategic investments and, in some cases, buying out the innovative smaller companies. America Online has made a flurry of deals, including the $50 million acquisition last February of Internet software developer Booklink Technologies Inc. and Navisoft Inc., which makes tools for multimedia displays.
Offering computer novices easy-to-use tools to make sense of the rapidly growing Internet is a key strategy for all major players. Last week, Microsoft chief executive Bill Gates revealed the Microsoft Network will feature full Internet access when the on-line service is launched Aug. 24 - four months ahead of schedule. Compuserve plans to release a more simplified service soon.
Prodigy is looking to more specifically target niche audiences, such as children and seniors, said company spokesman Brian Ek.
``You will see us deviate pretty substantially from the mass market approach in the near future,'' Ek said.
One of Prodigy's goals is to pry people away from their television sets, which an average person spends 160 hours viewing a month, to their PCs, where usage averages about six hours per month, Ek said.
An increase in usage could mean access to a gold mine: advertising revenues.
``If we can start moving the usage over to the other screen, the ad dollars will follow,'' Ek said.
by CNB