Microsoft readies new version of MSN

MS is hoping its newest MSN will help recapture customers who have graduated from slower dial-up services in favor of "broadband".

When Microsoft unveiled a multimillion-dollar makeover of its MSN Internet-browsing software last fall, the company had nine million subscribers and a $300 million marketing campaign designed to draw hordes of new customers.

It didn't quite work out the way Microsoft envisioned. Today, the software company has 400,000 fewer MSN subscribers than it did a year ago.

But Microsoft is hoping its newest version of MSN -- which is being released to beta testers next week -- will help recapture customers who have graduated from slower dial-up services offered by MSN in favor of high-speed or 'broadband' connections offered by cable and telecommunications companies.

'The past year has been a big year for the whole industry,' said MSN group product manager, Lisa Gurry. 'Although we could see the potential for broadband, it was not our primary focus. It turns out that it should have been our primary focus.'

Microsoft is offering the new service, called MSN Premium, through partnerships with broadband companies including Verizon, Qwest, and Charter Communications. But it also hopes to boost its customer base by marketing the package of browsing software and services to those who buy their access from non-Microsoft-partners. MSN plans to charge those customers $9.95 monthly in the United States.

MSN still significantly trails America Online in total number of subscribers, with AOL's US customer base at more than 25 million. But AOL has lost 846,000 subscribers in the last quarter alone.

The new MSN, which will be available by year's end, is focused on offering tools and services that would appeal to those with high-speed connections. The biggest enhancements are MSN's new tools for digital photo enthusiasts, which let them search photos more easily, insert pictures into a slideshow with music and more quickly send and receive pictures as small, compressed files.

MSN is also offering new features to let subscribers view and manage multiple e-mail accounts. Users can also choose to share their online appointment books with one another, so that co-workers, friends and family can check one another's calendars to schedule outings.

MSN's new offering is a start, said Rob Enderle, principal analyst with San Jose, California-based Enderle Group. 'I'm impressed by the direction and sense of where it's going,' he said. 'They (Microsoft) seem to finally grasp the fact that it needs to be a strategic part of Microsoft.'