In, Around and Online- Issue 2.29 - Week Ending 7/21/95 ======================================================= Copyright (C) 1995 Robert Seidman (robert@clark.net). All rights reserved. May be reproduced in any medium for non-commercial purposes. In This Issue... ================ -Disclaimer -Stuff From The Editor -Corrections -Microsoft Network News -Big Three Band Together to Fight Microsoft -Microsoft Outlines Web Advertising Strategy -Snubbed by Steve Case -NewsWorthy Notes/Sites to See -Stock Watch -Subscription Information Disclaimer ========== I began writing this newsletter in September 1994, at the time I was working for a technology company that is now owned by MCI. In March, I began working for International Business Machines Corporation. As of July, my management has agreed to allow me to do some work on the newsletter during business hours (probably about 6-8 hours a week). I speak for myself and not for IBM. Corrections =========== Last week, I included an item about Intuit lining up banking partnerships with 19 banks, to provide online banking via Quicken. I made a reference to three banks that Microsoft had recently lined up to provide online banking with its MS Money for Windows '95 personal finance software. The way the item was written it made it look like Microsoft had only lined up three banks to provide online banking. Microsoft has been aggressively pursuing the home banking market as well and has lined up at least 17 prominent banks. Stuff From The Editor ===================== I apologize for the delay in delivery of this week's edition. I had intended to send it out Friday night but e-mail glitches on my end and ClarkNet being down to the outside world made distribution impossible. On Friday I was in San Francisco for a meeting, so I decided to fly to LA for the weekend to visit with a good friend. I also had the chance to meet with another good friend, but I'll talk about that next week when her book comes out. Anyway, I spent 15 minutes on e-mail all weekend and that was great! Tonight, I flew from LA to Washington, DC. and just got in. I'm staying about a quarter mile from where I used to live and that seems sort of weird. It's 1:05 a.m. and I've just checked into my hotel and I've just gone from 85 with zero humidity to 85 with 98% humidity. Well, it is nice to have something to blame my hair on... This week, the newsletter isn't as comprehensive as I'd like and it hasn't been edited as normal, but in the interests of getting to sleep, I hope you'll allow me this one "off" week. You still get a newsletter, and it's still free and I think there is still a good nugget or two to be found. Hope you think so too. Next week, back to business. See you then! One sort of major event (depending on who you talk to) that didn't get into the newsletter was the announcement of availability of Ziffnet and The Washington Post (via Digital Ink) on Interchange. While I covered most of my feelings on the overall Interchange model with the announcement of the Minneapolis Star-Tribune Online, there's still more to be said, and I hope to say it next week... Another point I didn't get into the newsletter that I'd like to address here is that in spite of everything, Microsoft is still taking a very aggressive posture. This week they announced that they'll be giving away the MS Money for Windows '95 for a couple of months. While clearly Intuit dominates the personal finance market with its Quicken product, given that the Dept. of Justice still may bring an antitrust suit against Microsoft, this seems like an especially bold announcement (the buzz was that they had planned to give MSN away for the remainder of '95, but based on all the flack, they canned that idea). Love them or hate them, you sort of have to admire a company that spits in the face of adversity. Someday, their boldness might cost them, but for now, it is business as usual. Microsoft Network News ====================== On Friday, the Justice Department announced that they had dropped their subpoena requesting additional information from Microsoft for the Microsoft Network. While this news may have seemed like good news for Microsoft (they had sued to quash the subpoena), the reality is that it may signal that the Justice Dept. will be filing an antitrust suit against Microsoft. Assistant Attorney General Anne Bingaman, in a letter to U.S. District Judge Robert J. Ward (who was scheduled to preside over a hearing regarding the subpoena on Monday) said that since Microsoft had already shipped its "gold" master disks for the Windows '95 operating system, arguing over the subpoena was useless. "Given the delay by Microsoft in producing documents under this CID, it is apparent that the government will have to make its decision as to whether to initiate an enforcement action prior to the launch date on the basis of evidence we have gathered to date ...," Bingaman said. In other Microsoft Network news, at a conference held this week in Long Beach, Ca., Microsoft announced they would launch the service on August 24th with full Internet access (via a PPP connection). Previously, only e-mail and newsgroups were to be ready at launch, with the rest coming sometime late in the 4th quarter. "As we saw exponential improvements in computing capabilities that made software valuable, we now see those same dynamics taking place in the communications and networking area, driven by the Internet," said Microsoft chief Bill Gates speaking at a conference geared at developers who wish to develop interactive content via the Microsoft Network. Translation: We're no different than anybody else -- the Internet is hot, and we want to make money on it. And there's nothing wrong with that -- even if you are Microsoft. Let's give Microsoft some credit -- the company has been plagued with delay after delay with their Windows '95 product. Originally, the plan was to launch MSN with only minimal Internet support (e-mail and Newsgroups), but the popularity of the Web and the fact that all the major services have Web access pushed Microsoft into completing this ahead of schedule in the United States. A very smart move, too but not totally without smoke and mirrors. What AOL and Prodigy did with their Web browsers was actually quite impressive because they integrated the browser into the online service. That gives them both potentially a lot of flexibility and power. Prodigy's client software needs true multitasking capabilities to fully leverage the advantages. AOL's software just needs to work more consistently -- the browser still chokes a lot even with the compression turned off. But, AOL is already doing a fantastic job of integrating Web services (including In, Around and Online!) into their own service. With time, the browser will be more stable. If I'm not wrong about that, AOL's browser is the cream of the online crop. CompuServe took the easy way out -- they went with a PPP style connection that meant basically they could use any browser they wanted. Having invested a cool $100 million in company formerly known as Spry (now known as CompuServe Seattle), they used a variant of Spry's Air mosaic client. But the truth is that CompuServe subscribers accessing in this way can use whatever browser they want. The advantage here is that going this route is faster and easier. The disadvantages are that the capabilities to integrate Web content into the online service in a slick way aren't there. But let's face it, CompuServe WinCim isn't all that slick anyway. The wind is blowing that a new and improved WinCim will be available this fall (amid reports and rumors that CompuServe is going to drop its ASCII based text service altogether). As with CompuServe, for the time being, Microsoft is taking the easy and fast route by utilizing a PPP connection and essentially allowing users to use whatever browser they want. And this is a smart move too, because it buys Microsoft time. Had Microsoft launched without any Web capabilities, the press would've been all over them. I don't think the majority of the press has figured out just how slick the model AOL has created is. Granted, it has to be made to work consistently and to incorporate new standards, etc., but they've got some extremely cool capabilities that integrate Web and AOL services that the content providers will love. Microsoft won't have this at launch, but make no mistake about it, they will ultimately have similar capabilities. Microsoft is now on a mission to integrate everything on the Internet with the Microsoft Network in compelling ways. Such development capabilities will be built into the "Blackbird" development tool. Until that happens -- and right now, that won't happen until some time in 1996, America Online is technically superior to Microsoft when it comes to integrating the Internet with the online service. I know, some of you are saying, "Big Deal". Well, lets face it, even the newest and coolest messaging systems for the Web still are not good. For example, c|net (http://www.cnet.com), a Web service that I really like, has supposedly come up with the state-of-the-art in Web messaging. They get an "A" for effort and a D for implementation. Messaging on an ASCII BBS is easier than this -- and certainly easier on America Online and other services. But AOL has something the other services don't -- they can fully integrate an AOL area around a content providers Web site. "Great software will again be crucial in delivering innovative applications," said Mr. Gates referring to at the conference in Long Beach. For now, Microsoft lags behind when it comes to online innovation to . While the smoke and mirrors PPP approach will by them a reprieve from the PR nightmare of not having Web access, there's one thing that you can eventually count on. "Microsoft Web". One of the funnier moments of the conference was when basketball superstar Shaquille O'Neill made a surprise experience to plug his new service on the Microsoft Network. Hopefully you were lucky enough to see either the video footage or the photograph where "The Shaq" swooped the comparably tiny and especially nerdy looking Bill Gates into his arms. Microsoft also outlined one of their advertising strategies at the developers conference. For $7,500/mo. and a 12 month commitment, Microsoft will put up a shortcut that will link users directly to a companies World Wide Web page. The Big Three Band Together to Fight Microsoft ============================================== America Online, CompuServe and Prodigy have been rivals for years. Sometimes bitter rivals. But Microsoft's foray into the online service arena has turned AOL, CIS and Prodigy into friendly enemies. This week they got a little friendlier when the chiefs of the big three online service companies got together in Washington, D.C. for an anti-Microsoft rally of sorts. In a press conference attended by America Online's Steve Case, CompuServe's Robert Massey and Prodigy's Ed Bennett, the 3 online chiefs urged the Justice Department to turn up the heat in its investigation of the Microsoft Network. The three also crafted a one page letter to Bill (Microsoft Chairman Bill Gates) reiterating their feeling that the Redmond based monolith is using its dominant position in the Operating Systems market and leveraging that position as a marketing tool and urging Mr. Bill to consider un-bundling MSN from Windows '95. The Microsoft Network - An Alternate Viewpoint ============================================== While I know there are some who would prefer to hear no more about the Microsoft Network, there is no bigger story in the industry. There's just no way to get around it. However, when it comes to viewpoints, the only one you get is mine. As a compromise, and to provide some balance, I'm including a piece by one of my favorite online pundits, Rosalind Resnick. As some of you know, Rosalind is a columnist for the Miami Herald and the editor of Interactive Publishing Alert (IPA). I highly recommend Interactive Publishing Alert. For more information on the IPA, contact Ms. Resnick at rosalind@netcreations.com or check out http://www.netcreations.com on the Web. The following is one of Ms. Resnick's Cyberbiz columns, used with permission: July 17 1995 Call me a contrarian, but I'm just not sold on the idea that the forthcoming Microsoft Network is going to bulldoze the online world the way the Justice Department thinks it will. Sure, I know how the argument goes: Once Microsoft rolls out its long-awaited Windows 95 operating system next month, millions of people who have Windows 3.1 on their computers now will dash out and upgrade to the new software. When they do, they'll find access to Microsoft's new online service conveniently bundled in. Tempted by a free offer to try the Microsoft Network, they'll click on the little MSN icon on their screen, log on and step into a virtual Never Never Land. Before long, cyberspace will belong to Microsoft Chairman Bill Gates -- as will electronic commerce, banking and all the other goodies that come with it. You don't have to be too paranoid to see where the Justice Department gets this idea. After all, there are roughly 60 million Windows users worldwide; the entire Internet global communications network has only half that many people. If only 1 out of 10 Windows users join the Microsoft Network, the fledgling online service will be as big as CompuServe and America Online combined. But that's not the only worry. At the Internet World show I attended in San Jose in April, I watched along with dozens of others as a Microsoft company demonstrator seamlessly dragged and dropped files from online databases to his hard drive and back again over a 28.8 kbps modem connection that seemed much faster. Because the Microsoft Network looks and feels just like any other Windows 95 application, it soon became difficult to tell whether the data was being retrieved from MSN, the Internet, or the computer's hard drive. "All you need to know is how to double-click it," the demonstrator told his mesmerized audience. "You don't need to know anything else." What's more, the Microsoft Network offers some innovative features that its rivals don't -- features that only Windows 95 makes possible. For example, an MSN subscriber can begin downloading a photo, then return to composing an email message without having to wait until the download is complete. Also, an MSN user who spots something interesting online and wants to save it to his hard drive can simply click on the object and drag it over to the edge of his screen -- no need to figure out how to save, copy or transfer files. MSN's email interface lets you add colors, fonts and typefaces to your messages and attach navigational icons that recipients can click on to immediately go to a certain spot on the Microsoft Network. MSN's universal in-box lets you receive messages sent to CompuServe, America Online and other online services, without logging on to check multiple mailboxes. That said, I still don't think that the online populace is ready to crown Bill Gates king no matter how good his network is or how many people flock to Windows 95. Here's why: 1. Online users are fickle. Just because an online service stuffs a free diskette in every computer magazine and offers new users free online time doesn't mean that everybody who tries it is going to stay. I'm sure that plenty of people will give the Microsoft Network a chance, but there's no guarantee they'll stick around once their free trial runs out. As Microsoft will undoubtedly learn, it's one thing to be on every desktop; it's another to win the hearts and minds of the online public. 2. Online users may balk at MSN's pricing structure. Rather than sharing connect-time revenues with content providers as the other online services do, Microsoft offers publishers and other vendors a cut of the sales they ring up. Each time a merchant makes a sale through the network, Microsoft takes a 5 percent to 30 percent commission. This means that, although MSN users will get online staples such as email, chat, bulletin boards and Internet access as part of their monthly fee, they'll have to pay extra fees to access specialized news, entertainment, information and shopping services. While a pay-as-you-go plan sounds great at first, users may drop MSN once they find out that $1 here and 50 cents there can add up to real money. 3. Online users may prefer to surf the Net instead. Gates has been quoted as calling the Microsoft Network the "civilized" alternative to the Internet. While a network like that may appeal to a certain segment of the online population, such as parents with young children, I doubt it will light much of a fire under the millions of people who have flocked to the Internet for its rough-and-tumble freedom. While MSN offers Internet access, too, many online users will find it cheaper to pay an Internet provider $20 a month for unlimited access to the network and surf all the Web sites they want for free. People who take this route probably won't be missing much: Many of MSN's information providers have sites on the Internet, too. 4. Microsoft may not turn out to be as good at running an online service as it is at running a software company. Let's face it: The online world is a new frontier and nobody yet has figured out how to create services compelling enough to attract tens of millions of mass-market consumers -- and net a healthy profit. Will Microsoft be the first? Perhaps -- if it can rise to the challenge of managing a round-the-clock information and entertainment service and keeping its customers happy. That's a tall order -- even for Microsoft. So before the government decides to break up Microsoft's impending monopoly of the online world, the regulators need to understand that, in cyberspace, size is not necessarily strength and the companies on top today won't be around tomorrow unless they're savvy enough to keep giving online users what they want. Just a few years ago, the GEnie service was No. 3 with over 400,000 members, right behind CompuServe and Prodigy. But, despite a loyal following and the backing of General Electric, GEnie failed to change with the times and has dwindled to fewer than 100,000 users today. Personally, I'd rather leave the fate of the Microsoft Network in the hands of the online users -- believe me, they're a tough crowd. --- Rosalind makes a compelling argument and if the potential market for online services consisted only of early adopters, I'd agree with her. The biggest potential market remains untapped -- those folks who have never used an online or Internet service and those who don't yet own computers. For that untapped segment, distribution might be critical. NewsWorthy Notes/Sites to See ============================= AMERICA ONLINE signed a letter of intent with SurfWatch Software to develop expanded parental control tools for America Online. America Online wants to increase its parental control capabilities in general, but specifically with regard to newsgroups and the Web. No financial details were disclosed. -- HIGH SPEED CONNECTIONS: If you're in Elmira, New York you have an opportunity I'm jealous of -- high speed access to services via one of Time Warner's Paragon Cable system. Only 500 lucky homes (plus some schools, libraries and government offices) get to participate in the market test. A base "online" service which includes the Elmira Star Gazette and PATHFINDER, news, weather, sports, shopping and e-mail will be available for $14.95 a month. Access to existing services (AOL, CompuServe, etc.) will also be available. High speed access to the Internet is available for an additional $9.95/mo. The base fee includes the modem rental. In spite of earlier comments on Pathfinder, I think everyone knows that I'd ante up the $25/mo. for the full package. -- CompuServe Selected Martin/Williams as their advertising agency effective August 1. This follows AOL's recent announcement that they'd chosen Chiat/Day to handle corporate branding. Let the media blitz begin, -- AOL SUED - Palo Alto Attorney Stephen Hagen has filed a class action suit on behalf of AOL's 3 million members. The main complaint is AOL's billing mechanism. AOL charges in one minute increments. If you are on one minute and one second, your billed for 2 minutes. It used to be like this with phone companies too. They've gone to six second increments as a standard. AOL should look at the six second approach since so much of their revenue comes from the $9.95 fee. But I don't know if billing in one minute increments is "illegal". It was common for a long time. I'm going to find out how CompuServe and Prodigy handle this... Stock Watch =========== This Last 52 52 Week's Week's Week Week Company Ticker Close Close High Low ------- ------ ------ ------ ------- ------- America Online AMER $48.38 $53.50 $54.63 $13.75 Apple AAPL $43.75 $48.75 $50.94 $30.63 AT&T T $53.63 $53.88 $55.88 $47.25 Bolt,Beranek & Newman BBN $34.63 $35.25 $35.50 $10.00 General Elec. GE $59.88 $60.00 $60.13 $45.38 H&R Block HRB $37.88 $40.00 $47.63 $33.00 IBM IBM $103.63 $103.88 $108.33 $54.50 MCI MCIC $21.63 $22.06 $25.88 $17.25 Mecklermedia Corp. MECK $31.50 $36.50 $38.25 $ 4.25 Microsoft MSFT $92.00 $103.63 $110.25 $61.34 Netcom NETC $32.75 $38.13 $39.50 $16.75 News Corp. NWS $24.25 $24.25 $24.75 $14.38 Performance Syst. Intl PSIX $19.75 $25.25 $25.50 $12.00 Sears S $33.50 $34.00 $34.63 $26.50 Spyglass Inc. SPYG $39.50 $38.88 $44.00 $26.50 UUNET Technologies UUNT $40.63 $49.00 $51.75 $21.75 See you next week. Subscribing and Unsubscribing ============================= To subscribe to this newsletter by e-mail: Send an e-mail message to: LISTSERV@CLARK.NET In the BODY of the message type: SUBSCRIBE ONLINE-L FIRSTNAME LASTNAME Example: Subscribe Online-L Robert Seidman If you wish to remove yourself from the list please DO NOT reply to this message -- send an e-mail message to: LISTSERV@CLARK.NET with the text SIGNOFF ONLINE-L in the body of the message. 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