AOL-MSN hype war starts

A suspicious absence of two-way satellite, m'lud...

By a bizarre coincidence Microsoft mounted a "$1 billion" marketing campaign for the new MSN yesterday, while AOL retaliated with the launch of AOL 6.0. Microsoft will be blitzing the US retail channel with free MSN CDs, while AOL will be giving away CDs in about 50 retail chains.

AOL gazumped the MSN announcement by claiming 25 million users worldwide the day before, thus emphasising that MSN is the challenger, with just 3.5 million. But all is not quite as the spinmeisters would have you believe; the Microsoft $1 billion is not quite what you'd think of as $1 billion, and both companies' announcements seem not to mention the satellite broadband services they'd each promised for Q4.

As with the $500 million promo campaign for Xbox, the Microsoft billion includes a large quantity of marketing spin. Xbox, incidentally, has also figured in the coincidences department this week - you can't have helped noticing that members of the press appear to have been granted interview rights with various Xbox luminaries who told them nothing new about next year's model. But it's helpful spin against Playstation 2, which is really rolling out.

MSN actually has a global marketing budget of $150 million for the new MSN, the billion being what total spend on the service will be over the next year. There's plenty of scope for fuzz in there, but at least some of it will consist of retail partnerships (deals with retail outlets where virtual money moves back and forth), cross promotions (ditto) and rebates (which are intended to be clawed back from consumers via fixed-term contracts). Most of this "spend," we can assume, will actually be in the US, where MSN has been forging its retail partnerships most diligently.

At the moment MSN seems to be largely silent on the broadband satellite service it's supposed to be rolling out this year in conjunction with Gilat. Gilat itself reiterated its intention to launch the StarBand two-way high speed satellite service in the US this quarter, when it announced its IPO earlier this month. Earlier this year Hughes Network Systems (HNS) filed suit against Gilat claiming patent infringement.

And here comes another one of those coincidences. HNS and AOL actually did announce a broadband satellite service this week, but AOL seems to have been too busy with AOL 6, AOL by phone and whatever to get around to mentioning it yet. But a joint release is available from HNS, if not from AOL.

AOL Plus Powered by DirecPC "creates new online possibilities for all of AOL's 25 million members," which is puzzling, considering it's priced in dollars and "is available at Circuit City and independent satellite dealers nationwide." DirecPC is available elsewhere in the world, but it's not at all obvious that the AOL-branded version is. Search AOL for satellite and you get redirected to the Direcpc site, where it becomes apparent that it isn't. A further diligent search of the FAQ reveals that DirecPC and AOL Plus Powered by etc are separate services with separate software, running off different satellites.

Something else that may or may not be available is two-way satellite broadband, as promised by HNS for Q4 this year. As the company said in April: "The two-way product and service will also offer new capabilities to support the announced AOL Plus Powered by DirecPC service." The actual announcement this week is however of a 'broadband one way, modem the other' service. It'll consist of a satellite dish and a USB modem, priced at $149. Oh, and it's only available for Windows right now.

So two way broadband delayed by both parties? You wouldn't know it from the marketing hoopla... ®

Related stories:
Writs in space: Hughes lawsuit spanners broadband MSN
N's next big heave -- broadband access from space
HNS AOL Plus FAQ

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