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October 30, 2000

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Subject:  The new MSN Browser
Author:  GoofyHoofy

Hi there. As the pop-up window from the Fool just told me (as if I didn't know), this is my first post on the Yahoo! board. As the red star next to my name indicates, however, it's far from my first on the Fool. I hope you don't think this is a troll post; I assure you it's not. I have some concerns about the new business plan from MSN, which I think has a chance to affect both AOL (on which board I am a regular) and Yahoo! (on which, obviously, I am not.)

I am also surprised that there is almost no discussion of Microsoft's new strategy on either board, which surprises me, and makes me think that either I am overly concerned or that it simply hasn't been thought through, and that is why I am here. (Note: if you don't like long posts, now would be a good time to hit the "next" button.)

My early take is that the new MSN game plan poses a threat to both AOL and Yahoo!, and perhaps marginally more to Yahoo!

Let me explain:

The new MSN browser comes with persistent buttons for ease of access to desirable features: e-mail, IM, calendar, weather, stock quotes, browsing, free phone, and so on. This sounds very much like a replication of the AOL experience ("for dummies" or "training wheels" depending on your level of snobbery). But "ease of use" is also the hallmark of Yahoo, and I'll use it as proxy to encompass its other virtues: faster loading, brand awareness, depth of offerings, and so on.

I have been one to snicker at Disney's attempts to aggregate disparate Websites into one portal (Go.com) and NBC's (NBC) and so on, because they lacked the fundamental driver to encourage (read: force) users to return time after time, to build loyalty, to create that depth of repeat experience which the truly successful companies have managed.

Now I'm not so sure. Microsoft clearly has the ability to put this software in front of tens-of-millions of users, and to weave together their offerings in a way that is convenient and compelling, and to "encourage" those users to go first to their own proprietary offerings, even while still allowing access to those of others.

The reason I think it may be slightly more threatening to YHOO is that Yahoo! relies entirely on the voluntary travel of its users to its site. It is a marvelous thing that they have been so successful at it (and my everlasting disappointment that I was not an investor in it.)

AOL, by contrast, still offers the closed capture of its client, and that is why most of its users spend upwards of 80% of their time within the walled garden, as opposed to "out on the net." I wouldn't say either is better, only that they are different, and both quite successful.

Don't get me wrong. YHOO and AOL are by far the strongest brands on the net, and I am certainly not positing that they are likely to fade away anytime soon; habits die hard, to be sure. But putting the MSN IM at one click, and the software already embedded in the browser is surely a simpler candidate for use than one which requires a separate software module and configuration. Likewise for music and video downloads. Perhaps likewise for calendars, address books, and so on.

That the MSN sites for its various enterprises are all over the place and separately titled (tickets, maps, travel, stocks) becomes almost irrelevant if they are all accessible from a persistent on-screen menu on the browser, as opposed to various bookmarks at distant or unknown places on the net (to the casual user.)

Over time (and I have no idea how much time) it seems that MSN will be able to siphon traffic to their services, and while the stickiness of re-entering a stock portfolio or setting up a buddy list will slow the process, I think the inexorable truth is that it could migrate users to the MSN sites, with no countervailing competitive advantage to other portals such as Yahoo, Lycos, Excite, etc. to haul them back.

To those familiar with Microsoft's tactics, having a bunch of free Websites sounds very much like "embrace." Aggregating them through a browser which encourages traffic to flow to themself as opposed to others makes me think "extend." We all know what the third "e" is. Hyperbole? Probably. Irrelevant? I don't think so.

To be clear, I don't believe this is a 6-month, or a 1-year or even a 2-year concern. But over a 5-year time frame (which Microsoft has the luxury of) I think it could be significant.

I have always been an admirer of Yahoo's light business model, of the power of their brand, and of their execution in a fast changing landscape. I have been a believer in AOL's focus on the "normal" user rather than the techheads, in spite of the derision that has brought them from the cognoscente.

I have laughed at Disney's attempts, Gates' multiple relaunches and table thumping threats, and of the myriad others who have so widely missed the mark in attracting the online users' time and attention.

I'm not laughing at this one. Are you?
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By way of disclosure, I will note that I have not used, nor even seen the new browser, I am reacting based only on press accounts of it from multiple industry and consumer sources. (In fact, I am unlikely to see it anytime soon, as I live in a Mac environment.)

So maybe it's not all it's cracked up to be. Maybe the browser will be so heavy, and so feature laden as to be leaden, as I find much of their software.

But I am concerned that their change in strategy, away from "paying subscribers" and to "ease-of-use" portal, abetted by a software upgrade which they have a demonstrated ability to get into the market, could have a significant effect in the online world. And I am curious what the folks who know Yahoo! far better than I might think of this potential shift.
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