MSN launches AOL defection tool

In Microsoft's ongoing efforts to unseat America Online Inc. as the 300-pound gorilla of online service providers, its MSN Internet Access division is rolling out an AOL defection tool on Tuesday.

With MSN's Switching Tool, it takes three steps to migrate an AOL customer's address book, calendar, and archived e-mail over to MSN. As part of the deal, Microsoft will cancel your AOL account and for 30 days will refer to your new address any e-mail sent to your AOL address.

MSN began its campaign to woo AOL users a year ago by introducing MSN Explorer, a simple browser with hooks to the MSN portal, along with a US$50 million marketing campaign. Since then, just under 2 million AOL members have defected to MSN Internet Access, MSN representatives claim. Microsoft plans to spend an additional $10 million to continue the conversion campaign for another year.

Switching tool offered

"MSN is targeting AOL because that's where all the subscribers are," says Dylan Brooks, a senior analyst with Jupiter Media Metrix. AOL users are the least likely to change ISPs (Internet service provider)--partly because AOL doesn't make it easy to switch. Brooks notes the irony: MSN's cancellation process isn't getting easier, while it makes AOL's process "hassle free." He says the dirty little secret ISPs share is that none wants to make it easy to cancel service.

Migration is handled via a three-step Switching Tool from TrueSwitch, a Microsoft partner. TrueSwitch hosts the tool, which guides customers through a Web-based questionnaire coupled with a Microsoft Active-X control to migrate former AOL account data.

TrueSwitch locates AOL data on a user's PC and moves it to MSN's Web portal for Web-based access. TrueSwitch also will notify AOL Billing by e-mail or fax when AOL customers terminate their accounts. The switching tool is the next generation of its existing migration option, which helped AOL users "walk through" the process.

MSN charges $21.95 a month for unlimited dial-up access, and between $39.95 and $49.95 for high-speed Internet access. AOL charges $23.90 a month for its dial-up Internet access.

MSN makes headway

As the number two ISP, MSN shows signs of gaining on AOL. MSN says its membership has grown by 4 million over past year to 8 million. Meanwhile, AOL reports a membership of 34 million, with new customers signing on at a slowing pace. Number three provider Earthlink has 4.5 million subscribers, according to Jupiter Media Metrix.

Both MSN and AOL have paid dearly for market share in their bitter war for the loyalty of average online consumers.

AOL reports 6.5 million new members signed on with it over the past year, thanks to promotions and free trials. Morgan Stanley analysts estimate the percentage of nonpaying AOL subscribers jumped to 15 percent in 2002 from 7 percent in 2001.

Microsoft has spent heavily to acquire new members and is showing signs of belt tightening. Last year, it discontinued a $400 rebate program after conceding it cost too much to operate. A current MSN promotion offers new subscribers $50 "cash back" after they pay the bill for three months.

MSN is also offering new broadband customers free activation and a free installation kit, including a DSL (Digital Subscriber Line) modem, when they sign up for a year of service.

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