The growing rivalry between AOL Time Warner and Microsoft is spawning a web of deals and alliances, which could mean good news for consumers
Published:
27 June 2001 y., Wednesday
Two titans are left standing in the wake of the dot-com collapse. There's AOL Time Warner (AOL ) spanning media, Internet access, and cable television. Equally formidable is Microsoft, cutting its impressive swath through the software world. Talks between the two recently broke down over how Microsoft's much-anticipated XP operating system would interact with AOL's Internet services. That has fueled much speculation over which company will emerge victorious in the battle for the loyalty of a new generation of Netizens.
While Microsoft and AOL compete directly in such areas as dial-up access, instant messaging, and interactive TV, there are many others where they don't. For instance, AOL doesn't have an operating system, and Microsoft isn't a media company. It's in these no-contact zones where the Cold War is most active. The furious dealmaking by AOL is all aimed at blunting Microsoft's steady move into the market. On Nov. 8, Gates & Co. will launch the new Xbox game system in a $500 million marketing blitz that is sure to cause damage. Microsoft is likewise making defensive alliances in areas of AOL strength, such as cable TV, though it plays down the notion that keeping AOL in check is of strategic importance.
Since 1997, Microsoft has invested $1 billion in Comcast (CMCS ) and $5 billion in AT&T (T ) to ensure that it keeps a big hand in the development of interactive TV.
Both giants are busy forming alliances to create new spheres of influence. And the propaganda is hot and heavy, too.
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