AT&T has talked to Microsoft about buying all or part of Microsoft's MSN Internet access business and the MSN Web portal to bolster the AT&T WorldNet service, according to a USA Today article published on Friday.
Microsoft, in turn, would get AT&T to use and to back the Windows NT operating system, according to the USA Today article, which is based on information from anonymous sources.
By adding the subscribers of Microsoft's Internet access business to its own WorldNet Internet access service, AT&T could increase the attractiveness of the MSN portal to content providers, an analyst said. Building on that momentum, AT&T could then create a tight community formed by all these subscribers to deliver business opportunities to its partners, said Tim Sloane, an analyst at Aberdeen Group in Boston.
"It's the same reason why AOL (America Online) found (Netscape Communications') Netcenter attractive," Sloane said, referring to Netscape's portal site.
An effective Web portal draws consumers in with content that they find valuable and that gives them a sense of community, he said. In turn, the portal gives businesses opportunities to sell their products and services in an integrated fashion, by providing things like security certificates and single billing, Sloane added.
If AT&T were to follow this strategy, then "it becomes clear the Netcenter model will drive the market for the next few years to come," Sloane said.
Microsoft, in turn, could get rid of an operation that so far hasn't been making money, Sloane added.
A Microsoft official who declined to comment on the USA Today story said the company plans to spend about $US100 million this year to market its MSN business.
"We're totally committed to MSN and to our Internet access business," said Marty Taucher, director of network communications for MSN, adding that the MSN business unit is expected to be profitable for the first time this year since its creation in 1995.
Taucher declined to say how many people subscribe to Microsoft's Internet access service, but USA Today put that number at 2 million people and said acquiring those subscribers AT&T would double the number of WorldNet subscribers.
AT&T declined to comment.