AOL Muscles In On MSN's Former Desktop Stronghold

Just weeks after Microsoft ceded its turf on users' desktops, America Online is angling to move in—striking marketing deals with major PC manufacturers.

by Christopher Saunders of internetnews.com [July 30, 2001]

America Online unit is aiming to strike marketing agreements with PC manufacturers, and sources say Compaq Computer Corp., the world's second-largest desktop computer maker, is among them.

What AOL Time Warner is looking to do is get America Online software on the desktops of PCs manufactured by Houston-based Compaq. In the online marketing world, that's considered prime placement for Internet services and products, especially since a Windows desktop is the first thing that new users see.

Additionally, icons placed there by a PC manufacturer remain on the Windows desktop until a user deletes it—an action which newbies rarely do.

Sweet deal
As part of its licensing agreement, Microsoft previously required computer manufacturers to place links to its own MSN on the desktop, but earlier this month relaxed the rules, allowing PC OEMs to put whatever icons they wanted on the desktop—including those of MSN competitors.

That move apparently came as a gesture of goodwill from the Redmond, Wash. software giant, following a ruling by a D.C. federal appeals court that upheld criticism of monopolistic practices in Microsoft's Windows licensing agreement.

As a result, Microsoft's decision opened the doors for America Online to start negotiations with Compaq, according to a source close to the PC maker.

Terms of the proposed agreement were not disclosed, although America Online parent AOL Time Warner has lately been shelling out ad space across its on- and offline properties in return for services, technology and cross-marketing deals.

AOL spokesperson Kathy McKiernan said the company "never comments on negotiations until they're announced."

However, McKiernan did confirm that the company is actively pursuing partnerships with OEMs, in which it would pay them for "promotional rights ... which until now Microsoft had taken for free."

"It's an opportunity to market our services to consumers, to give consumer more choice, and it's about competition—and consumers benefit from competition," she said. "Until today, they've suffered from Microsoft preventing competition on the desktop."

Spokespeople from MSN and Compaq did not care to comment at this time.

—End