Microsoft Teams Up with TCI to Launch On-line Service

Strategic Insights -

Microsoft Corp. has taken U.S. cable-television giant Tele-Communications Inc. as a partner in its planned on-line service, the Microsoft Network. TCI will invest $125-million (U.S.) for a 20-per-cent stake in the on-line computer service, which will compete with established players such as Compuserve Inc., America Online Inc. and Prodigy Services Co. The partnership will enable Microsoft to tap into the tens of millions of cable-TV subscribers, expanding its market reach and distribution channels.

Key Takeaways:

  • Microsoft has partnered with Tele-Communications Inc. (TCI) to launch its on-line service, the Microsoft Network, with TCI investing $125-million (U.S.) for a 20-per-cent stake.
  • The partnership will allow Microsoft to access the tens of millions of cable-TV subscribers, expanding its distribution channels and market reach.
  • The Microsoft Network will compete with established on-line services such as Compuserve, America Online, and Prodigy, which have approximately 2 million, 1 million, and unknown subscribers, respectively.
  • TCI will bring its cable and communications division, international cable and programming business, and venture capital arm to the partnership, providing Microsoft with a range of expertise and resources.
  • Microsoft officials stated that the partnership will enable the company to expand its on-line service beyond telephone lines to cable-TV lines, providing a new platform for audio and video services.
  • The launch of the Microsoft Network will be delayed due to the announced delay in the release of Windows 95, with first access through telephone lines expected in 1996 and television sets and cable lines not until 1996.

Statistics:

  • TCI will invest $125-million (U.S.) for a 20-per-cent stake in the Microsoft Network.
  • Compuserve has approximately 2 million on-line subscribers.
  • America Online has approximately 1 million on-line subscribers.
  • The Microsoft Network will expand its distribution channels from telephone lines to cable-TV lines, providing a new market and platform for audio and video services.

Sources:

  • The Globe and Mail
  • Geoffrey Rowan
  • Microsoft Corp. (no date)