MSN, AOL Rally, Rage as Second "8.0" Launches

The battle between AOL Time Warner’s America Online and Microsoft’s MSN is shaping up to fit in perfectly with the times — having all the earmarks of your typical election-year mudslinging.

Expect to see plenty of punches thrown at AOL during Thursday’s unveiling of MSN 8.0. Microsoft erected an 11,000 sq. ft. dome in Manhattan’s Central Park, under which executives and well-wishers will expound on new features available only with its service.

It will also be a rally of sorts for Redmond, Wash.-based MSN’s executives, vendors and advertisers, hundreds of whom are expected to be in attendance.

The spectacle, which culminates in a live performance by rocker Lenny Kravitz, will continue the weeks of sparring between the two Internet services that has reached a pitch — and a brazenness — typically reserved for stumping politicos.

Last week, Microsoft unleashed packs of “butterfly bladers” — dressed like its portal’s logo, and sporting Roller Blades, purple suits, butterfly wings and placards touting pro-MSN slogans — who roamed nosily through the streets of Manhattan to herald the coming of MSN 8.0.

A number of the bladers found their way to the plaza at New York’s Lincoln Center. Inside, AOL execs happened to be unveiling version 8.0 of their service — and trading barbs of their own at Microsoft and its chiefs.

Within each of the companies, the posturing continues as well. America Online has “AOL Running Man” to help keep its staffers’ spirits up as the marketing battle between the two companies rages around their competing releases of version 8.0.

“Running Man” (also known as “Did You Know” man) is an animation making the rounds of the company’s headquarters in Dulles, Va. The clip shows a giant-sized Instant Messenger icon gleefully squashing a little MSN butterfly.

Although an AOL spokesperson said the company is staying focused on getting the word out about its recent launch, there’s a not-so-subtle indication that management tacitly approves of such signs of partisanship. Indeed, the AIM icon is sparking a number of similar displays circulating the halls of America Online.

That’s in addition to dueling press releases, such as the one issued by Microsoft on Wednesday morning which indicated a recent study found that users preferred MSN to AOL by a margin of three to one. Most of the participants in the study — which was funded by Microsoft — said MSN’s ease of use proved the deciding factor.

The usability study is an old campaign tactic for Microsoft. As far back as 1997, Redmond was commissioning Usability Sciences (the same firm responsible for Wednesday’s findings) studies that found Internet Explorer 3.0 was preferred to Netscape’s (now AOL’s) Navigator.

On the same day meanwhile, another AOL press release about 8.0 came out since the launch, this time touting big download numbers.

“Only two weeks after it became available, AOL 8.0 has been downloaded more than 5 million times, surpassing last year’s AOL 7.0 record, and has been used by more than 8 million AOL Screen Names,” the company said.

“The record-breaking launch builds on AOL’s unmatched focus on consumers’ online experience, and the company’s legacy of using extensive consumer research and member feedback to develop new features and services.”

America Online didn’t say whether that 5 million figure included versions of 8.0 that it quietly rolled out through “AOL Keyword: Upgrade,” in weeks prior to the official launch.

Even the timing of MSN 8.0 debut Thursday appears anything but unintentional, coinciding with AOL Time Warner’s release of third quarter results — including the expected update on revenue woes at its America Online division.

Because AOL Time Warner released its results late in the afternoon Wednesday, news outlets are likely to carry the story of AOL’s advertising and commerce headaches — including a restatement of prior earnings — on the same day that MSN’s splashy launch is making headlines.

“It is an interesting coincidence,” chuckled MSN Product Manager Parul Shah, when asked about the timing of the launch. “Maybe (AOL) will hope that MSN will be in the news so much that day that they won’t have to worry as much” about their earnings problems, she said. “We’re here to serve.”

Shah’s comments illustrate the spirit behind the thrusts and parries playing out between the two companies, in jabs in the media, in advertisements and dueling press releases.

It won’t stop anytime soon, either. America Online is getting ready to unveil more product press releases around the arrival of AOL 8.0 as well. It includes information about how subscribers can further personalize and customize their AOL interface using unique themes.

It also plans new e-commerce announcements in the coming weeks, according to people familiar with the plans, and announcements about its “Did You Know” character (supposedly nothing like the Microsoft Office “Clippy” character mercifully retired last year). The animation tool is embedded within some of AOL’s Rainman Web pages, and pops up to help guide members through new features and services.

Microsoft, similarly, plans to use its present ad campaign, “Better with the Butterfly,” as a longer-term promotional springboard, retaining the TV spots’ live-action butterfly mascot beyond the present slate of ads, to highlight upcoming features of its service.

The company also plans to take its message on the road with a two-month, seven-city “Dome Tour,” during which it will show off MSN 8.0 features under its massive, butterfly-branded portable shelter.

There, the company also is likely to reuse another tried-and-true marketing ploy — its Pepsi-challenge-inspired “Dare to Compare” effort, which, like the Usability Sciences studies, first appeared during the late 90’s Browser Wars.