By Therese Poletti
NEW YORK - Microsoft's deal with NBC for a 24-hour cable news channel and an interactive news service on the Internet is a major boost to its fledgling Internet strategy, analysts said.
Analysts also said that Microsoft's partnering with NBC is an astute and logical one as it prepares for the future where consumers may be able to use high speed cable modems in PCs in their homes to access the Internet or online services.
"It gives them a major footing," said Scott Winkler, an analyst with the Gartner Group in Stamford, Conn.
Winkler also pointed out that Microsoft will likely exploit all its Internet products through the deal.
Turner Broadcasting Systems' CNN, the first 24-hour all news cable channel, has a popular site on the Internet called CNN Interactive, where viewers can send e-mail and discuss news.
Both formats are cross-marketed, with CNN's Web site mentioned on the cable television channel and visa versa.
"You can look for stuff to be uniquely exploitative of Microsoft technologies," said Winkler. "Having some major content will help them, give them some major momentum."
Microsoft has been behind in embracing the Internet.
But analysts also point out that Microsoft sometimes has a pattern of observing a new market for a time and then jumping in, and to eventually become a major dominant player, as it did in the desktop applications business, with its Word word processor and Excel spreadsheet software.
The Microsoft Network, which was unveiled August 24 with the launch of its Windows 95 operating system, was behind the three major online services, America Online, CompuServe and Prodigy Services.
Microsoft has re-positioned the MSN as a site on the Internet, as the Internet has exploded. Some in the industry believe the Internet may eventually eclipse commercial online services.
So online services are moving to provide better access. "It's a good catch up move for Microsoft," said Rod Kuckro, editor of the Information and Interactive Services Report, a newsletter in Washington.
In the past year, there has been a flurry of deals between online service providers and cable companies, who are performing trials of their service over high speed cable modems, which transmit data almost 100 times faster than a typical 14.4 modem, which transmits 14,400 bits per second.
CompuServe was the first online service to participate in cable modem trials and it is involved in Time-Warner's trials in Elmira, N.Y.
America Online is also in the Elmira trial. Prodigy began a test of cable modems with Cox Cable in 1993 in San Diego, Calif.
"If you can get it to work, it's an enormous leap in speed," said Richard Christner, a vice president of Mercer Management Consulting in Washington. "The bandwidth that cable modems provide can really make online services a mass market. It's still going to take them time to deploy these things. Now it's a good time to start if you are Microsoft."