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Microsoft's Hotspot Test Run

Microsoft Corp. (Nasdaq: MSFT) is making a late push into the WiFi hotspot market as part of its Windows Live initiative. The move is seen less as a threat to more established players such as Boingo Wireless Inc. , enterprise-focused aggregator iPass Inc. (Nasdaq: IPAS), and T-Mobile US Inc. , than a suggestion that Redmond could be eyeing Google (Nasdaq: GOOG)'s recent entry into this still-growing market. (See Mountain View Gets Free Access.)

Microsoft started sending the Windows Live WiFi Suite beta program invitations this week. The package includes hotspot discovery capabilities, an "intelligent connection" manager, VPN security, and hotspot locator software. The company touts the system as "a fast and easy way to find Hotspots without having to go to a Webpage."

Currently the code will run on Windows XP with an update for the new Vista operating system planned for next month. The package has not yet been tuned up to run on Windows Mobile or other handheld operating system, according to the beta invite.

Established WiFi hotspot players such as Boingo and iPass say they are viewing Microsoft's move as a positive one for the industry rather than a negative one for their businesses. Especially since both players handle tasks such as billing and authentication on the back-end that the Microsoft package doesn't touch.

"We've been working with Microsoft on this concept for three or four years -- it was originally supposed to ship with XP SP2," says Boingo spokesman Christian Gunning in an email reply to questions. "Its not a threat so much as it is an enabler for all operators/aggregators."

"Today, the in-venue experience for the end-user is still suboptimal for those not using smart clients to simplify the identification of, connection to, and authentication with, public hotspots," Gunning says. "Microsoft is effectively integrating some of that smart client capability into the OS, which would actually help Boingo get to 100 percent market penetration in smart client access to the network, as opposed to today where we rely on the user to download and install an 11MB software application."

"We have a relationship with Microsoft on multiple fronts," notes Rick Bilodeau, senior director of corporate marketing at enterprise-focused aggregator iPass. "They need the existing providers' [hotspot] databases in order to do their locator [software]."

Analyst Rob Enderle of the Enderle Group agrees that Redmond's WiFi moves don't signal a threat to the existing aggregators but could indicate Microsoft's interest in going after major rival Google, which is now making waves with its plans for ad-supported WiFi services in cities in the U.S.

"As Google starts moving into the free carrier space that could motivate Microsoft to do something," says Enderle. "They see Google as a Tier-one competitor."

The WiFi package is itself just one part of a major overhaul of Microsoft's presence on the Web with Windows Live offering updates like local search and new messaging and blogging capabilities. It is, according to Enderle, an attempt to give Redmond a more human face.

"This is to create a stronger direct relationship between Microsoft and its customer base," says Enderle. "It virtually never touched them before."

— Dan Jones, Site Editor, Unstrung

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