Microsoft Exec Sees Challenge In Pc Sales Making Computers More Affordable Considered Key To Industry’s Future

Having conquered the operating-system market among the one-third of American households that now own personal computers, Microsoft is asking itself: What about the ones that don’t?

Steve Ballmer, executive vice president for sales and support, said Wednesday that Microsoft’s challenge now is to “drive” PCs into the approximate 65 percent of U.S. households that don’t yet own one.

The key is affordability. Wal-Mart experimented with a $900 computer that sold well but probably lacked the power or features to satisfy buyers for long, Ballmer said.

To expand the market, the computer industry needs to develop a machine in that price range that still has enough power and features to satisfy its users.

For now, non-owners seem to be staying out of the market, he said, while those who already own a computer seem willing, even eager, to buy faster, more powerful machines as they become available.

Ballmer’s remarks came in a question-and-answer session with reporters and editors from several Puget Sound news organizations at the company’s Redmond, Wash., campus.

One reason computer buyers are seeking more power and features is to take advantage of the Internet, the enormously popular but still chaotic public computer network that offers virtually any kind of information.

Like many organizations, Microsoft is experimenting with new types of Internet content to find out what attracts people’s attention and what, if anything, they will pay to receive.

The company has recently redirected its new, proprietary online service, The Microsoft Network, and much of its software development to keep pace with the Internet’s surprising surge in popularity.

“The core issue is figuring out this business model,” Ballmer said.

In shifting its focus to the Internet, Microsoft has separated the issues of access and content. It gives away some content, charges for membership in the MSN “club” and, also for a fee, offers dial-up access to MSN and the Internet.

“At the end of the day, we probably have more of an asset in content than in our access network,” he said.

MSN is positioning itself as “the Internet online service,” said Bill Miller, its marketing director, with the goal of creating content that “gives people a reason to get on” the network.

It doesn’t aim to replace print or broadcast news media, but to offer compelling features unique to the PC such as news on demand (instead of on a broadcaster’s schedule), the depth of print media and the sound and video of radio and television, said Miller and Andy Beers, news director for MSN News.

Some features, such as high-quality video, will require more “bandwidth” or network connections that can handle data more rapidly.

But those connections are only a few years away, said Steve Guggenheimer, an executive in Microsoft’s Internet platform and tools division.

Connection speeds are spiraling upward, said Guggenheimer, noting that Microsoft’s goal now is to harness speed and computing power and “bring them together.”