Compaq, Microsoft unveil MSN Companion

Plugging into the emerging web appliance market, Compaq and Microsoft have launched their second internet device designed for novice web users as part of the software giant's campaign to push its MSN service.

The Ipaq Home Internet Appliance IA-2 MSN Companion will initially be available from US retailers priced at $499, but the cost is slashed if customers sign up for MSN. The companies plan to launch the product worldwide, but no time frame has yet been determined.

US consumers will receive up to $500 off the total price if they subscribe to MSN for three years. The original IA-1 was priced at $599 without the MSN money back offer, or $199 with the offer.

The IA-2 features a 15-inch colour monitor, two built-in speakers, a keyboard, mouse and modem. Its predecessor had separate components and a flat-panel screen.

"These devices further demonstrate our commitment to making MSN available any time, any place," said Sarah Lefko, MSN product manager at Microsoft. "We just want to provide a wide range of choices."

The Compaq machines join another MSN Companion device which Microsoft developed with low-cost PC maker eMachines, which was launched earlier last month.

Compaq, Microsoft and eMachines are among a number of companies, including Dell and Gateway, which have recently turned to internet appliances as new sources of revenue. The firms are marketing the easy-to-use machines as an option for people who are uncomfortable using more complex PCs or who want a second device in the home.

According to researcher IDC, the entire appliance market, which includes handheld devices, set-top boxes, game consoles and web terminals, is expected to be worth $17.8bn by 2004. By that time, 89 million units will have been shipped worldwide.