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Outage may hit Microsoft in the wallet

The software giant may face lost revenue after its Web sites were unreachable for hours.

Compiled from Times wires

© St. Petersburg Times, published January 26, 2001


SEATTLE -- A Microsoft technician's error jammed company computer systems responsible for directing online traffic, resulting in hours of problems for people trying to access some of the software giant's Web sites.

The consequences of the outages, however, could be farther reaching. Microsoft and its affiliates lost significant advertising revenue as a result of traffic being misdirected, and the software giant faces glaring evidence of a need to review its network infrastructure -- and potentially invest heavily to improve it.

"It's obviously a pretty simple formula for these portals: 98 percent or 97 percent of revenues is advertising," says Patrick Keane, a senior analyst of Jupiter Communications, referring to Microsoft portal MSN.com. "It definitely hurts, especially when you consider so many competitors that deliver arguably the same product they do."

The temporary predicament was caused by a foul-up with Microsoft's domain-name servers -- the computer hardware that matches Web surfers with particular addresses on the Internet, Microsoft said. Among the servers affected were the ones handling Microsoft's home page, meaning that customers had problems logging on to several Microsoft Web sites, including MSNBC.com and MSN.com.

Microsoft said the problem began after a technician reconfigured the network equipment that directs Internet traffic about 6:30 p.m. Tuesday. That caused many of Microsoft's sites to be unreachable Tuesday night and Wednesday.

The mistake was fixed at about 2 p.m. Wednesday.

"This was an operational error and not the result of any issue with Microsoft or third-party products nor the security of our networks," spokesman Adam Sohn said.

AdZone Interactive estimated that MSN.com received $33-million in ad revenues in November, while Microsoft affiliate Hotmail.com received $22.3-million. Microsoft's family of sites was the third most popular in December, with 53.8-million unique visitors, according to Media Metrix.

Other Microsoft sites, such as Expedia.com, HomeAdvisor.com and the Carpoint automobile buying service, likely took an even bigger financial hit than the MSN.com portal as a result of the outages. According to Keane, the ads on these sites target a more specific audience and consequently cost more. In addition, the outages mean that Expedia and Carpoint lost money on transactions that couldn't be conducted online.

- Information from the Associated Press and Scripps Howard News Service was used in this report.

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