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AT&T REVS UP ONLINE BUSINESS NEW UNIT'S MANDATE: BOOST IMAGINATION, PERSONALINK SERVICES

By Published on .

Telecommunications giant AT&T, already a primary supplier of networking tools and hardware for interactive TV, is staking a claim in consumer online services.

AT&T last month acquired ImagiNation Network, a small games and entertainment service. The company also is developing its own wireless service, PersonaLink, and has been rumored as a bidder for Ziff-Davis Publishing Co.'s Interchange online service.

The egg from which these efforts are hatching is AT&T's three-week-old Consumer Interactive Services unit, led by President Gordon Bridge, 52, a six-year AT&T veteran and former IBM Corp. executive. His goal is to turn AT&T's high-tech doings into household words.

"The number of homes with PCs is growing rapidly, and the big function everyone wants is entertainment. That, plus the future of wireless communications, is what we're basing our consumer interactive plans upon," Mr. Bridge said.

The unit's first big move was the acquisition of the unprofitable ImagiNation Network, based in Burlingame, Calif.

AT&T had owned 20% of ImagiNation; it bought out investors Sierra On-Line and General Atlantic Partners for $40 million.

ImagiNation allows users to play computer games and chat with one another via modem.

AT&T's consumer interactive unit is also overseeing the rollout of AT&T PersonaLink Services, a wireless communications network that AT&T envisions will become "an electronic community where people will meet, shop, work and play." By March, PersonaLink will offer an online shopping mall featuring merchandise from Tower Records, Lands' End, 800-FLOWERS and others.

There are no plans yet to link the two services, but AT&T hopes to mass-market them to its millions of consumer and business customers.

"We're very early in the planning stages and we can't foresee all the ways we'll market these services yet, but there is tremendous potential to tap our many synergies," said Mr. Bridge, formerly president of AT&T EasyLink, an electronic business information service.

So far, AT&T has only dabbled with consumer services on the Internet, unlike competitor MCI Communications Corp., whose internetMCI service made a big splash last month.

"I think there's an awful lot of money being bet on the Internet and I don't know if all those bets are well placed. No one is sure where these things will lead," Mr. Bridge said of other companies' efforts.

"AT&T is taking a somewhat conservative but smart approach to the interactive area, spending money where they're fairly sure it will pay off," said Craig W. Ellis, a telecommunications analyst with Wheat First Butcher & Singer, Richmond, Va.

The biggest hurdle AT&T faces is getting ImagiNation Network up to speed in the fast-evolving computer online industry.

The service lost $10 million in its last two fiscal years and is now facing new competition from several upstart online gaming operations. Among them: Catapult Entertainment's Xband Video Game Network that launched Nov. 17, allowing owners of Sega Genesis videogame systems to play against each other via modem.

Nevertheless, Mr. Bridge said ImagiNation Network will become "the cornerstone" of AT&T's new interactive offerings for consumers.

AT&T already is pouring new market research into the network, with the goal of turning the 45,000-subscriber service used mostly by male computer hobbyists into a broadly marketed computer entertainment service for people of all ages and both genders, Mr. Bridge said.

ImagiNation next year will add Internet e-mail capabilities, but Mr. Bridge insists the service isn't trying to compete with CompuServe, America Online and Prodigy.

"I'm sure some users of the big, popular services will find their way to our service if it represents their primary interests, but we're not positioning ImagiNation Network as a fully developed online service," he said.

PersonaLink, AT&T's other new consumer multimedia service, is designed to offer an easy-to-use mobile network for business and consumer users of personal digital communications devices.

Now compatible only with Sony Corp.'s new Magic Link PCS device, which sells for about $900, PersonaLink is designed to work with the next-generation PCS devices arriving early next year, including Motorola's hotly anticipated Envoy device.

PersonaLink subscribers pay $9.95 per month for electronic communications services, including the ability to send and receive messages, faxes, paging and a daily news service.

Targeting mobile business users and travelers initially, Mr. Bridge said PersonaLink will eventually expand to include consumer customers as the market for PCS expands.

"A wireless device that acts as your phone, your computer and your communicator is what everyone will be using in the future," he said.

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