The project, dubbed "MSN 2001" within the company, is aimed squarely at luring Web surfers away from AOL.
"We are going to leapfrog AOL," Mike Nichols, MSN's product manager, said Wednesday. "We think we have a product that is superior to AOL."
AOL, the nation's largest Internet service provider, has more than 23 million users. MSN has 3 million, despite having been in existence since 1995.
MSN is also targeting an estimated 14 million first-time Web users who are expected to sign up for Internet access over the next year. By emphasizing simplicity and ease of use, AOL has traditionally fared well with first-time users.
Microsoft, based in Redmond, Wash., hopes to mimic AOL's success by revamping its portal â€“ to be called MSN Explorer â€“ to make it friendlier for new users. Colorful, rounded icons will replace plain-text tabs, making MSN look more like a browser and less like a Web site.
The browser will contain more customized information, such as local weather reports and news. A multimedia player will let users listen to Internet radio or watch videos while surfing the Web. MSN's instant messaging will also let users make free long-distance calls over the Internet.
"It looks very good," said Bruce Kasrel, senior analyst at Forrester Research in Cambridge, Mass. "I'm impressed. But it's going to take more than a good browser to get people to switch" from AOL.
MSN hopes to one-up AOL by offering high-speed Internet access in major metropolitan areas starting this fall. The company is testing the high-speed service in Dallas. Most AOL customers rely on dial-up access, which is considerably slower.
Access to MSN will be provided via digital subscriber lines by a network of local providers contracted by MSN. Consumers in outlying areas with no access to DSL will have access through high-speed satellite service from Gilat Satellite Networks Ltd. Mr. Nichols declined to say how much MSN will charge for high-speed service.
Despite massive investments by Microsoft over the years, MSN has languished behind AOL. Part of the problem has been Microsoft's piecemeal approach to the Internet. MSN started five years ago as a proprietary service with no access to the Web.
The new MSN promises to put together offerings such as Hotmail, Expedia, MSNBC, Gaming Zone and Money Central and "make it much more easy and seamless for users," Mr. Nichols said.