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One day before Microsoft is set to release the latest version of its MSN Internet access software, rival America Online said Wednesday that its new 8.0 software has set download records since it launched last week, setting the stage for an all-out battle between the two Internet service providers.

AOL claims that AOL 8.0 has been downloaded over 5 million times since the software launched October 15, surpassing the record set by AOL 7.0 last year, which was downloaded 2.5 million times in the first five days. That the Dulles, Virginia, ISP's announcement comes one day before Microsoft prepares to launch MSN 8 is of little surprise, however, given the mounting competition between the two companies.

A day before AOL unveiled its 8.0 software, Microsoft announced that it was launching a $300 million marketing campaign for MSN 8, doubling the amount of money it spent on the previous version of its software. The ISPs' game of publicity one-upmanship underscores both their needs to succeed in the market.

Ready for the Challenge?

AOL, the current market leader with over 35 million members, is faced with numerous challenges, not the least of which is to prove itself financially fit in the face of increasing scrutiny from both investors and its parent company AOL Time Warner.

In fact, when AOLTW reports its third-quarter results after the bell Wednesday, all eyes will be on AOL, which is expected to make or break the company's ability to live up to financial forecasts for the period.

Meanwhile, Microsoft is sparing no expense in its effort to gain ground in the ISP market, where it is currently in second place with 9 million users. And the Redmond, Washington, software giant's seemingly bottomless coffers will no doubt play in its favor.

MSN 8 is due to be launched in New York City's Central Park Thursday, in a lavish affair featuring Bill Gates and rocker Lenny Kravitz. Meanwhile, AOL is gearing up for its retail distribution and direct marketing campaigns, increasing the presence of the already ubiquitous AOL CDs.

Where these efforts will take the companies is ultimately up to the users, however, whose satisfaction will be measured not in days, but over the next several months when the new subscriptions reports roll in.

Shares of AOLTW sunk 3.04 percent in early trading Wednesday to $13.09, while shares of Microsoft also slipped, trading down 0.27 percent to $51.53.

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