Microsoft earns a mixed report card for its year-old Live initiative

A year ago this week, Microsoft Chief Software Architect Ray Ozzie shot the first salvo in Microsoft’s latest campaign to secure its place in the services world. Entitled “The Internet Services Disruption,” the October 28, 2005, memo from Ozzie to the top Microsoft brass outlined some of Ozzie’s ideas for what – three days later -- became known as Microsoft’s Live platform.

How has Microsoft fared, in terms of living up to the Live goals it set for itself? I’d give the company an A- for delivery, but a D- for presentation. Microsoft is actually making some real headway in the way it is developing and distributing services, but almost no one knows it, thanks to the abysmal job the company has done in defining Live and updating the various Microsoft constituencies on its progress.

"Live" is Microsoft shorthand for services. Windows Live is not, as many still assume, a new, hosted version of Windows; it is the set of services extensions to Windows. The same is true of Office Live. (Confusingly, however, CRM Live is a hosted version of Microsoft CRM.)

In his missive last October, Ozzie painted an ambitious, company-wide services strategy for Microsoft. At the heart of his plan designed to insure that Microsoft would avoid being left behind as Google, Yahoo, Salesforce.com and a variety of startups rocketed to the top of the tech food chain was the concept of ad-supported services and software.

“Most challenging and promising to our business, though, is that a new business model has emerged in the form of advertising-supported services and software. This model has the potential to fundamentally impact how we and other developers build, deliver, and monetize innovations,” Ozzie wrote.

Since last fall, Microsoft has launched a raft of new properties under the Live banner. In addition to nearly two-dozen services branded as “Windows Live,” there’s also Office Live, the final version 1.0 of which is set to be delivered any day now; CRM Live, a hosted version of Microsoft’s CRM 4.0 platform due by mid-2007; the still-unannounced Visual Studio Live (code-named “Tuscany”). Microsoft has begun laying the foundation for a Windows Live developer platform.

But there’s also been mass confusion among company watchers, Microsoft partners and Microsoft customers about exactly what Live is and how Microsoft’s Live strategy hangs together.

Microsoft officials declined several requests for interviews to discuss the company’s first year progress on Live -- the initiative which Microsoft CEO Steve Ballmer recently pegged as Microsoft's number one priority.

Fortunately, Live watchers outside the company are not so reticent to grade the company.

“I think the branding of Live has been confusing,” said Directions on Microsoft analyst Matt Rosoff. “It seems like end-users who don't particularly follow Microsoft have never heard of Live or confuse it with the next version of Windows, and customers, partners, and advertisers often express puzzlement over the difference between Windows Live, Live (e.g., Live Search), and MSN. The developer strategy for Live still hasn't seemed to gel very well, either.”

Microsoft has used ‘Live’ to mean several different things, Rosoff added. “We (Directions on Microsoft) view Windows Live as Microsoft's latest consumer online strategy, essentially the latest chapter in the long story of MSN. But sometimes the Live brand is also used to describe broader concepts, such as software being delivered as a service or subscription-based models for buying software. I don't think the brand has been as misused as .Net was a few years back, but it's still fairly indistinct.”

Brandon LeBlanc, one of Microsoft’s newly-minted Windows Live Most Valuable Professionals (MVPs), agreed that Microsoft hasn’t done well in telling its Live story.

“I think Microsoft is still finding their footing with Windows Live,” said LeBlanc. “Microsoft internally has a good set of goals to strive for in terms of Windows Live. It’s essentially getting all these online services (desktop or web) to work together - part of Microsoft's unified communications goal they are trying to attain.

"I think all that is clear but what I disagree with is Microsoft's ongoing silence about Windows Live, its definition, its goals etc.,” LeBlanc continued. “I think this problem lies with the guys in the higher ranks on top of what seems to be endless shifting of ‘re-orgs.’ I think it’s time to stop and have some of the bigwigs come out and talk about what Windows Live is, what is important, and how Microsoft is working to meet its goals for Windows Live.”

Sources close to the company say Microsoft doesn’t want to talk about Live for a variety of reasons. Most of the Live family of services remain in beta. (But since when does Microsoft refuse to talk about vaporware or unfinished products? Why the reticence now?) Not all of the Live properties have been as thoroughly beta-tested as Microsoft officials tend to like. (But hey, Google’s out there bragging about having the lowest ratio of testers to developers in the industry! What have you got to lose, Microsoft?) Microsoft doesn’t want to give its competitors a leg up, by offering too many details about its unfinished products and evolving strategies. (Again, since when has that stopped the Redmondians from attempting to freeze markets by talking about products when they are little more than drawing-board concepts?)

Microsoft’s Live track record is actually decent. Sure, there have been problems, like the disastrous August rollout of Windows Live Spaces, the company’s social-networking/blogging platform. (Many users were left unable to use the service for days following Microsoft’s ‘upgrade’ from MSN Spaces to Windows Live Spaces.)

But if you compare Ozzie’s vision memo to what the company has managed to deliver in the past year, Microsoft’s MSN and Platforms and Services teams have accomplished a lot. Microsoft now has a new ad platform (adCenter), a forthcoming Google AdSense competitor (ContentAds, due out in 2007); an improved search engine (Windows Live Search), and for the Web 2.0 faithful, a YouTube competitor (Soapbox on MSN Video).

Ozzie said Microsoft needed to experiment with “limited trial use, ad-monetized or free reduced-function use, subscription-based use, on-line activation, digital license management, automatic update, and other such concepts are now entering the vocabulary of any developer building products that wish to successfully utilize the web as a channel.” Check. That goal is well on the way to becoming reality.

Ditto with improvements in unified communications, another top Ozzie priority. Microsoft has been building presence into more and more of its products. And the company is pushing to make VOIP a key part of its current and future Live services.

There’s also been a positive change, in terms of the speed of service development and delivery.

“What has been good, and perhaps a marked change from what MSN had come to represent, is the rapid development of products based on user feedback,” said Chris Overd, one of the principals behind LiveSide.net, an independent Microsoft-Live-tracking site. “Whereas MSN Hotmail had been left to receive only a few minor releases each year, Windows Live Mail has experienced multiple major updates in the past 12 months, with a large proportion of the changes being directly based on user feedback.”

But “what has been disappointing to see is the poor communication to users regarding the change,” Overd continued. “Although there is a definition of what Windows Live represents hidden away on ideas.live.com, for users upgrading from MSN Hotmail, MSN Messenger, or MSN Spaces, the new branding is somewhat of a mystery.”

Another Live area where Microsoft has had less-than-stellar success is in achieving better service/server synergy – and integration/collaboration between the Windows and MSN teams in general. Ozzie said he wanted to lessen the “tension” between its enterprise and Internet products and product groups, citing as examples of pairings in need of improvement Exchange/Hotmail, Active Directory/Passport and MSN Messenger/Office Communicator. Not much progress there, from what I’ve seen.

Some of the company’s most interesting Live services are still under wraps. Still no sign of LiveDrive, SkyDrive and any other Microsoft Web-based storage service(s) in development. The rumored “Project Bronx,” the anticipated Office Live services for mobile devices, is still MIA.

“In year two with Windows Live, we (LiveSiders) are expecting a lot more integration between the existing services, and a more consistent experience across the board,” Overd said. “Although the number of new products shipped is likely to decrease, the level of innovation will still be high. Windows Live is a long term strategy for Microsoft, so it’s only going to get more interesting in the next 12 months.”

It should definitely be an interesting year two for Microsoft Live. Anyone have any wild predictions on what we might see from Microsoft on the Live front?