MSN Finds Focus - Finally

The Microsoft Network is getting focused - again. Hoping that four times is the charm, The Microsoft Network this week will take the wraps off its fourth strategic vision in four years at a daylong event that insiders said will see the online service - for the first time - positioned as a linchpin in Microsoft's strategy of selling Windows-based technology and extending the use of the company's flagship operating system online.

The idea, which began crystallizing at Microsoft long before former Silicon Graphics Inc. Chief Executive Rick Belluzzo took the helm of Microsoft's Consumer and Commerce Group earlier this month, is for MSN to evolve into a vehicle for delivering Microsoft-developed applications online.

"They're trying to build a story of how MSN becomes core to the future of Windows," said Seamus McAteer, an analyst at the research firm Jupiter Communications. "It essentially transforms MSN into a giant research and development effort designed to support the distribution of the operating system."

Proving ground

The approach casts the MSN portal as a type of proving ground for Microsoft-developed large-scale Web applications, such as universal user registration, instant messaging and electronic commerce services. Once proven on MSN, in theory, partner Web sites will be more willing to buy the Microsoft-developed services - and the Windows-based servers needed to run them.

Microsoft has already had some success revamping MSN. In March, for instance, the company inked a key distribution deal to provide e-mail, instant messaging and other services on behalf of the AltaVista navigation hub.

And increasingly during the past year, the company has worked to distance itself from its one-time focus of providing media offerings online to a new emphasis on developing technology-based software applications via the Web.

Microsoft certainly pointed its online operations in that direction when it named software development veterans Brad Chase and Jon DeVaan to shepherd the company's Consumer and Content Group.

Though Chase and DeVaan now both report to Belluzzo, the pair clearly has guided their unit on a course that is emphasizing software development at the cost of building topic-specific media properties.

Earlier this month, for instance, Microsoft President Steve Ballmer said the company does not plan to invest any more resources in developing new category-specific retail sites, such as its Expedia travel reservations service or CarPoint automobile service. Instead, Microsoft's online emphasis is shifting away from developing topic-specific content designed to attract a selected audience, toward a model that focuses on creating basic Web tools that can be used across an array of partner sites.

Case in point: MSN is shifting its approach to building online communities. Last week, the company let the contracts expire for nearly 50 of the 70 free-lance online forum managers it had hired nearly two years ago to develop topic-specific communities for the MSN service, according to industry sources. The contracts of the remaining 20 managers, mostly in the separate MSN Computing Central service, are slated to expire next month.

In place of the professionally developed forums, MSN has launched a service that enables online users to develop their own Web communities, an approach akin to the "clubs" launched last year by portal rivals such as Excite and Yahoo!

The new forum tools mirror a string of online applications Microsoft has promised this year that offer Web sites broad-based services that work best when a large number of sites share commonly developed tools.

For instance, Microsoft earlier this year announced plans to assemble a comprehensive directory of online merchants that uses a common framework, called BizTalk. It allows businesses to exchange pricing information in a standardized way. The company also is promoting the idea of users carrying personal information in "digital wallets" that build on the PassPort technology Microsoft acquired last year with start-up FireFly Networks.

Existing media-oriented online operations at Microsoft, such as its MSNBC news service, appear safe for now, analysts said. However, questions remain how Microsoft will continue to draw traffic to its portal without investing in content designed to attract specific audience segments, analysts said. A steady stream of users is required for Microsoft to achieve the volume it needs to build and test its large-scale applications.

One alternative for Microsoft, analysts said, may be offering a free Internet access service that shepherds traffic to the MSN portal.