The New MSN

Microsoft held court Thursday at the company's MSN (Microsoft Network) Day at the Seattle International Conference Center, where senior vice president Brad Chase and vice president Richard Belluzzo detailed how the company plans to move ahead from its current position at third in the Web portal race. In November, Microsoft plans to unveil a completely overhauled version of MSN, featuring new search, shopping, and communications capabilities, new partnerships, and more.

Some of the capabilities were previewed at the Seattle event, which was interrupted in the morning by a fire alarm that sent hundreds of journalists, analysts, and Microsoft executives out of the conference center into the pouring Seattle rain. "No, we did not plan this," quipped Microsoft's Chase after someone suggested that Microsoft had staged the fire alarm to underscore the urgency of the company's MSN initiatives.

The Everyday Web
Microsoft clearly sees MSN as critical to taking advantage of the power of the Web, and growing with the Web. As America Online was quick to realize, the Web is the engine that will help drive online services. "We want to transform the Web from the occasionally used, inefficient medium it is today to a highly personalized place to get things done, what we call the Everyday Web because you use it every day," said Richard Belluzzo, who was formerly CEO of Silicon Graphics and has just joined Microsoft as vice president of the Consumer and Commerce Group, working under senior vice president Brad Chase. Belluzzo said that Media Metrix data shows MSN as third in the Web portal race (behind AOL and Yahoo!) and that Microsoft is not satisfied with that.

Microsoft's efforts in overhauling MSN will focus, according to Belluzzo, on four areas: delivering a richer set of software and services for common Web activities; offering "megaservices" to Web site developers; building marketplace partnerships to improve shopping experiences; and delivering the Internet to users anytime on any platform.

Partners On Parade
In the area of offering megaservices to Web site developers and building marketplace partnerships, Microsoft is seeking to link MSN services and tools to commerce offerings. Internet commerce is squarely on Microsoft's radar, and Microsoft is also focused on owning and advancing its own commerce sites. For example, Microsoft executives announced that the company is spinning off its Expedia.com online travel site as a separate stock on the NASDAQ stock exchange. It has been speculated that Microsoft will move quickly to spin off some of its other Internet commerce sites and offerings.

Microsoft recently forged a partnership with Ford Motor to work together on the CarPoint car-selling Web site and is seeking to form other such partnerships. The company has also formed a partnership between MSN and CareerBuilder, to work together on online job hunting applications.

As MSN increases the number of partnerships it has with other companies and sites, MSN-centric services, such as cobranded MSN messaging and Microsoft Passport, will be extended to the partner sites. Microsoft's Chase described the effort as "integrating MSN with online marketplaces."

Chase also announced that Microsoft is launching a new vertical portal called Microsoft bCentral, designed to offer services and tools to owners of small companies. The site includes tools for getting a business started online, promoting and marketing online, and managing the business. A beta version of the site will be available on September 30 at www.bCentral.com.

Use What You've Got
The other key ways that Chase said Microsoft plans to extend MSN are by drawing from Microsoft's existing software tools, and rapidly increasing the number of platforms MSN-based services can be run on. A demonstration he showed illustrated how this might work in the e-mail arena. Microsoft, under its MSN wing, has a free, Web-based e-mail product: Hotmail. It also has a robust, long-standing e-mail front-end: Outlook/Outlook Express. And lately, Microsoft has been pushing MSN Messenger, an instant messaging product also falling under the MSN wing. According to Chase, there are already 2.8 million users of MSN Messenger, after two months of availability.

In the demonstration, Outlook Express ran on a Hotmail back-end. (In other words, a more robust e-mail front-end was being used to extend the capabilities of the less powerful, Web-based product.) Chase created an e-mail message with rich, embedded HTML and graphics in Outlook Express, which he then sent directly through the Hotmail back-end.

The complex rules and filters available in Outlook Express represent other ways Microsoft plans to extend Hotmail's capabilities. For example, a useful sorting engine (in a prerelease version) was shown. It organized incoming Hotmail messages by how recently they'd arrived and how frequently the sender of the message communicates, with "other messages" (likely to be spam) at the end.

Also in the demonstration, a prerelease version of new MSN Messenger let users create an instant message on a PC and send it to a WebTV-based user. The instant messaging software will quickly be extended out to Windows CE and several other platforms. Microsoft also announced this week that it will now allow platform providers and Internet service providers to license and cobrand MSN Messenger software.

Search and Shop
Searching and shopping are other areas where Microsoft is working on extending MSN's capabilities. In November, Microsoft will launch a series of new shopping services for MSN. For example, earlier this year Microsoft acquired Compare.net technology, which scours the Web for the best prices and other variables pertaining to products a consumer might want to buy online. That technology will eventually be fully integrated with MSN.

In the search area, Microsoft has been drawing from the IntelliSense technology it has built into many of its office productivity applications. IntelliSense in Microsoft Word, for example, is capable of analyzing what the close proximity of two words in a document might mean, or what common misspellings might actually refer to. By drawing from IntelliSense to overhaul MSN's search capabilities, Microsoft hopes to categorize search results intelligently. "I think it's now fair to say we have the best search technology online," says Chase.

Beyond the PC
In discussing Microsoft's efforts to bring MSN to alternative platforms, Microsoft vice president Jon DeVaan said the company will extend its MSN Mobile Service by working with carriers to let more users of non-PC devices such as cellular phones and hand-held computers send instant messages and view Web content. Like Yahoo!'s Yahoo! Mobile offering, MSN's portal services will be completely integrated with MSN Mobile Service, says DeVaan. DeVaan also showed the MSN Web Companion, an easy-to-use, inexpensive Windows CE– and MSN-based device for users who want Internet access but don't need a full-fledged PC. The Web Companion devices will appear in notebook and desktop sizes by the end of the year.

Microsoft has formidable competition in the online services and Internet portal arenas. AOL and Yahoo! have rapidly growing, loyal user bases. Beyond the partnership efforts and other initiatives announced in Seattle this week, however, it's clear that Microsoft is betting on the ubiquity and power of its non-MSN software tools to help MSN move up from its current number three spot in Internet portals. In fact, from a bird's-eye view, it's a move very similar to Microsoft's integrating its applications functionality with Windows functionality.

One could argue that the centerpiece of MSN Day, in terms Microsoft's long-term online road map, was the demonstration of Outlook Express married with a Hotmail back-end. Here was an example of a rich application from Microsoft's platform legacy used to extend a Microsoft online tool. In November, and going forward, we can expect to see that kind of marriage again.