SEATTLE -- Microsoft Corp., playing catch-up in consumer online services, today rolled out Rick Belluzzo, its newest high-level executive, who after only two weeks on the job described how the company will compel consumers to use the Web every day.
Microsoft calls the strategy "Everyday Web," and today's event here was a classic demonstration of a strategy-in-progress because what was shown included mostly future services and features planned for existing services.
"The average person uses the Web once every 13 days and stays there for an hour. We want it to be a part of everyone's [everyday] lives," Belluzzo said.
The strategy focuses on four areas: delivering software as services for common Web activities, delivering "megaservice" building blocks via the Web to developers, striking e-commerce partnerships with third parties, and bringing the Web to users regardless of location or device.
The most significant tangibles the company announced were a new search engine for MSN.com and a small-business portal called bCentral -- both of which enter a crowded marketplace.
The challenge ahead
"If Microsoft can establish its new MSN search as a real cut above the crush of other engines out there, it could generate a significant amount of new traffic. I'm still not sure whether MSN -- a sort of flat, horizontal site -- is going to now have doors to specific vertical communities," said Dwight Davis, an analyst with Summit Strategies.
The small-business site goes into beta Sept. 30. The new search engine can be found at www.search.MSN.com.
Microsoft also demonstrated a prototype of MSN Messenger integrated into Outlook Express e-mail. Yusuf Mehdi, director of marketing for Microsoft's Consumer and Commerce Group, claimed the company's research showed instant messaging gets used three times as much when it is integrated into e-mail.
No date was given for formal integration, but the two messaging services can be cobbled together by hand today, according to Brad Chase, vice president of the Consumer and Commerce Group.
Today's announcement was the second this month signaling Microsoft's desire to sell software as services on the Web. It emphasized "megaservices" as building blocks developers can pluck off the Web. Moreover, Microsoft said services relating to communications, search and shopping will be made available on the Web.
Threat to current business model?
The strategy poses a challenge to Microsoft's existing business model of selling shrink-wrapped software through a large and well established distribution channel.
"The whole announcement is interesting to the degree they are emphasizing software as services," said Summit Strategies' Davis. "The product groups still have a lot of issues to deal with in maintaining a revenue stream with the current shrink-wrapped sales model. They are not going to say anything today that locks them into any new licensing model."
Not to worry, said Microsoft President Steve Ballmer.
"The PC is growing nicely and its revenues will overwhelm those from the Internet this year," he said in an interview outside the announcement, which was interrupted by a fire alarm.
Ballmer all but said Microsoft will not offer software for free that it charges for today, such as Microsoft Office. (Rival Sun Microsystems Inc. gives away its StarOffice software for free over the Web.)
"If you create things of value, you should get paid for them," he said.
Another theme that emerged at today's event was Microsoft's support for hardware other than the PC.
"We love the PC, but believe that world is broader than that," said Belluzzo, referring to cell phones and handheld computers as alternative platforms to the PC. (Mehdi at one point demonstrated the ability of MSN Messenger to exchange messages with WebTV.)
That Belluzzo took the unusual step of unveiling his strategy so soon after starting work at Microsoft signals the Redmond, Wash., company's concern about catching up to what rivals Yahoo! Inc. and America Online Inc. have already done -- offering rich Web services, including small-business sites.
"That was the first call I had to make," Belluzzo said, standing next to Ballmer in the drizzle as everyone waited for the all-clear signal to re-enter the Bell Harbor Convention Center. "The Everyday Web strategy came together during the past two months. I want to accelerate that basic path," he said.
And if that basic path is the wrong one, Microsoft will change it, said Dave Readerman, an analyst with Thomas Weilsel Partners in San Francisco.
"Microsoft continually tunes and adjust its strategy and usually gets it right on release 3," he said. "I've lost count of how many Internet Strategy Days they've had."