Microsoft plans to announce this week its first product from its long-incubating NetGen unit, according to a story in Newsweek.

The new Microsoft threedegrees instant-messaging-based application, formerly code-named "Genesis," is aimed at the 13- to 24-year-old crowd. Besides facilitating small-group instant-messaging communication, threedegrees also allows participants to share music, photos and customized animations, Web reports say.

Microsoft has been working on ideas for products that would appeal to this user segment, which, the company's own research has found, spends $153 billion annually and comprises an estimated 27 percent of all Internet users.

Last spring, a corporate spokeswoman told Microsoft Watch that the NetGen team was doing "no external marketing." She would say "there have been many learnings as a result of the group's continued work that have been injected into other groups."

A couple of years ago, Microsoft was willing to talk about its "NetGen Strategy Team" and its focus on the Microsoft-dubbed "Generation i" (Internet Generation). A number of Microsoft's high school- and college-age interns worked as part of the NetGen team. Some even lived in a house in Seattle known as the "NetGen Lab" where Microsoft could study their computing habits.

Microsoft Watch hears that the NetGen group is now working on its next application, code-named Vogue, which will go beyond threedegrees and take Microsoft's knowledge on groups and relationships across other online activities and experiences. Vogue will make use of peer-to-peer networking, .Net web services, SmartPhone and other related technologies, sources say.

Newsweek quotes Microsoft officials as saying threedegrees will be available free (from www.threedegrees.com), but there currently is no business plan for the technology.

But over time, Microsoft could end up selling NetGen technologies via online subscriptions, similar to the way it currently pushes games via its XBox Live service, Microsoft Watch sources say.