Live 2.0: It's About Windows, Not Google

For awhile, Microsoft trailed behind Google like a lost puppy, seemingly imitating its new online services, like mapping and local search. The similarities stop there. Long ago, Microsoft said that Windows Live was about, well, Windows. That vision is finally coalescing, starting with today's Live relaunch.

I call the relaunch "Live 2.0," but Microsoft has a much less trendy name: "The next generation of Windows Live," according to Brian Hall, general manager of the Windows Live business group. Live 2.0 brings all but two services to full release—betas be gone!—with SkyDrive continuing in testing and Calendar starting the process within a few days.

Commiserate with the branding, Windows Live services are more about extending the Windows experience than competing with Google. In fact, Hall never discussed Google in our interview. Microsoft CEO Steve Ballmer may pound his shoe and rail about Google competition, but down in the trenches product managers are more focused on existing customers. With over 400 million active Live IDs and a Windows install base approaching 1 billion users, Microsoft has plenty of customers to worry about.

Putting the Live in Windows
To reiterate: Live 2.0 is more about Windows users than Google.

In November 2005, I wrote about Microsoft's Live vision:

"While Google might be a catalyst in Microsoft's services strategy, the reasons for launching Live are much broader than the search rival. Microsoft is looking to accomplish a couple things: For MSN, the new services are a way to drive additional revenue—whether from advertising or paid services—off clearly identified market segments, small businesses for Office Live and active online consumers for Windows Live."

"Microsoft hopes to generate greater customer value and make new-version Office and Windows upgrades more appealing. MSN has done a tremendous job cranking out new products and services, well ahead of the long Office and Windows development cycles. The point: If Google didn't exist, Microsoft probably still would have embarked on a services strategy."

Little has changed from the initial vision. Microsoft sees Live as a way of extending Windows capabilities, particularly between operating system release cycles. It's no coincidence that Microsoft senior vice president Steven Sinofsky is charged with Windows core development and Windows Live services. From Microsoft's perspective, one is an extension of the other.

Microsoft will promote Windows Vista and Windows Live benefits in the "Open up your digital life" marketing campaign.

"People love a PC, not because it works with products, but for what it lets them do," Hall said. Microsoft is betting that "Windows Live experiences will make the WOW come back to Windows."

I was surprised to hear a Microsoft executive use "WOW," because the marketing campaign is long gone. What Hall means: WOW is more than a marketing concept; it's Microsoft's real experiential goal for Windows Vista.

"For all Windows Vista users, it's definitely like an upgrade to their experience," Hall said about Live services.

In the past, I've faulted Microsoft's slow roll out of Live services. It's as if Microsoft marched to a different beat than Web platform (aka Web 2.0) companies like Google, which moved to Internet time. But if Microsoft executives really meant what they said in November 2005, the slower pace makes more sense. The company took the necessary time to build out Live services infrastructure, so as to extend the Windows experience—rather than hurt it. Meanwhile, nimbler rivals heckled Microsoft's lumbering approach.

That said, Microsoft doesn't have some whiz bang new experience for today. People using Live services in beta will find them pretty much the same as they were yesterday. But the pace of improvements, with lots of spit and polish, has significantly increased over the last six months, particularly in areas of cross-service integration.

Microsoft also has opened up Windows Live to competing services, which is a departure from the original direction. At least through early 2007, Windows Live services were silos connected to the operating system and to one another, but with Microsoft doing little to connect to other online services. The approach meant that Microsoft bore heavier development burden than many competing services, which used APIs to connect together. Live Events and Photo Gallery are examples of more extensible services. Both can connect to other services, Flickr being one example for Live Photo Gallery.

But What About Google?
Windows as priority is a fine concept, except that Web platform companies are shifting computing and informational relevance from the desktop to the Web. It's a problem Microsoft recognizes, which explains why its Web services are so closely tied, whether by technology or brand, to Windows. Microsoft wants to keep the Windows PC as the axis for computing and informational relevance.

By no means is Microsoft ignoring Google. But the real competition is about platforms and how they enable third-parties to make money. Development and product support come when other companies make money. Live doesn't compete with Google. Windows the platform competes with the Google advertising and search platform, and where is the center of informational, computational and developmental relevance. From a strictly strategic sense, Live's close ties to Windows is hugely sensible. Google-Microsoft competition is really about platforms.

Microsoft's online services group bleeds money while Google rakes in the dough. From a revenue perspective, advertising and search is a place where Google and Microsoft compete. Google's position is clearly stronger and increasing. But Google's position is more tenuous than it appears, too. Google applications and services seek to create stickiness for search, and subsequently contextual keywords and advertising. Users can switch search engines by typing a new Web address, something Google seeks to prevent through sticky services like e-mail.

Microsoft already has in Windows the stickiest software product on the planet—and it's something people directly pay for. Google gives away search for free, recovering from its partners' revenue paid for advertising and other services. Windows is the stronger foundation. Google's might and mighty share price stand on the assumption that people will favor the search engine over others. Windows already is a captive product, with no signs market share will diminish anytime soon. It's a good foundation for Live services, whether or not the Online Services group ever makes significant gains in advertising revenue or search market share.

Related Posts:

• Blodget Bludgeons Windows Live to Death, Microsoft Watch, Oct. 8, 2007
• Microsoft Searches for Signs of Live, Microsoft Watch, Sept. 27, 2007
• Search: What Microsoft Should Do Next, Microsoft Watch, Sept. 24, 2007
• Live Hotmail: Teen Sensation, Microsoft Watch, Sept. 20, 2007
• Is Microsoft's Head Really in the Clouds?, Microsoft Watch, July 26, 2007
• Is Windows Live a Killer?, Microsoft Watch, July 26, 2007
• Microsoft Clubs Its Way to Search Gains, Microsoft Watch, July 16, 2007
• Which Comes First, Software or Services?, Microsoft Watch, July 9, 2007
• When Is 'Open' More Open for Microsoft?, Microsoft Watch, May 17, 2007
• Hot or Live, It's No Longer Beta, Microsoft Watch, May 7, 2007
• The Google Quandary, Microsoft Watch, April 24, 2007
• Who Pays for Software Plus Services, Microsoft Watch, March 15, 2007
• Wanted: Dead or Live, Microsoft Watch, March 2, 2007
• Why Google Matters to Microsoft, Microsoft Watch, Feb. 22, 2007
• Microsoft Seeks More Mobile Relevance, Microsoft Watch, Feb. 12, 2007
• Sorry, but Live Isn't Dead, Microsoft Watch, Dec. 12, 2006
• It's a Shame About Ray, Microsoft Watch, Dec. 6, 2006