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Wednesday, November 2, 2005 - Page updated at 12:00 AM

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Microsoft makes splash with big plunge into Web

Seattle Times technology reporter

Live, from Microsoft


Previews of the company's new Windows Live services are being released via ideas.live.com, while previews of Office services are expected to be released in early 2006 via officelive.com. Here are some of the services unveiled Tuesday.

Live.com: A home page that users can personalize with connections to favorite Web sites and services. The page would constantly update with new photos as they're added to a photo site, for instance, or news updates would occur as they appear on favorite news sites. A test version is available.

Windows Live Search: Expected to arrive in 2006, this would deliver services that help users find what they are looking for on the Web, their PC desktop, mobile device or give information about their geographic area. Replies will appear in the form of documents, pictures, multimedia content, local information and maps.

Windows Live Mail: Messaging and e-mail service that would eventually replace Hotmail, although Hotmail addresses would remain valid. The service would let users share photos and documents with their contacts. The company is accepting requests to participate in testing.

Windows Live Favorites: Service that enables users to access their Internet Explorer and MSN Explorer favorites from any PC that's online. Now available in test form.

Windows Live Safety Center: Free security service that scans PCs for viruses and cleans their machines. Now in test. After the scan, users are invited to subscribe to Windows OneCare Live PC maintenance service, also in test.

Microsoft Office Live Basics: Ad-supported free service to help small businesses establish a digital identity. Provides a domain name, hosted Web site with 30 megabytes of storage, five e-mail accounts and simple Web page design tools.

Microsoft Office Live Essentials: More complete service for small businesses offering a domain name, Web site space, up to 50 e-mail accounts and 22 applications for managing a business.

Microsoft Office Live Collaboration: Business management tools, including customer management, project management, document management and collaboration, hosted by Microsoft that companies can use standalone via the Web or in conjunction with Office.

SAN FRANCISCO — Like an old card shark who has been watching the game while holding a handful of aces, Microsoft Chairman Bill Gates laid out a dizzying array of new online products Tuesday to help his company regain the attention and business it has been losing to Google and other Internet upstarts.

The products are part of an ambitious new "Live Software" strategy to weave together computers, electronic devices and the Internet with new online services. Gates characterized the move as one of the enormous shifts in focus Microsoft undertakes about every five years.

"It's a new way to look at software, a better way that creates a lot of opportunities," Gates said while outlining the strategy for reporters and analysts in San Francisco.

The new services are intended to make it easier, for instance, to synchronize addresses and phone numbers between your computers at home and work, your mobile phone and your online e-mail service.

Microsoft has been trying to evolve into more of a services business for years. Gates unveiled a ambitious vision for Web services in 2001, but it never became as universally embraced as he hoped.

Meanwhile, Microsoft faces growing challenges from Google and other companies offering services that allow consumers and office workers to conduct more and more activities online, rather than on PCs loaded with Microsoft Windows and Office software.

Now that fast Internet connections, wireless networks and improved hardware are readily available, Gates said the time is ripe for a new approach for Microsoft and for developing software in general.

But there's still work to be done, as evident by several technical glitches Tuesday, which included a connection failure that initially prevented Microsoft Vice President Blake Irving from demonstrating a service called Windows Live.

Glitches aside, it remains to be seen how the services and strategy will affect Microsoft's earnings and its humdrum stock, which gained 26 cents Tuesday to close at $25.96.

Analysts intrigued

But several analysts at the presentation were intrigued by the company's new foray into Web services. "At least they're saying, 'We get it, we understand the model,' " said Rick Sherlund, an analyst at Goldman Sachs.

Another big question is whether software developers will embrace the technology. Microsoft is releasing a new programming toolkit next week, and Tuesday's announcement may be intended partly to generate excitement around its software platform.

Most of the products are free services Microsoft would provide over the Internet, including a messaging system to replace its Hotmail e-mail service over the next year, a Windows security checkup and a Web page creation and hosting service for small businesses.

Simultaneously, Microsoft is preparing a huge push into the market for online advertising. The free services will generally be supported by ads, similar to how Google's advertising sales bolsters its search service.

Microsoft also hopes the free services will entice users to buy subscriptions to more advanced versions.

Services shown yesterday are intended to supplement, rather than replace, Microsoft's Windows and Office.

The idea is not to phase out packaged software or the PC, but instead make it easier to synchronize home and office computers, devices such as digital cameras and online services from Microsoft and other providers such as Yahoo!

People don't have to use Office or Windows to take advantage of the services, but the software provides "rich capabilities that let you get more out of those things," Gates said.

Microsoft Chief Technical Officer Ray Ozzie said the goal is to create "seamless experiences" with a new approach to developing software and services.

Apple, Xbox influence

One inspiration was Apple Computer's music system, which combines the iTunes online music store, a computer-based media player and the iPod portable music player. Another was Microsoft's Xbox Live online gaming service.

"That weaving together — it really accomplishes these experiences that would not be possible if they were not designed in concert with one another," Ozzie said.

Competitors were still digesting the announcement Tuesday.

Google did not comment directly on Microsoft's news but issued a statement welcoming the competition. "Since our inception, we've focused our development efforts on delivering useful services over the Web. ... As always, we welcome new technologies and perspectives that help connect people with the information they need."

Sun Microsystems simultaneously announced two Web services, one to convert text to a format for podcasting, the other to convert documents to an open-source format. Both carry charges and require a credit card.

"What I've seen in the [Microsoft] announcement is it's a bit of more of the same; it's Microsoft becomes the host for your assets," said Alan Brenner, Sun's vice president of client systems.

Microsoft's new products are partly a broadside against Google, but the companies are still taking a different tack, said Van Baker, an analyst with the Gartner market research company.

"The difference that I see between them and Google is Google wants to deliver Web services-based applications, so every application, every functionality is going to be delivered via Web services," Baker said. "What Microsoft wants you to do is buy software that's enhanced by Web services and Internet connectivity."

Baker said that despite Microsoft's "muddled" message yesterday, "there's some pretty interesting technology that's being demonstrated there."

"It's really a great platform for Microsoft to use advertising-funded capability to deliver some great services to consumers and small businesses," he said.

"It's an entree for them to position what they deliver for free as step one in a set of services that you can supplement by doing an a la carte or subscription or license arrangement for incremental services."

Microsoft's new strategy is partly an evolution of a Web-services strategy code-named Hailstorm that Gates presented in Redmond in 2001.

Programming technology behind Hailstorm is now widely used, but it never became the ubiquitous platform for consumers to organize their lives via the Internet and Microsoft software, as Gates had envisioned.

Passport turnoff

One hurdle was that the Hailstorm vision depended on users registering with Microsoft's Passport authentication service. Consumers and businesses were reluctant to use Passport as a sort of gatekeeper, and competitors soon developed an alternative approach to verifying online identity.

Irving and David Cole, a senior vice president developing the services, confirmed the new Live services will also require users to have a Microsoft Passport.

But Passport is less of a concern now that Microsoft is no longer perceived as "the evil empire," said Dave Winer, a software developer whose work on Web standards helped build a foundation for Microsoft's new services.

"Google is more the evil empire now," Winer said. "Microsoft represents the opportunity for a two-party system."

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com

Copyright © 2005 The Seattle Times Company

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