TECH TALK: Microsoft Live: Analysis (Part 3)

Russell Beattie called Microsofts Live services Monopoly 4.0:

The names that Microsoft chose to launch with show their true intentions and motives. Instead of creating a new Live service and concentrating on making that a new profitable business, they instead launched Windows Live and Office Live as extensions to their desktop monopolies. isnt just for new online web apps (as it would appear at first glance) but are meant to be integrated consumer services just like Apples iTunes. Ray Ozzie actually gave that as an example today in explaining the power of tying all their different products and services together in one seamless package for consumers.

But thats the key word here of course: Tying.

Though it doesnt seem to make sense for Live to have the Windows or Office names right now – is just another web dashboard at the moment – there are far more ambitious plans to come. The Windows and Office monikers are there because Microsoft will, of course, be up to its old tricks by heavily integrating Live services into the desktop sucking the air supply out of any online competitors. It doesnt seem that they should be allowed to do this sort of thing, but the success of iTunes seems to have given them a new excuse to start tying products again. And hell, the DOJ agreement only lasts until 2007, no? I can easily see MS adding links throughout their OS and Office products as they have with Passport, Hotmail and MSN in an effort to push these new services.

Om Malik compared Microsoft to Macy: In the fashion world, haute couture designers like Tom Ford and Dolce & Gabana create eye-popping outfits, that impress the fashionistas worldwide, and generate gushing headlines around the planet. A few hundred of them are sold at prices high enough to pay off the debt of some struggling nation. However, a few months later, pale imitations of that daring vision start to show up in mainstream stores like Macys, and thousands of consumers buy them. Thats when the real money is madeThe Web 2.0 pioneers who created some fantastic new apps are like those star designers. They created the template of whats cool. A few months later, just like Macys Microsoft learnt the new babble. Microsoft Office Live, is the watered down version of Web 2.0, wrapped in a business model for folks who dont know and frankly dont care about Ajax or whatever that goes into the cauldron.

Om Malik also captured all of Microsofts potential competition.

Phil Wainewright made the point that advertising may not be the right model:

I am frankly bemused that anyone seriously believes Microsoft or anyone else is going to fund their on-demand applications from advertising revenues. The idea is complete bull, on two counts.

First up, ads in applications don’t work. All the evidence from the past ten years of online services is that the more engaged the user is in pursuing an activity, the less likely their attention will be diverted by an ad.

The second factor is that the world does not revolve around advertising, it revolves around trade. Businesses need to be able to make and sell stuff before they have any money left over to spend on advertising.

Fred Wilson doesnt think it is a big deal: Windows Live is lame. I honestly could not find a single thing I’d use it for. Of course, that doesn’t mean that others won’t find it useful. But I already have a feed reader (actually a bunch of them). I already have a VOIP client and an integrated IM client. I already have several email apps. I already have a damn good social bookmarks managerThis is not going to be a repeat of the late 80s and early 90s when Microsoft slowly and surely put all the desktop software companies out of business. The web is not a platform that Microsoft controls. We the people control it.

Dana Blankenhorn wrote: What Microsoft has done today is to try and tilt the market’s reality back into a proprietary direction, placing a new business model on an old reality. The plan is to have a variety of paid tiers for online versions of Office, delivering basic functionality for the price of looking at ads, and more functions as you pay moreThat is a sea change. Microsoft is moving toward a business model first pioneered in the mid-1990s by America Online.

Tomorrow: Emerging Markets Opportunity

TECH TALK Microsoft Live+T

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Rajesh Jain

An Entrepreneur based in Mumbai, India.