Microsoft readies for rivalry with ‘live software’ strategy

The Canadian rollout of Microsoft’s “live software” services strategy will require the company to double-check the terms and conditions of its joint venture agreement with Bell Sympatico, executives said earlier this month.Microsoft Corp. Webcast an internal staff briefing from its Redmond, Wash.-based headquarters to discuss its plan to offer two sets of Internet-based services designed to complement its flagship products,
Windows OS and the Office suite of tools. Windows Live and Office Live are not intended as a replacement to the upcoming Windows Vista or Office 12, but to personalize content and manage data. They will generate revenue either through advertising or subscription fees, executives said.
Microsoft has offered software as a service before, including live help functions in Office and its LiveMeeting collaboration product, but increasing competitive threats from Google have put pressure on the firm to offer alternatives to buying expensive software and installing it locally.
Windows Live includes several tools, such as an e-mail service and instant messaging service, that has previously been available in Canada through MSN.ca.
Last year, however, Microsoft Canada formed a partnership with Bell to launch Sympatico-MSN.ca, a single portal that would offer the best of both sites.
Nov. 1 was actually the 10-year anniversary of MSN’s foray into the Canadian market.
In an interview shortly after the Web cast, Microsoft Canada vice-president of marketing Jordan Chrysafidis said the two companies were still hammering out the details of how Windows Live could be offered to Sympatico-MSN.ca’s Canadian users.
“It’s going to be soon. I’d give you a date if I had one,” Chrysafidis said.
“We have a great partnership with them, and obviously we don’t want to mess that up . . . (the live software strategy) is something we could not have foreseen.”
Chrysafidis said the beta trial of Office Live, which will include tools to help small businesses establish an Internet presence and five Web-based e-mail accounts through an ad-supported model, will begin next spring in the U.S. and eventually make its way here. 
“Those are things that, if you are a company with 10 employees or less, it’s prohibitive,” he said.
“We’re aiming this at the kind of firm that can’t afford its own IT department.”
Bill Gates, Microsoft’s chief software architect, said the live software era would not exclude its large corporate customers, however.
“A lot of these things could extend into the enterprise,” he said, pointing out the work the company is already doing in providing managed services to some of its clients. “We’re not just saying consumer or small business.”
There are many Canadian companies that already offer hosted online services for small businesses here.
For example, Toronto-based SoftCom Technology Consulting Inc. has been offering a free Web-based e-mail application called mail2web.com for several years.
John Carthy, SoftCom’s vice-president of sales and marketing, said he didn’t necessarily see Microsoft’s live software strategy as a competitive threat.
“Microsoft has never made any statement that they weren’t going to get into software as a service. I’m not surprised, I’m just hoping it’s something they will open to their channel,” he said.
“They could offer it direct or through their channel.” When Microsoft has done both, Carthy added, it has traditionally priced itself out of the market so that channel partners tend to win the business.
Gates likened Windows Live and Office Live to other major milestones in its 30-year history, including its embrace of the graphical user interface in the early 1980s, its Internet strategy of 1995 and the launch of its .Net Web services platform in 2000.
Qualitative improvements in hardware, along with the rise of online advertising, has primed the market for online services, he said.
“We want software developers to be able to tap into that model,” he said.
“It will be tiered at the bottom end with (free) ad-funded services and subscription services at the top end.”
Chrysafidis said the growth of broadband in Canada means Microsoft might fare better with its live software strategy than its previous efforts to lure small business customers through its BCentral strategy on MSN.ca.
“None of these things tend to be overnight successes,” he said. “It may be we weren’t ready with BCentral . . . but I think this is a company that has a determination to stick with it. When we launched MSN.ca 10 years ago, we had very small marketshare and a major competitor in AOL.”
Windows Live will also include Safety Center, where users can scan for and remove viruses from their PC, while Office Live includes 20 applications that can automate project management, expense reports, and time and billing executives said.
“Live software works with many devices,” Gates said. “It’s not forcing the user to move the data around and to personalize it to the device.” 
Microsoft said it will make application programming interfaces available to its developers so they could customize and build on top of Windows Live and Office Live.