Understanding Windows Live

Windows Live is the most significant update to Microsoft’s consumer online services since MSN was launched in 1995. The company is rapidly updating its services, hiring new staff, and building out its online infrastructure after years of letting them stagnate. Even so, Windows Live is not a fundamental change in how Microsoft does business-the company will continue to earn most of its revenue from selling software licenses, although more of that software might eventually be tied to online services. Moreover, while Microsoft hopes that online advertising becomes a significant source of revenue, it’s simultaneously pursuing many other long-term opportunities.

Build-Out Under Way

Between approximately 2002 and 2005, consumer online services were a relatively low priority for Microsoft, and minor updates to most MSN services occurred once a year, if at all. Some services, such as Hotmail, have had the same user interface and few feature improvements since they launched in the 1990s.

Since Microsoft announced Windows Live in fall 2005, online services have clearly become a high priority, as shown by the following: