November 1, 2005 10:26 AM PST

Gates: We're entering 'live era' of software

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SAN FRANCISCO--Kicking off what he called the "live era" of software, Microsoft Chairman Bill Gates said on Tuesday that the company plans to launch new Internet-based complements to its core products.

Gates said Microsoft is working on two products, "Windows Live" and "Office Live," that create opportunities for the company to sell online subscriptions and advertising. Both are targeted at smaller businesses and consumers.

The products won't replace the company's ubiquitous operating system or productivity suite, and people don't need to have that software loaded to tap into the Web versions. "They are not required to use Windows or Office," Gates said at a press event here.

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Bill Gates, Chairman, Microsoft

Gates said that Windows Live is a set of Internet-based personal services, such as e-mail, blogging and instant messaging. It will be primarily supported by advertising and be separate from the operating system itself. Office Live will come in both ad-based and subscription versions that augment the popular desktop productivity suite.

"This advertising model has emerged as a very important thing," Gates said.

But free products won't replace paid software. Many of the Live releases will have payment tiers, Gates said, with the lowest levels free and ad-supported, and higher-end versions paid for by the user.

"We'll have licenses and subscriptions as well," Gates said. In many cases, companies will have a choice between running software on their own servers or as a Live service.

Acknowledging potential antitrust concerns, Gates said that Windows Live is built off published APIs (application programming interfaces) that its rivals will also have access to.

"It's a dramatic sea change," Gates said of the overall shift to online services. "The live phenomenon is not just about Microsoft. It's partners, it's competitors...the whole space is being transformed."

Ray Ozzie, recently tapped to head Microsoft's services push, joined Gates in detailing the plan.

Toe in the water
The Internet-based services announcement was widely expected. But Microsoft has kept details of the plan tightly under wraps.

Gates likened the services push to other major strategy shifts at Microsoft, including its December 1995 move toward the Web and a June 2000 commitment to Web services.

Ray Ozzie
Ray Ozzie
CTO, Microsoft

The idea of an online adjunct to Office and Windows is not entirely new. The company already has its Office Online Web site that gets about 55 million unique users a month and offers items such like downloadable templates.

And in years past, Microsoft has attempted to build online alternatives to Office. One widely rumored project, developed in the late 1990s under the code name "Netdocs", was never made available.

One reason: Infighting between Office executives and Web advocates, according to sources at the time. David Smith, an analyst at Gartner, says that same tension still exists within Microsoft.

"There are different factions within the company, like before, and it is unclear what the corporate strategy is going to be," Smith said.

Windows comes online
Microsoft Live will consist of new services as well as some products previously offered under the MSN brand. will continue to exist as a site for "programmed" content. Windows Live will be more personalized, the company said.

"It's easy. It's live, and it has 'me' at the center of the universe," said Blake Irving, a Microsoft vice president who was on stage to demonstrate Windows Live. However, the demo failed. "All of you guys that have done demos have been there," Irving joked.

Blake resumed his demo a few minutes later. He showed how people could use a sidebar to subscribe to RSS feeds, load podcasts and

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Microsoft/Google competition is great for consumers
I believe Microsoft and Google are destined to compete for the hearts and minds of developers and users, and maybe someday enterprise customers. I don't think it will be a head to head battle for a while since Microsoft and Google approach the market very differently.

I am reminded of a quote "In a fight between a grizzly bear and an alligator, the terrain determines the winner". Meaning, each company has its strength and position in the market. The company that crosses over to fight on the others turf is likely to lose...but probably not die. These giants are too strong and too smart to battle to the death over any one market. It will be a battle for first place versus second place, with each making money in its own way.

My guess is this will be a battle of the titans fought on many different fronts for a very long decades. This is great for customers and users. Innovation will flourish and prices will decline. Competition is a great thing.

Microsoft has already entered the battle for Search supremacy. MSN Search is awesome. In fact, it is hard to pick a winner in terms of relevance of results for any particular search. Internal to Microsoft we have a search site that simultaneously sends a search query to MSN Search and Google, and displays the results side by side. Internal users vote on which results were more relevant. This feedback helps us tweak the ranking and relevance algorithm. I was director of engineering at AltaVista so I have a real appreciation for search. I have got to tell you that I think MSN Search is equal to, or better than Google. Now it is a matter of gaining user market share and building out the Ad Network revenue model.

I wrote a blog today on this subject and how I think it will play out. See <a class="jive-link-external" href="" target="_newWindow"></a>
Posted by Don_Dodge (64 comments )
Reply Link Flag
True, but
It is odd that both companies seem to be inventing ways to compete. On the surface, they do not appear to be competitors at all. Now, Google is contributing developers to, and Microsoft is making some kind of online Windows and Office products.

It is as if they each want to say "aha, we are beating the competition!" But, in order to do that they each have to purposefully jump from their core businesses into the other's. It is just weird.
Posted by just_some_guy (231 comments )
Link Flag
Sorry, your not objective...
Competition is good, but MS does the most to decrease
competition of ALL tech companies hands down. You work for a
bad company and can't admit it.
Posted by MacGregory (53 comments )
Link Flag
"MSN Search is awesome." -- Done Dodge

I am a consumer not connected to Microsoft or Google. I like working with Microsoft products. But when I search online, I use Google to save time simply because Google shows the most relevant results most of the time.

This is by experience. In the wild! Not in some control group or laboratory experiments organized by people connected to Microsoft.
Posted by Mendz (519 comments )
Link Flag
MSN search vs Google search
I find that Google typically returns 8-10 times more relevant results than MSN does for most common searches. Typically surfers tend to follow only the top 50-100 results which are kind of uniform for most search engines, Google, MSN or Yahoo!.

However, when it comes to depth of search and the number of indexed web-pages I see that MSN is nowhere close to Google. You can see this typically in image searches. Google tends to deliver images across a broad spectrum associated with the keyword(s) whereas MSN mostly delivers only images associated to the most popular interpretation of the keyword(s).

MSN search is also lacking heavily in the number of images in its index. A Google image search for "MSN" returned around 2,630,000 results whereas the same on MSN returned only 148,795 results, nearly 17 times lesser.

If MSN search is awesome, then Google search is simply amazing. You can blog all night on how awesome MSN search is, but the fact is it has a lot of catching up to do both in sheer size and scale, if it is to be comparable to Google.
Posted by pythonhacker (71 comments )
Link Flag
Microsoft the follower...
Microsoft has done well over the years in following others and cleaning up because of its scale. Following a company such as Google, won't work for Microsoft. I spoke with one of MSFT's lead engineers recently and he was telling me about the fantastic search that they have in the labs. But, the conversatin has moved on: it's about search-enabled applications now, it really is a SEA change :-)

Rebranding some MSN stuff and adding layers of subscription based services is not going to get MSFT very far.
<a class="jive-link-external" href="" target="_newWindow"></a>
Posted by tomforemski (18 comments )
Reply Link Flag
the flagship website of this effort is a joke. MS is now following Google in making big announcements about ridiculous products that lack any substance.
Posted by (42 comments )
Reply Link Flag
Windows Re-Live.
Sounds remarkably like Apple's .Mac service, Apple's own Address
Book will send out updates to one's Card when updated. Microsoft
are inventing things all over again, lets try something 'New'.
Posted by Bellette (22 comments )
Reply Link Flag
Not inventing...
Sounds more like their copying what someone else has already done.
Posted by thedreaming (573 comments )
Link Flag
Gates is trying to remain relevant

Me too, me too.
Posted by technewsjunkie (1265 comments )
Reply Link Flag
Gates will always be relevant
With the billions of dollars he pours into charity Gates will remain as one of the most relevant people alive today! No one does more period!
Posted by CoachWT (42 comments )
Link Flag
Always a follower, never an innovater! All software supplied has numerous security flaws as a standard feature!
Posted by heystoopid (691 comments )
Reply Link Flag
Microsoft actually did something productive.

Too bad it looks just like Google Home, including the google-esque name/beta logo.
Posted by wazzledoozle (288 comments )
Reply Link Flag
MS are so backward ... Apple has ben providing live updates to its software (that are user controlled not filled with spam and ads) ever since they launched OSX .. where has this company bene the last 5 years? Patching ....
Posted by paulie_shanna (5 comments )
Reply Link Flag
You can get a whole live desktop at
Why have a half live service when you can get an entire free online desktop with office and everything at <a class="jive-link-external" href="" target="_newWindow"></a>
Posted by iqula (59 comments )
Reply Link Flag
Nothing but a Linux box
Cosmopod is nothing but a Linux box and you use an X Windows client. Who are these people anyway? How do I know I can trust them with my data? The details of their service are very... non-existant...
Posted by wiley14 (39 comments )
Link Flag
MORE advertising?! just what we need
The 'new' business model of ad-based software/services is
following the 'known' business model of canned software.
Yikes. Do people really want this? Not likely. This is about
Microsoft putting the conditions in place to generate more
income. Trouble is, it doesn't offer the consumer any value, as
far as I can see. The consumer and the small business will be
the launch pad for this new direction and soon it will be
universal. When I imagine the future I don't see the myriad of
advertising that will be the norm for this kind of business plan.
Posted by Peter Norman (1 comment )
Reply Link Flag
And this brings the number of "live" Microsoft demo failures to...
..................oh, who knows? I lost track.
Posted by Norseman (1319 comments )
Reply Link Flag
Me Too
How come the " Me Too" becomes bigger and accepted wider than the original leader? Any way who is the widely used leader?
Posted by roameri (2 comments )
Reply Link Flag
I think it is exciting...
... to see how Microsoft will play out this "Web 2.0" game (whatever that means) targetting desktop and mobile users. Looks good though the UI's not as cool or as flashy as Microsoft Windows Vista...
Posted by Mendz (519 comments )
Reply Link Flag
IE + MS Live + Ads = More Security Nightmares
Thanks but I'll pass on this Chairman Gates. No doubt this will be "optimized" for IE, and the combo of all Microsoft all the time plus ads is just too inviting for those pesky virus writers that plague Windows.
Posted by R. U. Sirius (745 comments )
Reply Link Flag
Business Risk, Sarbanes-Oxley etc.
I agree.

There is certainly an argument to re-assess distributed systems, but does anyone really think it prudent to place the responsibility for the security of company data with an "online" service like Mojo?

I can just hear Data Security groups saying "I don't think so." when someone from Marketing asks if would be okay to...."

MicroSofts success in this space will be marginal at best - there are just too many security issues.

Posted by tbraith (1 comment )
Link Flag
MS CANT innovate
Microsoft is screwed they cant REALLY offer full webbased services because if they did you could use them from any platform using any browser that includes linux unix osx etc . so instead they offer crappy watereddown *extras* microsoft cant innovate because it will ruin their way of locking people into to their operating system and their office products.So now google is free to innovate and lead the way especially since they are a proponent of open source and have allied themselves with sun/openoffice
Posted by corvax (1 comment )
Reply Link Flag

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