Some commentators have taken Microsoft's entry in to the Web 2.0 world as a reason for spreading doom and gloom and predicting the annihilation of small, innovative developers. I disputed this prediction and agreed with entrepreneurs Jason Fried of 37 Signals and Sridhar Vembu of Zoho in my Dodging the Gorilla post. The whole hype around Windows Live got me thinking whether there is some level of reality distortion going on. The clues are there if we look carefully. I will let you decide but consider this - Windows Live is a mix of both established Microsoft web components and properties and new tools (such as Live Writer).

Passport - Live or Resuscitated?

We can take one example - Microsoft Passport. Passport has been around on the web for more than five years in various guises. Passport has been used across a number of Microsoft services including XBox Live, MSN Messenger and Hotmail. It has surfaced under various names. The latest incarnation is Windows Live ID. Microsoft has made one change to the passport.net site that can dramatically affect the traffic on Live.com. The sign-in button on the passport site now points to a page on Live.com. I can't be certain when the change took place but maybe Alexa gives us a clue.

What is interesting is when you take the page views for passport and compare them against those for Windows Live. You get a very interesting traffic correlation.

Market Power is not the same as Web 2.0 Viral Growth

• Microsoft has the enormous marketing muscle (obviously)


• Microsoft can re-direct traffic between sites and brands it owns with the change of a URL


• Viral adoption can be organic (as was the case with MySpace) or it can be driven with intent.


• It is all about the content.

The big advantage Microsoft has is the projected sales of more than 200 million PCs in 2007. With Vista expected to ship on the vast majority of those machines, Microsoft has a massive launch pad for the Live Brand. These numbers make it obvious why companies like AOL, Google and Yahoo compete for desktop real estate with the major hardware vendors. Whoever can capture a users first view of the Internet has the opportunity to capitalize on the advertising revenue that is driven by their web browsing. Google understands this and that drives their efforts to optimize the relevancy of web search and partner with major hardware vendors and web site destinations such as MySpace and AOL.

As the major Internet brands adopt Web 2.0 technologies we need to be wary of the hype that can be created simply by massaging traffic patterns through URL re-direction. It will be interesting to see if TMZ, one of the sites we featured in an earlier blog on up and coming Web 2.0 sites in 2006, is growing virally or is being pushed by AOL. It is after all a Warner Brothers web property.

There is no denying that Microsoft is investing heavily in Windows Live and their market power must not be under estimated, but re-branding MSN Spaces and MSN Messenger will not be enough to create a hot bed of Web 2.0 activity. Microsoft has to move quickly to architect a vibrant community that will make Live.com a compelling destination.

What is your take? Is Live.com a site to be reckoned with - or is Microsoft hyping re-badged products? Leave a comment below and add to the conversation.