The Windows Live Effect - split from services to succeed?

If you looked back 18 months at the discussion around Windows Live, MSN and Microsoft's search strategy, the current market-share situation is almost counter-intuitive to what was largely expected. They area of most focus has been search, yet despite large improvements made by the Live Search team, Microsoft search share has only stabilised or grown slightly depending on which web-measurement firm you consider.

The most recent Live Search review I read was from ZDNet, and they praised the new UI, features and vertical search engines available from Live Search. Larry Dignan even went so far as to say "Overall, Windows Live Search is a viable competitor to Google–even if it doesn’t get credit for it." Indeed the biggest difficulty for Microsoft seems to be in achieving recognition for a quality search product and so converting users away from Google, something that the Live brand has failed to achieve so far.

In contract, MSN pre-Berkowitz was largely predicted to die a slow death, unsurprising given that it was losing some of its most popular services to Windows Live. Checking out the stats on Alexa shows this hasn't been the case, with MSN now having more reach than both Yahoo and Google due to good performance in the first 6 months of this year. Some of this must be credited to the improvements delivered by the various MSN teams as part of "The January Effect".

Alexa Traffic Graph

There is the new MSN UI, sleek and with easy navigation between sites it shows a marked change from the previous UI which was cluttered and confusing. Indeed tweaks to the UI are still being made in order to increase user satisfaction, though you may not have noticed the changes. For the past few months MSN has been trialing some new homepage options, including a new "widescreen page" (Homepages A,B,C). Across the various MSN sites there have been new features launched, in particular polls, ratings and forums, all designed to increase user interaction. Then there are the new sites MSN is trialling such as MSN Reporter and the new MSN A-List, a site showing "What's Hot" on MSN right now and similar in nature to Google Trends.

While 2007 has been a good year so far, the MSN Entertainment section has a key role to play over the rest of the year. There is the Live Earth portal on which focus will peak next month as the seven international concerts designed to raise awareness of global warming take place. The key issue going forward is how popular MSN Soapbox can become, with more integration between existing Windows Live services essential if it is to stand any chance of challenging YouTube.

So far it looks like the decision to split content and services was a good one. Who knows, maybe the decision to split search and services will also deliver.