OK so the official start of summer isn’t for a few weeks, but Microsoft is facing its most important period in perhaps its entire 30 year history, as initiatives in all its important consumer and online services come together.  How they do will do much to shape Microsoft’s future as a player in consumer services.

In 1967, the counterculture movement, although it had been building for a number of years, came together in San Francisco’s Haight Ashbury district.  That summer changed the way we looked at “the establishment”, the war, and the world.  In similar fashion, Microsoft’s consumer services haven’t really all come together until now.  Windows Live spent three years finding itself, Search has been on its own vision quest , Windows Mobile was stuck in a corporate rut, and Zune was too young to know any better. 

While we don’t expect to see Steve Ballmer in paisley, we do think that this summer will be Microsoft’s Summer of Live.  Let’s take a look at what we’re expecting:

Bing: Search gets a new name, and a new direction

Bing went live last night, although some parts of the world are getting a “beta” experience and not the full-on “preview” (if you want to try the preview, change your country to US in the upper right hand corner of Bing).  Microsoft has focused its efforts on specific verticals, and from early reports has released an impressive product.  Intending to be a “decision engine” for shopping, travel, health, maps, and video and images, with a new clean interface and surprisingly good core relevance, this summer marks the beginning of a new era for search.  How it will play out in terms of market share and user acceptance will be a big question, but this time Microsoft can’t be accused of copying anyone.  Bing is new and fresh and a different approach to search.

Zune and Games and consumer perception

Our guest reporter Chris Poirier is at E3 this morning (the MS press conference is being streamed live at 10:25am PDT, sorry couldn’t find a direct link to the stream.  Chris will have more from E3, and might be popping up on our LiveSide Twitter feed, too), where Microsoft is expected to surprise and delight.  One of the reasons we’re adding some coverage of the Zune (and Windows Mobile) to LiveSide is that consumer perception matters.  Microsoft really is going to make or break the success of all of the Live services based on what consumers think about their products, and whether or not it’s “cool” to use them.  What we’re seeing, with the new ad campaigns and new hardware from Zune, etc., may be a shift in perception about Microsoft.  Another $80-100 million campaign for Bing isn’t going to hurt, either.  Backed by solid software offerings from Zune, fairly seamless integration between services centered around Live ID, those ad campaigns, and some new fresh looks with results that deliver, Microsoft is making a serious attempt to shed its stodgy image and start fresh.

Windows 7 and Windows Live

The centerpiece of a live services push, and the centerpiece in new attitudes about Microsoft, will be Windows 7, expected to be released this fall (but the Summer of Live will be full of Windows 7 talk, for sure).  Along with that, we’re expecting a Windows Live Wave 4, which will bring together the desktop experience the same way Wave 3 solidified the online experience.  Again, the perception that “Vista is bad” has hurt Microsoft, but that could all change quickly once the “Windows 7 rocks” ball gets rolling.

Microsoft has made some serious blunders in the live services space in the past few years.  The delays of Longhorn, which became a not yet ready for market Windows Vista, cost Microsoft.  The launch of Windows Live, to great fanfare, was unfocused and poorly planned.  MSN Search/Windows Live Search/Live Search bit off far more than it could chew, couldn’t find an identity, and added to the perception problems plaguing Microsoft.

This summer may change all that.  Microsoft clearly has discovered the importance of perception in the consumer marketplace, and the importance of paying attention to design and user experience.  Bing exhibits few of the inconsistencies that have plagued Windows Live, for example, and Windows 7 is Windows Vista with its act cleaned up.  Some $400 million in advertising, by firms like Crispin Porter + Bogusky and JWT, aren’t hurting, either.

So as the weather heats up (here in the northern hemisphere), the buzz about Microsoft looks like it's heating up too.  What will happen this fall and beyond after the initial buzz dies down?   Will Microsoft be fast enough to build on that initial wave of enthusiasm?  Historically, Microsoft has been far too slow moving to be successful in the online space.  We'll soon find out if that's changed, too.

In the next few weeks, we’re going to be hearing a lot about Microsoft’s new brand for search.  We pretty much know it won’t be called “Live Search” anymore, and we’re hearing again and again that it won’t be called Kumo, either.  It doesn’t take much digging to find some strong hints that “Bing”, one of Mary Jo Foley’s original triad of possible new names (along with Kumo and Hook) might be the name of choice in Redmond.

Bing.com is registered to Microsoft (since March 4, 2009.  Before that the domain was owned by a guy in Australia) and controlled by Microsoft nameservers.  Microsoft controls Bing.co.uk, Bing.de, and Bing.ca, too (although not Bing.jp or Bing.cn – we didn’t do an exhaustive check on all the possible country names).  Of course Kumo is registered, too.

Bing and Kumo share similar US Trademark applications as well.  Applications are live for both names, as “computer search engines”.  Interestingly, Microsoft also has a Bing trademark application relating to Maps, but not for Kumo.  Note that neither Bing nor Kumo have trademark approval, yet.  Kumo is farther along in the process, but Bing hasn’t even been assigned an examining attorney.

So is it as easy as calling up TESS online and looking up Microsoft trademark applications?  Can a company launch a product in this day and age without blowing its cover?  Or are the days of “one more thing”, when we were truly surprised by a well controlled unveiling, over?  Even Apple doesn’t seem to be able to keep a secret anymore,  and we don’t remember the last time an announcement at an Apple event wasn’t thoroughly played out on Techmeme for days or even weeks beforehand.

Since trademark law recognizes convention priority (meaning that a trademark filed in one country has priority rights when filing in another country), and since trademark applications aren’t quite as easy (or free) to access in countries like South Africa, there’s still hope that a new name could surface.  Pulling off a new domain might be trickier, but we’re no experts in what it would take, and we suppose it could be possible.

Perhaps we’re holding out hope just because we just don’t like the name Bing very much.  A character in a John Irving story described hearing “a sound like someone trying to not make a sound”, and to us, Bing would be a name trying to be cool when no one could think of a cool name.  Now Kumo, it was kind of growing on us, and like the puppy Kumo that Joe Tartakoff at Paid Content has been so avidly tracking, it’s kinda cute.  Bing? Not so much.  Besides, it’s a clown name.  The ringmaster in Dumbo?  Voiced by Herman Bing.  We rest our case.

So whether it’s at All Things D in California next week, or SMX Advanced in Seattle, or somewhere in between, we’re hoping to be surprised and delighted by possibly the most important brand name unveiling in the history of Microsoft.  If not, who knows, maybe Bing will grow on us too. 

Seattle Times reporter Ben Romano posts today on some more problems for Hotmail, this time apparently caused by “routine maintenance” overnight gone somewhat wrong.  Romano pointed to the Hotmail Online Solutions Center, and a rash of recent discussions about not being able to access Hotmail.   It’s all been cleared up,  according to a Microsoft spokesman:

"Last night Windows Live Hotmail conducted routine maintenance, affecting approximately 1% of Hotmail customers, that caused a temporary delay of mail delivery to affected accounts. The issue has been resolved, and mail delivery has resumed. Microsoft worked quickly to resolve this issue and has restored service for all Hotmail customers. Microsoft apologizes for any inconvenience this has caused consumers."

So if you had trouble accessing your Hotmail, try again.

Thanks for the link, Ben! (and speaking of Seattle newspapers, today is the last day of publication for the Seattle PI, a paper I’ve been reading since the early 60’s, and who have been good to us here at LiveSide, along with the Times.  A sad day in Seattle, here’s all our best to the PI family).

Way back last February, when Microsoft first made a public offer to buy Yahoo!, part of what they were after was the brand.  Microsoft executives have been almost happy to point out that they have a brand problem, especially, according to them, with Live Search. At the time, rolling the two search products into one under the Yahoo! brand looked like the way forward.

Jerry Yang put a stop to that, which may have been the best thing to happen to Microsoft all of last year.  However, those pesky search share numbers have continued to go nowhere fast, with Live Search losing grip on what little share it has.  Microsoft CEO Steve Ballmer hints at every chance he can that he’s ready to do a search deal with Yahoo!.

But to fix the branding, why not just promote Live Search?  Some good hard pushing marketing (ok, and some serious work on core relevance) is what’s needed, but that could be accomplished just as easily by pushing Live Search as it could by pushing Kumo, or some other name.  If anything, this quasi-leaking of Kumo, at least in the short term, is just confusing the branding even more.

But then as I was looking at the Kumo home page screenshot we came across the other day, it hit me.  Live Search is an ok name as long as it’s a Microsoft property.  You’ve got the Windows Live connection, you’ve got the Windows Logo, you’re all set.  But what happens if you do a search deal with Yahoo!?  Granted this is pure speculation, but suddenly a name change seems to make more sense.  In competition with Microsoft over mail and messenger services, they wouldn’t be too happy to find themselves promoting Windows Live Hotmail and Messenger, even by association.  Given the almost manic efforts of Yang and the Yahooligans to escape the clutches of the evil empire from the north, almost any Microsoft branding on a Yahoo! site might be near unbearable.

Enter Kumo.  Wipe the slate clean, promote a new brand without an overt Microsoft connection, and a search deal might be a bit more palatable. Yahoo!/Kumo, it’s almost fun to say.

Of course renaming Live Search isn’t going to be the make or break issue concerning a Microsoft/Yahoo! search deal, but it just might be an important concession.  Truthfully Microsoft has a lot of hard bargaining to do with Yahoo! and new CEO Carol Bartz.  A search deal probably means a lot more to Microsoft than it does to Yahoo!.  But Microsoft wants the Yahoo! search business, needs it, more like.  Introducing Kumo might just get them closer to the prize.

It’s easy to forget sometimes (especially living 40 miles from Redmond, like I do) that the whole world doesn’t work, or live, quite the way you think it would from reading Techmeme headlines.  In a number of markets Windows Live (again, especially Messenger) dominates.  An article in today’s The Nation (“Thailand’s biggest business daily”), announcing the launch of Windows Live on mobile in Thailand (and news of “plans to kick off lucrative mobile advertising services” in the second half of the year), offers up some telling numbers:

Nearly two-thirds of Thailand's Internet users - 9 million out of the 15-million total - are users of Windows Live, spending a cumulative 2.4 billion minutes online with MSN messenger.

This large online community has provided significant revenue for Microsoft from online advertising. The jump from the PC environment to mobile phones offers much bigger market opportunities for generating online revenue. Penetration of mobile phones in Thailand is about 86 per cent of the population, with 65 million mobile devices in use around the country.

Microsoft's strategy is to convert these subscribers to Windows Live and MSN services without the need for a personal computer. It pursues a phenomenon called "mobile first user", in which people are gaining their first experience of the Internet on mobile phones, rather than personal computers.

The phenomenon will soon be dominant in emerging countries like Thailand, where the mobile penetration rate is higher than that of personal computers, according to the marketing director in Southeast Asia for Microsoft's Online Services Group, Craig Law-Smith.

Thailand has the third-largest number of Windows Live users in Asia following China and Taiwan. Thailand is also in the top ten countries in the world for data usage on mobile phones through General Packet Radio Services (GPRS) connections.

Of course the world of Windows Live extends farther than just Thailand.  Somewhat buried in today’s announcements coming from MWC were a number of press releases announcing significant Windows Live partnerships, just not ones that effect San Jose or New York:

Microsoft and Gemalto Partner to Bring Windows Live Messenger to the Mass Market of Mobile Subscribers
Customers can keep in touch with friends and communities on the go through any handset that allows SIM cards.
BARCELONA, Spain, Feb. 16 - Microsoft Corp. and Gemalto today announced they are collaborating to offer Windows Live Messenger services to the mass market of mobile subscribers through a new Windows Live Messenger client application that comes pre-installed on phone Subscriber Identity Module (SIM) cards. The Gemalto application, named SIMessenger, is the world's first Microsoft-certified instant messaging SIM client solution.

Microsoft and Orascom Telecom to Distribute Windows Live Mobile Services
New alliance extends Windows Live experience to mobile customers in new territories.
BARCELONA, Spain, Feb. 16 - Today at Mobile World Congress 2009, Orascom Telecom Holding S.A.E. and Microsoft Corp. announced a new alliance enabling them to distribute Windows Live Hotmail and Windows Live Messenger on mobile phones in Orascom Telecom's key markets. The services will be introduced to customers in a phased rollout through Orascom's affiliate partners.

Microsoft and America Movil to Extend Windows Live Mobile Services Across Latin America
Regional agreement will provide comprehensive suite of Windows Live, MSN and Live Search to 17 countries including Mexico, Brazil, Argentina and Colombia.
BARCELONA, Spain, Feb. 16 - Today at Mobile World Congress 2009, Microsoft Corp. and America Movil, the leading provider of wireless services in Latin America, announced that America Movil will adopt and deploy a comprehensive suite of Windows Live mobile services to its 172 million customers. Windows Live has a strong customer base in Latin America with millions of customers using the services on their PC, including the leading instant messaging and e-mail offerings in the region. Through this deal, America Movil will make it easier for its customers to extend the Windows Live and MSN experience from the PC to their mobile phone through its mobile Internet browser, text messages and client-based applications.

Microsoft and Personal Provide Windows Live Services to All Personal Customers
Launch of new service will provide consumers with easy access to Windows Live offerings through their mobile phone.
BARCELONA, Spain, Feb. 16 - Microsoft Corp. and Personal S.A., a leading mobile operator in Argentina and Paraguay, announced the recent launch of SIMessenger to Personal's customer base of 14.5 million people.

Telefonica and Microsoft Extend Reach of Windows Live Services to Millions of Mobile Customers in Latin America
Extension of regional agreement delivers new ways for customers to connect to Windows Live.
BARCELONA, Spain, Feb. 16 - Extending the strategic alliance that was first announced last year, Telefonica and Microsoft Corp. today announced that the companies are deploying a range of Windows Live for Mobile client application services that offer an enhanced experience for their mutual customers on their mobile devices. Telefonica, one of the leading mobile operators in Latin America with more than 100 million customers in Latin America, will enable its customers to download a Java-based client application that gives them access to Windows Live Hotmail, Windows Live Messenger and Windows Live Spaces to communicate and share with the people they care about from their mobile phone. The announcement was made at Mobile World Congress 2009.

Microsoft appears poised to leverage its dominant position with Windows Live Messenger in many markets around the world and extend them into much more lucrative Windows Phone and mobile phone services.  Whether or not that will work its way back to the US (or even if that will matter much) remains to be seen.

It wasn’t so much different for Benjamin Disraeli over a hundred years ago when he complained about three kinds of lies: lies, damned lies, and statistics.  We’ve seen lots of numbers thrown about in recent weeks.  We’ve been following the news (and rumors) of Microsoft layoffs, Apple OS installs, and Adobe AIR downloads, all seemingly spun enough to make us dizzy.  As our mainstream media falls apart at the seams it’s hard to know who to believe.  Our tendency to take a number and run with it has been exponentially increased (in volume, if not in importance) by the sheer number of blogs and “citizen journalists”.

Microsoft of course plays a mean numbers game.  The layoffs are a good example, for while MS certainly made a number of cost cutting moves, it also used the opportunity to ax well-loved but dead-end programs (Aces Studio) and re-align the Entertainment & Devices Division to prepare for the likes of Zune Mobile and Project Pink, even as far as to “lay off” one exec, to replace him with another a few days later.  Cutting Aces Studio under the guise of a poor economy saved the hassle of dealing with a small but angry mob.  So while the blogs ran with “Microsoft cuts 5,000”, a closer look seems to reveal a lot more than just bottom line cuts.  That headline number didn’t tell the whole story.

Another set of numbers swirling around Microsoft recently concerns Zune: the 2nd quarter results dropped the bomb that Zune sales were down 54%  and the blogs were off and running.  Kill the Zune, they cried, even as Adam Sohn practically begged them to read between the lines.  Zune isn’t only about hardware sales, in fact, there’s some evidence that it never was.  A brown Zune?  Of course no one is going to buy a fat brown Zune, but lots of people talked about it, Microsoft established a base on which to build a platform, and now the big bet is on a Zune ecosystem.  Will opening up a platform to new Zune and 3rd party devices, even phones, and the introduction of Zune Mobile be able to compete?  That remains to be seen, but Zune isn’t dead, regardless of the headlines.

For Live Search, there really aren’t enough ways to spin a set of statistics to make good news out of the current situation, but Microsoft seems more committed to search than ever.  And yet for all of Google’s lead in search market share, only a very small portion of that share makes them any money, and Microsoft’s strategy seems to be to go after that most lucrative market first.  Live Search cashback has been a successful proof of concept, and we’re seeing hints that the cashback program may become a bit more engaging.  Search advertising, however, depends on spin: advertisers go where they think they’ll get the biggest bang for the buck, they love front runners. 

Which may be why a Microsoft-Yahoo! search is still so important to Microsoft.  The problem is that it may be far more important to Microsoft than it is to Yahoo! at this point.  Yahoo!, which took a nose dive after the failed bid last year, seems to have sunk as low as it will go, and may just survive with new leadership now in place.  In this case, the spin is all about “Yahoo! needs to make a deal with MS”, but really, it may be the other way around.

The layoffs were real, and painful.  Microsoft faces challenges that go well beyond the economy.  Consumers drift toward netbooks and away from powerful desktops perfectly suited for Software + Services, cash cows like Office, and even the not inconsequential installation of Windows Live Essentials.  Yet the numbers in the headlines don’t tell the whole story.  We’re going to have to dig a little deeper for that.