Microsoft’s MSN and other online businesses used to be a pretty big deal. They sat at the top of the pack with AOL and Yahoo!. That was before social networking and video sharing and…. Google.
Microsoft has brought in new blood to try to resurrect it fallen online operations. But it may take more than a transfusion to get the operations back on their feet.
There is some concern at Microsoft that it allowed itself to be overly focused on how its online software, like mapping, functioned and let marketing go to hell.
Microsoft really has three online initiatives and they may not be able to all exist together. There is the old portal business that competes with the likes of AOL and Yahoo!. There is a home grown search engine that competes though not very well, with Google. And there is the Microsoft Live business that helps tether users of Windows and Office to MSFT to get additional interoperability and functions for the software that is installed on PCs.
It could be argued that the search feature is core to the online connection to Office and Windows users. Search is an essential function for users of operating system and productivity software. It is part of the overall efficiency of the internet. So, search and Live can probably live together and be part of the same overall operation.
The leaves MSN which has little to offer beyond what users get from AOL and Yahoo!. Since most of the services from these “portals” are free, MSN has to count on advertising revenue to fuel its income. And, as Yahoo! investors have found out recently, that is easier said than done. Whether the model will work for AOL, which is dropping its fees to subscribers in favor of trying to create a larger audience for advertisers, is still to be determined.
Microsoft has two promising online business and a portal operation that is running far out of first place in that segment of the market.
Maybe AOL or Yahoo! would buy MSN. It is hard to see what Microsoft should do with it.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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