By Yi-Wyn Yen

Microsoft is trying its luck at social networking - again.

After a failed attempt four years ago, Microsoft (MSFT) is ripping a page from Facebook’s playbook, introducing on Thursday new profile and photo-sharing features to its web-based Windows Live services. The software giant allows users with Windows Live Hotmail or Messenger accounts to create online profiles that highlight what a person is doing through a Facebook-like newsfeed.

Microsoft hopes that giving Windows Live a new facelift will encourage more people to spend more time on its web properties. Checking e-mail or instant messaging accounts for up a third of the time people spend on the Internet, according to research firm comScore. Microsoft has 375 million Hotmail users and 325 million Messenger users worldwide. “If we can gain a whole 60 minutes per user, we would grow a whole Facebook in [time spent],” says Brian Hall, general manager for Windows Live.

Though Hall admits that Microsoft’s new strategy could shift some attention from Facebook - in which Microsoft holds a minor stake - to Windows Live, the real concern is longtime rival, Google (GOOG). The search giant already has a commanding lead in the search advertising business, and Microsoft worries about Gmail’s growing share in the e-mail market. “According to comScore, Google has a 6% share of email [in the U.S.] But they’re growing fast,” Hall said.

Like Google, Microsoft has struggled to make inroads in social networking. Four years ago, Microsoft launched Spaces, a blogging tool to build a social networking site within Windows Live. Though Microsoft added 100 million people in it first year, less than 1% of social networking users use Spaces today. “The blogging approach [to social networking] is not the right approach. People are too busy to make that investment,” Hall said.

Windows Live lets its new newsfeed feature do the heavy lifting to give people’s friends updates on what they’re up to. Microsoft has partnered with more than 50 web companies, including Amazon.com (AMZN), Twitter, Flickr,and iLike, a music discovery site. Anytime you blog on WordPress, write a restaurant review on Yelp, or watch videos on Veoh, your status is updated through your Windows Live profile.

Analysts say the new Windows Live makeover is a preview of Microsoft’s newest operating system, Windows 7. The latest version of Windows is expected to integrate tools like photo-sharing, videos, and messaging more seamless between PCs and mobile devices. “All these built-in applications with a blend of Google, Apple, and Facebook is Microsoft’s view of an integrated world,” said Rob Enderle, president of the Enderle Group. “Windows Live comes out first. This is designed for Windows 7.”

Microsoft’s had success with operating systems, but the company still struggles to make a profit from its Internet businesses. Microsoft is banking that more time spent on Windows Live will translate into more web searches on Live and more ads viewed on its portal, MSN. For its fiscal first quarter, which ended in September, Microsoft lost $480 million from its online unit. “We have to get great at the advertising business,” Hall said.

By Yi-Wyn Yen

Microsoft is trying its luck at social networking - again.

After a failed attempt four years ago, Microsoft (MSFT) is ripping a page from Facebook’s playbook, introducing on Thursday new profile and photo-sharing features to its web-based Windows Live services. The software giant allows users with Windows Live Hotmail or Messenger accounts to create online profiles that highlight what a person is doing through a Facebook-like newsfeed.

Microsoft hopes that giving Windows Live a new facelift will encourage more people to spend more time on its web properties. Checking e-mail or instant messaging accounts for up a third of the time people spend on the Internet, according to research firm comScore. Microsoft has 375 million Hotmail users and 325 million Messenger users worldwide. “If we can gain a whole 60 minutes per user, we would grow a whole Facebook in [time spent],” says Brian Hall, general manager for Windows Live.

Though Hall admits that Microsoft’s new strategy could shift some attention from Facebook - in which Microsoft holds a minor stake - to Windows Live, the real concern is longtime rival, Google (GOOG). The search giant already has a commanding lead in the search advertising business, and Microsoft worries about Gmail’s growing share in the e-mail market. “According to comScore, Google has a 6% share of email [in the U.S.] But they’re growing fast,” Hall said.

Like Google, Microsoft has struggled to make inroads in social networking. Four years ago, Microsoft launched Spaces, a blogging tool to build a social networking site within Windows Live. Though Microsoft added 100 million people in it first year, less than 1% of social networking users use Spaces today. “The blogging approach [to social networking] is not the right approach. People are too busy to make that investment,” Hall said.

Windows Live lets its new newsfeed feature do the heavy lifting to give people’s friends updates on what they’re up to. Microsoft has partnered with more than 50 web companies, including Amazon.com (AMZN), Twitter, Flickr,and iLike, a music discovery site. Anytime you blog on WordPress, write a restaurant review on Yelp, or watch videos on Veoh, your status is updated through your Windows Live profile.

Analysts say the new Windows Live makeover is a preview of Microsoft’s newest operating system, Windows 7. The latest version of Windows is expected to integrate tools like photo-sharing, videos, and messaging more seamless between PCs and mobile devices. “All these built-in applications with a blend of Google, Apple, and Facebook is Microsoft’s view of an integrated world,” said Rob Enderle, president of the Enderle Group. “Windows Live comes out first. This is designed for Windows 7.”

Microsoft’s had success with operating systems, but the company still struggles to make a profit from its Internet businesses. Microsoft is banking that more time spent on Windows Live will translate into more web searches on Live and more ads viewed on its portal, MSN. For its fiscal first quarter, which ended in September, Microsoft lost $480 million from its online unit. “We have to get great at the advertising business,” Hall said.

By Yi-Wyn Yen

Microsoft is trying its luck at social networking - again.

After a failed attempt four years ago, Microsoft (MSFT) is ripping a page from Facebook’s playbook, introducing on Thursday new profile and photo-sharing features to its web-based Windows Live services. The software giant allows users with Windows Live Hotmail or Messenger accounts to create online profiles that highlight what a person is doing through a Facebook-like newsfeed.

Microsoft hopes that giving Windows Live a new facelift will encourage more people to spend more time on its web properties. Checking e-mail or instant messaging accounts for up a third of the time people spend on the Internet, according to research firm comScore. Microsoft has 375 million Hotmail users and 325 million Messenger users worldwide. “If we can gain a whole 60 minutes per user, we would grow a whole Facebook in [time spent],” says Brian Hall, general manager for Windows Live.

Though Hall admits that Microsoft’s new strategy could shift some attention from Facebook - in which Microsoft holds a minor stake - to Windows Live, the real concern is longtime rival, Google (GOOG). The search giant already has a commanding lead in the search advertising business, and Microsoft worries about Gmail’s growing share in the e-mail market. “According to comScore, Google has a 6% share of email [in the U.S.] But they’re growing fast,” Hall said.

Like Google, Microsoft has struggled to make inroads in social networking. Four years ago, Microsoft launched Spaces, a blogging tool to build a social networking site within Windows Live. Though Microsoft added 100 million people in it first year, less than 1% of social networking users use Spaces today. “The blogging approach [to social networking] is not the right approach. People are too busy to make that investment,” Hall said.

Windows Live lets its new newsfeed feature do the heavy lifting to give people’s friends updates on what they’re up to. Microsoft has partnered with more than 50 web companies, including Amazon.com (AMZN), Twitter, Flickr,and iLike, a music discovery site. Anytime you blog on WordPress, write a restaurant review on Yelp, or watch videos on Veoh, your status is updated through your Windows Live profile.

Analysts say the new Windows Live makeover is a preview of Microsoft’s newest operating system, Windows 7. The latest version of Windows is expected to integrate tools like photo-sharing, videos, and messaging more seamless between PCs and mobile devices. “All these built-in applications with a blend of Google, Apple, and Facebook is Microsoft’s view of an integrated world,” said Rob Enderle, president of the Enderle Group. “Windows Live comes out first. This is designed for Windows 7.”

Microsoft’s had success with operating systems, but the company still struggles to make a profit from its Internet businesses. Microsoft is banking that more time spent on Windows Live will translate into more web searches on Live and more ads viewed on its portal, MSN. For its fiscal first quarter, which ended in September, Microsoft lost $480 million from its online unit. “We have to get great at the advertising business,” Hall said.

Xbox 360 gets an image makeover to compete with the Wii. Image: Microsoft

By Yi-Wyn Yen

The Xbox 360 is getting a major software update designed to transform it into a multimedia machine.

Starting Wednesday, all Xbox 360 owners will be required to update their gaming consoles so that they can watch movies in high-definition, stream TV shows and movies from Netflix (NFLX) and navigate categories like games, photos, and videos through a simplified dashboard populated with cutesy avatars.

Microsoft (MSFT) is counting on the Xbox makeover to not only drive console sales during a grim holiday-spending season but to broaden its appeal to casual gamers. In a statement, Microsoft hailed the move as “a new dawn in home entertainment,” going so far as to compare the Xbox Experience to the dawn of color television.

The company has been trying for years to brand the Xbox as the digital entertainment hub for the living room. Microsoft executive Shane Kim bragged that through the improved Xbox, the company is “building the world’s largest social and entertainment network” that connects to televisions. The Xbox is now referred to as the “New Xbox Experience.”

Some analysts argue that a recent price cut, not the Xbox Experience, is the console’s major appeal. Microsoft reduced its entry-level Xbox by $80 in early September to $199 and saw U.S. sales rise 33% in October, according to market researcher NPD. The Xbox Experience “is a marginal improvement,” said Todd Greenwald, a senior gaming analyst with Signal Hill. “I think if people are at Target and see an Xbox on a store shelf, they may see the Xbox Experience as a nice feature, but the price point is a much bigger driver.”

Both Xbox and Sony’s PlayStation 3 (SNE) are trying to make inroads to compete with Nintendo’s top-selling Wii. In October, Microsoft sold 391,000 Xboxes in the U.S. while Sony sold 190,000 PS3s. But Nintendo (NTDOY) outsold both gaming consoles by moving 803,000 Wiis, according to NPD.

Xbox Experience, which will offer more than 12,000 movie titles to rent from MGM, Paramount Pictures and Warner Bros., is part of Microsoft’s ongoing efforts to appeal beyond the hardcore gamer market.

Sony is also taking the multimedia approach. The PS3, which lets consumers play Blu-ray discs, is currently building a sophisticated virtual reality world called Home to make gaming a more social experience. Said Susan Panico, senior director of the PlayStation Network, “Our goal from Day 1 is to be an entertainment network. It’s about original programming and videos, and now we’ll bring Home to the PlayStation network.”

Greenwald says new software features Xbox and PS3 aren’t enough to take down the Wii. “I don’t think the Wii is successful because of the Mii avatars. With the Wii, you just pick up a motion-controlled wand and play. You don’t have to learn a controller and all its functions,” Greenwald said.

Microsoft’s Kim says it’s not trying to out-Wii the Wii, but noted the 360 can compete with Nintendo on price. The low-end version of the Xbox is $50 cheaper than the Wii, a point that Kim stresses. “We feel great about having the lowest price for a console, and that will be a big advantage for the holiday season,” he said. “When consumers are looking to buy a console for their kid this holiday, they will see that we’re at $200. Hey, $200 is $200.”

Xbox 360 gets an image makeover to compete with the Wii. Image: Microsoft

By Yi-Wyn Yen

The Xbox 360 is getting a major software update designed to transform it into a multimedia machine.

Starting Wednesday, all Xbox 360 owners will be required to update their gaming consoles so that they can watch movies in high-definition, stream TV shows and movies from Netflix (NFLX) and navigate categories like games, photos, and videos through a simplified dashboard populated with cutesy avatars.

Microsoft (MSFT) is counting on the Xbox makeover to not only drive console sales during a grim holiday-spending season but to broaden its appeal to casual gamers. In a statement, Microsoft hailed the move as “a new dawn in home entertainment,” going so far as to compare the Xbox Experience to the dawn of color television.

The company has been trying for years to brand the Xbox as the digital entertainment hub for the living room. Microsoft executive Shane Kim bragged that through the improved Xbox, the company is “building the world’s largest social and entertainment network” that connects to televisions. The Xbox is now referred to as the “New Xbox Experience.”

Some analysts argue that a recent price cut, not the Xbox Experience, is the console’s major appeal. Microsoft reduced its entry-level Xbox by $80 in early September to $199 and saw U.S. sales rise 33% in October, according to market researcher NPD. The Xbox Experience “is a marginal improvement,” said Todd Greenwald, a senior gaming analyst with Signal Hill. “I think if people are at Target and see an Xbox on a store shelf, they may see the Xbox Experience as a nice feature, but the price point is a much bigger driver.”

Both Xbox and Sony’s PlayStation 3 (SNE) are trying to make inroads to compete with Nintendo’s top-selling Wii. In October, Microsoft sold 391,000 Xboxes in the U.S. while Sony sold 190,000 PS3s. But Nintendo (NTDOY) outsold both gaming consoles by moving 803,000 Wiis, according to NPD.

Xbox Experience, which will offer more than 12,000 movie titles to rent from MGM, Paramount Pictures and Warner Bros., is part of Microsoft’s ongoing efforts to appeal beyond the hardcore gamer market.

Sony is also taking the multimedia approach. The PS3, which lets consumers play Blu-ray discs, is currently building a sophisticated virtual reality world called Home to make gaming a more social experience. Said Susan Panico, senior director of the PlayStation Network, “Our goal from Day 1 is to be an entertainment network. It’s about original programming and videos, and now we’ll bring Home to the PlayStation network.”

Greenwald says new software features Xbox and PS3 aren’t enough to take down the Wii. “I don’t think the Wii is successful because of the Mii avatars. With the Wii, you just pick up a motion-controlled wand and play. You don’t have to learn a controller and all its functions,” Greenwald said.

Microsoft’s Kim says it’s not trying to out-Wii the Wii, but noted the 360 can compete with Nintendo on price. The low-end version of the Xbox is $50 cheaper than the Wii, a point that Kim stresses. “We feel great about having the lowest price for a console, and that will be a big advantage for the holiday season,” he said. “When consumers are looking to buy a console for their kid this holiday, they will see that we’re at $200. Hey, $200 is $200.”

Xbox 360 gets an image makeover to compete with the Wii. Image: Microsoft

By Yi-Wyn Yen

The Xbox 360 is getting a major software update designed to transform it into a multimedia machine.

Starting Wednesday, all Xbox 360 owners will be required to update their gaming consoles so that they can watch movies in high-definition, stream TV shows and movies from Netflix (NFLX) and navigate categories like games, photos, and videos through a simplified dashboard populated with cutesy avatars.

Microsoft (MSFT) is counting on the Xbox makeover to not only drive console sales during a grim holiday-spending season but to broaden its appeal to casual gamers. In a statement, Microsoft hailed the move as “a new dawn in home entertainment,” going so far as to compare the Xbox Experience to the dawn of color television.

The company has been trying for years to brand the Xbox as the digital entertainment hub for the living room. Microsoft executive Shane Kim bragged that through the improved Xbox, the company is “building the world’s largest social and entertainment network” that connects to televisions. The Xbox is now referred to as the “New Xbox Experience.”

Some analysts argue that a recent price cut, not the Xbox Experience, is the console’s major appeal. Microsoft reduced its entry-level Xbox by $80 in early September to $199 and saw U.S. sales rise 33% in October, according to market researcher NPD. The Xbox Experience “is a marginal improvement,” said Todd Greenwald, a senior gaming analyst with Signal Hill. “I think if people are at Target and see an Xbox on a store shelf, they may see the Xbox Experience as a nice feature, but the price point is a much bigger driver.”

Both Xbox and Sony’s PlayStation 3 (SNE) are trying to make inroads to compete with Nintendo’s top-selling Wii. In October, Microsoft sold 391,000 Xboxes in the U.S. while Sony sold 190,000 PS3s. But Nintendo (NTDOY) outsold both gaming consoles by moving 803,000 Wiis, according to NPD.

Xbox Experience, which will offer more than 12,000 movie titles to rent from MGM, Paramount Pictures and Warner Bros., is part of Microsoft’s ongoing efforts to appeal beyond the hardcore gamer market.

Sony is also taking the multimedia approach. The PS3, which lets consumers play Blu-ray discs, is currently building a sophisticated virtual reality world called Home to make gaming a more social experience. Said Susan Panico, senior director of the PlayStation Network, “Our goal from Day 1 is to be an entertainment network. It’s about original programming and videos, and now we’ll bring Home to the PlayStation network.”

Greenwald says new software features Xbox and PS3 aren’t enough to take down the Wii. “I don’t think the Wii is successful because of the Mii avatars. With the Wii, you just pick up a motion-controlled wand and play. You don’t have to learn a controller and all its functions,” Greenwald said.

Microsoft’s Kim says it’s not trying to out-Wii the Wii, but noted the 360 can compete with Nintendo on price. The low-end version of the Xbox is $50 cheaper than the Wii, a point that Kim stresses. “We feel great about having the lowest price for a console, and that will be a big advantage for the holiday season,” he said. “When consumers are looking to buy a console for their kid this holiday, they will see that we’re at $200. Hey, $200 is $200.”