Go back to Part Two

Part Three: Services that communicate

There's an almost mythological story about Amazon.com where founder Jeff Bezos made a list of the things he thought he could sell online, and then ordered that list so that the best items to sell would be at the top. Amazon first started selling books, his number one choice, and then moved down the list until it was selling all of the listed items.

At MSN, things didn't happen quite that logically. The company started as an online service and then moved into the online content business. But by the early 2000's, MSN was starting to gel. It had services like Hotmail and Messenger that were wonderfully popular but offered no true integration between them. Thanks to early work by Blake Irving--described as the "tip of the spear" in terms of the MSN turnaround--and then later by Mehdi and Cole, a more customer-centric approach began to turn things around.

Irving's early work can't be emphasized enough. After joining Microsoft in 1992, Irving was responsible for the company's first Internet video conferencing product and collaboration product, Netmeeting, and worked on Internet phone and Internet mail client software. Moving to MSN in 1998 with John Ludwig, Irving launched the MSN Messenger instant messaging service in 1999. That product is now in use by over 165 million customers every single day. That makes it an ideal outlet for exposing customers to other MSN services.

"When you think about services like Hotmail or Messenger, or Spaces, or the My MSN home page, those are a few of the services where you actually have to authenticate to the network," Adam Sohn, the Director of MSN Global Sales and Marketing PR, told me. "We know a lot about what our best customers are doing. And given that we're at about 380 million unique users a month, that's a pretty decent sized sample for us to know, in our network, what's resonating with people."

MSN also closely watches for integration points across all the experiences it offers. Sohn believes that is an outcropping of the reorganization MSN did, and a shift in the mentality down at MSN, "We're leading that wave across Microsoft, where you think more about what the user wants to accomplish, rather than trying to jam features into the shape of the application," he added. "It's a confluence of those things."

MSN Messenger and Spaces

The recently released MSN Messenger 7 and MSN Spaces are off to a torrid start. Messenger is now the number one IM service on earth, with over 15 million people using the service simultaneously each day, exchanging over 2.5 billion messages each day. There are over 4.5 million Spaces online, making it one of the largest blogging services on earth. Spaces, overall, gets over 180 million page views each month.

"Since it launched, we've been averaging about 160,000 Spaces created each day," Larry Grothaus, a Group Product Manager for MSN, told me. "Initially, it was about 300,000 a day, and then it leveled off. The important point is that a lot of the discovery [of Spaces] came from Messenger 7. And that's available for [manual] download today, but we haven't started the auto-update process on that. As that larger base out there gets it installed, and sees this new [Spaces] button, they'll [discover that new service]."

Sohn added, "there's this interesting social phenomenon with Messenger 7. You learn a lot about what's going on with your buddies before you even start talking to them. So you see a little flashing star--a Gleam--and you think, what the heck is that? And all of a sudden you're reading someone's Space, and it's like, damn, I want to get one of these. In some ways, that's a tightly constrained social network."

It's predictable that a product like MSN Messenger 7 would do well, as the previous versions were used by so many people. That MSN Spaces has jumped out of the gates so quickly, however, is somewhat astonishing. Not only are people starting up Spaces-based blogs, they're continuing to add content to them over time. "People are being very active," Sohn said. "In the beta--and I'm sure the numbers have gone up since then--we were seeing 5 million comments a day, and 1.8 million photos uploaded a day [on Spaces]. So this is something that people are not only starting, but also they're actually using. It's just so drop-dead easy to throw photos up there, that if all you want to do is scrapbooking, it's a great tool."

"As for the blogging ... for once, we're not too early," he added. "But we're just early enough for blogging for the mainstream. The blogosphere likes to say all kinds of things about where blogging is. But people want this level of communication. It's great just to be able to logon from a vacation and throw some photos up. You're just enhancing your relationships with people, and you can do that in lots of different ways. Online is one of them. It's a key component."

Next generation communications experiences

"This was a big release season for us with what we call the 'Wave 10' products, including Spaces, [MSN] Messenger [7], and Hotmail," Sohn says. "But I think in the next year, you're going to see us really turn up the volume. Right now, the Search volume is--if I can use a Spinal Tap metaphor--at 11, right? I think we're at about 9 with the communications services right now, and it's going to go to 11 over the next year."

One contacts store to rule them all...

To facilitate the next generation of communications services, MSN has developed a unified contacts store. "Again, we're thinking like the consumer thinks: There are a bunch of people I have relationships with," Sohn told me. "So when you get away from Search, which is about your relationship with information, communications is about the people who are important to you. And how do we pivot software-driven experiences around that metaphor?"

"There are people I care about. How do I communicate with them today? Well, there's email, there's telephone, there's instant messaging, there's in-person stuff. Now how do we drive a bunch of software-powered experiences there? One of the key things we realized was, it's ridiculous to have an address book in every single application you have, especially when they're online. If you think about something like Messenger, you can certainly look at your contacts offline, and you have email addresses for all of them, but ultimately, that's an online service. It works when you're online. Hotmail, too, is an online service, although there are offline ways to access it through MSN Premium or the [Microsoft Office Outlook Connector] offering. Still, it's this thing that lives out in the cloud, and it's always on, always there."

The unified contacts store--or ABCH (address book clearing house), as it is called internally--is a huge infrastructure investment that took MSN a couple of years to complete. Work on this technology came out of Irving's personal commitment to unify the madness of competing address books at Microsoft. He and his team played a veritable game of "whack-a-mole" for a couple of years, preventing other teams from trying to build yet another address book. For MSN, this is important work: The division has created both an infrastructure investment and is releasing features on top of that investment in a more rapid fire way than was possible in the past. "This way we innovate not only for consumers, but also move the state of the art in terms of operating large services and building new capability into the platform," Sohn says. "And all of this is built on the new innovations that go into Windows [client and server] as they are updated. So it is all part of an interesting cycle."

To the end user, the unified contacts store is essentially plumbing, but here's an interesting statistic: MSN has over 8 billion contacts in that database. "Without beating our own chests too broadly, because right now, as a social network, it is one of the biggest social networks on the planet. It might be the biggest. We really don't know. But in the next year, year and a half, you're going to see us start thinking about how we can provide experiences that can take advantage of that."

"We have to be super careful," Sohn adds. "You know we're held to a different standard. We have to be super, super careful with anything that even remotely touches privacy or user consent. Also, we don't want to inundate people with very complex relationship metaphors. For example, my mother should not ever have to think about her relationships in terms of a graph, or think about mesh networking, or peer-to-peer protocols. She should just think, hey, I want to talk to my son."

Social networking

Over the next year, MSN will also expand the social networking functionality of its communications services. What's the next-generation communications experience? "If we think about all the ways in which you communicate through MSN today, where we give you the unified contacts store, there's a bunch of presence information in there ... how do we bridge that to the offline world?" Sohn asked. "Is there a scenario where I can say, I just want to contact Paul, and then the network figures out the best way to do that? I see that he's online, so maybe I want to initiate a video conversation. Maybe down the road somewhere, I want to call you, and you're not online, but I have all your numbers in my contacts list, and my computer starts calling you."

"I see a future where my cell phone just becomes a communications device," he added. "When I'm in the house, maybe I'm doing a wire line sometimes; maybe sometimes I'm doing VoIP. When I leave the house, I'm out on Cingular's network. Inside the house, maybe there's something smart enough to tell me when I could be having a VoIP conversation handset-to-handset, handset-to-PC, or PC-to-handset. Or maybe there are times when it just makes sense for me to have a wire line conversation, and then that cell phone just becomes a cordless phone. Today, I have my cordless phone at home, I have a cell phone, and I have whatever it is I use with my PC. I have no one stored in my cordless phone, but I have six hundred contacts in my cell phone, and more than 150 people in my [MSN] buddy list. How do I unify all that and pivot the communications experience around what I'm doing? The next year is going to be about relationships between people and how to make those relationships more meaningful."

The future of MSN Music

MSN remains committed to MSN Music and promises to ratchet up the volume on that in the coming year as well. "We've got Plays For Sure on the platforms side," Sohn said. "You literally see a logo on a box and you know it's just all going to work. That's actually been a pretty successful campaign so far, but what it's done is really set the stage for unchecked device innovation. You're going to see, over the next year, the device guys come out with some very cool stuff. And we're going to continue to drive cool features into the music service."

What about the competition? Today, Apple's iTunes continues to dominate the online music world, despite recent advances from MSN, Napster, Yahoo! Music, and RealNetworks Rhapsody. "We made a choice," Sohn told me. "It's a rapid-fire innovation choice. If Apple wants to push out a bunch of new features in iTunes, they have to go and touch every client. We just have to change some things in the service. We've already done that a bunch of times. We've added the ability to gift people songs, now that just shows up. We added download cards. We just keep churning the innovation wheel and we can just deploy stuff on the site, and boom, new features appear."

MSN portal prototypes

MSN has also been working on interesting prototypes that might turn into next-generation versions of its MSN portal. Not coincidentally, Google's announcement last week about adding personalization to its own Web site looks suspiciously similar to some of this work.

"We have some prototypes, stuff we're just throwing over the wall, in order to see how it works," Sohn said. "There are some very interesting information-driven experiences if you go to start.com/1 or start.com/2. We've done some interesting work there. In that set of experiences, we're thinking about how people think about the information that's important to them in their lives."

Gathering data

"One of the most interesting things I saw when I first came back over to MSN was a design ethnography going on," Grothaus told me. "We have anthropologists and ethnographers on staff dedicated to going into home environments, and looking at everything people are doing, not just with computers. They see how people are using their PCs."

"That is just indicative of this mentality of just understanding how people want to relate to other people and how people want to relate to information," Sohn added. "Then we go back and figure out what role the PC can play today, what role it can play tomorrow, and what partnerships we need to establish with device makers. This idea of having anthropologists around, they're not computer scientists at all. They just understand people. They drive a deep understanding of what people are trying to get accomplished. And then we figure out how we can use software to help them."

"We believe in that. You've covered Microsoft long enough that you probably roll your eyes when you hear the various iterations of our mission statement... Realizing your potential. But ultimately, that's been true forever. We just believe that software can make a lot of stuff better. But I think we've gotten much smarter about understanding how that is. You need something to bridge that gap [between Microsoft and the consumer]. Our ability to do that is just awesome."

Elsewhere at Microsoft, other groups are now thinking about users the way that MSN does. The Windows team, for example, has really institutionalized this concept by coming up with a set of prototypical users, called personas. "If you're a program manager writing a spec, you'll have to explain which persona you're targeting, like Abby [an inexperienced user] or whatever," Sohn said, alluding to the personas posters that adorn the walls around the Windows division offices. "This is a shift the company is making. But MSN is on the frontlines with the consumers, we're the online business for the company, and we're just leading that charge. There are other pockets of interest too. Robbie Bach and the Xbox guys get the consumer for sure."

MSN and advertising

MSN is even trying to innovate with advertising, if you can believe that. For a customer-centric division like MSN, of course, advertising is a fine line to walk. You need the revenue, but you don't want to alienate customers with in-your-face pop-up windows and other annoyances.

"There are a couple of interesting trends going on in advertising," Sohn mentioned. "Number one, if you look at search advertising and even display advertising, the experience that advertisers have interacting with these networks today are horrible in terms of how they buy across these big networks, and how they track campaigns. So we piloted this thing called Ad Center. We realized that this was a big horizontal problem for our customers where software could make a difference. As you know, that's the kind of thing we get excited about. So we build a system. Today, we do that with a partner called Overture, which is now owned by Yahoo!, and we think that partnership with continue. But we also think that there are places where we can add a lot of value."

"The other thing that's interesting on the ad side is that there's been a shift in thinking from the big brands. When [advertisers] think about their online mix, they think about banners, and keywords in search, but they're also thinking more about branded entertainment experiences. We actually took one of our ad sales units and gave them a charter where they became the Branded Entertainment and Experiences team, and if you've seen the Sprite stuff inside of Messenger 7. It's a branded experience, powered by Sprite. Is it an ad? I mean, to us, it's an ad. But it's also a software-powered, fun experience that builds a relationship between that consumer and the brand, but doesn't interfere with what they're doing, and in fact can actually enhance that interaction."

Another example of these new branded entertainment experiences is the VW Spin Cycle, which links the Volkswagen brand with mood-based music playlists like "back roads," "morning commute," and "bad hair day." VW aficionados can watch VW advertisements, sign up for a newsletter, or even shop for a new car. On the road of life, Volkswagen says, you need a great soundtrack. It's an interesting concept that combines a beloved brand with consumers in a non-painful way. "We've moved over the past years from believing we were building a giant communications network years ago, to believing we are building the largest, socially, demographically, and geographically distributed audience for advertisers, brand and direct the world has ever seen," Sohn adds, "and the way we do that is building the leading edge services that delight customers and keep them coming back, so everyone wins."

Conclusions

When I speak with people from the Windows division at Microsoft about new product releases, there's always an unspoken assumption that I won't see these people again for many months or even years. With MSN, it's sort of a running joke that I'll often be speaking with them just days later. They just have so much going on.

"It's a very exciting time," Sohn said. "This is a Bill Gatesian thing to say about MSN, but as fired up as I am about the stuff we've done in just the last year or two, I feel like we've just finished laying the foundation across all of our services so that we can do the next wave of super cool stuff. I feel like the whole MSN division is inhaling, and as soon as that ends .... If people think we're fast now, or people think we're spry and nimble, you just wait. The next year is going to be just awesome. We're going to floor people over the next 12 months. We're ready to rock."