Microsoft reveals plans for online services

...people could use a sidebar to subscribe to RSS feeds, load podcasts and enter search queries onto a personalised Windows Live home page.

People will also be able to add non-Web items, such as a corporate SharePoint server or recently opened documents, to the Windows Live home page. Irving also presented the Windows Live Safety Center, a free tool that lets customers check on the health of their PC and scan for and remove viruses.

Also included is an AJAX-based Windows Live mail client that connects to Hotmail or other addresses. The Web client resembles Microsoft's Outlook email program and can warn people about Internet fraud phishing scams.

There is also a Windows Live Messenger program that provides traditional instant messaging alongside some social networking features, such as the ability to view your circle of IM buddies. (Members have the right to say whether they want to be included in the viewable circle.)

In the demonstration, Irving showed how Windows Live Messenger offers the ability to make phone calls over the Internet, from a PC to a traditional phone.

Also for those who opt in, Microsoft has a new live business card that updates contact information online and on a PC any time that the information changes.

Some parts of the Windows Live software are in beta testing now, executives said. Others, like the new Messenger, should begin testing in December.

In the Office
The Office Live service is mostly targeted at small businesses, said Rajesh Jha, general manager of information worker services at Microsoft, who presented the demo of the service. He noted that 28 million of the world's 42 million businesses are companies with fewer than 10 employees.

Jha showed how small businesses like these can use Office online to set up Web sites with custom domain names and multiple e-mail addresses — all free. Initially, these sites will not carry ads, but Microsoft sees the feature as a revenue opportunity and expects it to eventually be ad-supported.

Another tool, called "Mojo," will enable a small group of users to work collaboratively on the same document — in the case of the demonstration, an Excel spreadsheet.

"We're always on the same page," Jha said. "This real-time service is going to be free."

He also showed some of the 22 applications that are part of the subscription service, including customer management tools and secure collaboration.

Office Live will be in invitation-only beta testing in the first quarter of next year, Jha said. That beta will also be limited to the US, he added.

More to come
Tuesday's announcement is more of a placeholder for other initiatives to come, Smith said. "I think part of why people look at this and say it looks sketchy is because it is. But it's a step in direction that they have to go in," he said.

Smith likened the announcement to Gates' Web call to action of a decade ago. "It's the beginning of a big change at the company that will take a long a time to see manifested in mainstream products," he said.

In the meantime, the new products help Microsoft better compete with online rivals. Although the traditional software industry is very profitable and well understood, online advertising is an important opportunity, Ozzie said. He praised Google for demonstrating some of the possibilities.

"Google is doing an amazing job of making that ad engine click on all eight cylinders." Ozzie said.

But he said that the industry has barely scratched the surface, pointing out that the market for online advertising could grow from $15bn now to $150bn by 2015.

CNET News.com's Mike Ricciuti contributed to this report.