Microsoft Live Services Show Financial Losses; Will Microsoft Drop Them?

The Windows Live Essentials have become something that many rely on.  Since Microsoft has removed Outlook Express from Vista, and then removed Windows Mail from Seven, it makes almost everyone download and install Windows Live Mail for their version of Windows, whether it be Windows XP, Vista, or Seven.

The packaging of the Live services are such that most download the entire package, as many use, or think they might use, Live Messenger, while the bulk of both Live Writer and Live Photo Gallery is so small that it’s just faster to say yes, and download everything. Live Writer is terrific, and keeps getting better. Live Photo Gallery, is not quite Picasa, but not far behind. Live Mail has a couple of flaws, which seem to elude the guys at Microsoft, but nothing that cannot be worked around. Live Messenger is great, and unless you use Trillian, because you need to join with other people, using other protocols, it is all that is needed.

Microsoft has really done something right this time, it would be a shame if they yanked it away, or let it languish, because they could not make it make money.

Yet we have seen how ruthless this company can be about profit over the years. Many people lauded Popfly, and were going gaga over the idea of having it available for their use. But when Microsoft decided it was not part of a positive monetary stream, it was cut out like a cancer.

Will the Live Essentials suffer the same fate?

An article in Ars Technica shows that Microsoft is losing money on them, and especially on Hotmail (now Windows Live Mail).

• Windows Live brought in $520 million in revenue but still lost $560 million. Windows Live was moved from the Online Services Division into the Windows client group.
• Mobile Services brought in $70 million in revenue but lost $50 million. Mobile Services was moved from the Online Services division to the Entertainment and Devices Division.
• Razorfish brought in $360 million in revenue but lost $50 million. Microsoft sold off Razorfish for $530 million in August 2009.

Windows Live’s loss is the most disconcerting; after all, Microsoft told us in January 2009 that the web services (such as Hotmail) and the client applications (such as Messenger) have 500 million users. Windows Live generates revenue mainly through advertising while its expenses come from data centers, research and development and innovation, as well as sales and distribution. Microsoft will continue to spend on Windows Live (it’s part of the software giant’s Windows strategy after all), and we’re likely to see a boost in its use as a portion of the 500 million Office users (some of which of course already use Windows Live) start using Office Web Apps via Windows Live SkyDrive.

Will Microsoft be wanting to sell off the Live Essentials, like it did with Razorfish? Oh, I know what the above paragraph says, but we’ve seen turnarounds from Microsoft before – seemingly on a whim, and also when it seemed that the right move was to stay the course just a small bit longer.

As someone who is ready to criticize Microsoft at a moment’s notice, about almost anything, I really can’t see a reason to abandon, or sell these programs. If anything, this would be the reason to get those last, little niggling bad bits out (Like the bug that sometimes stalls Live Mail if a person starts working with mail while a large amount of mail is still downloading. It’s a threading issue, because the entire application does not stall, just parts of it.)

Small things in Live Writer get fixed, on a regular basis, and I personally have not noticed a problem in Live Messenger in over two years.  These programs are better than they were, and I recommend, or install them for all my customers.

What is needed now is a 64bit version of Live Essentials, to go along with those many copies of Windows 7 that will be 64bits.

(For those than want to check out the Microsoft financials a bit more closely, the link to the Ars article has the graphs and charts)

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Quote of the day:

After two years in Washington, I often long for the realism and sincerity of Hollywood.

- Fred Thompson (former Senator and former actor, shows like Wiseguy, movies like  The Hunt for Red October)

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