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Microsoft plans to go it alone online
Post Yahoo!: Redmond considers its options

By Ina Fried

Published: Wednesday 07 May 2008

In the wake of Microsoft's decision to pull its Yahoo! offer, executives are trying to make the case that Redmond's online business can go it alone.

Speaking to investors yesterday, Windows Live general manager Brian Hall tried to bring the focus back to what Microsoft is doing 'on its own', rather than what might have been.

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Speaking at a Merrill Lynch technology conference, Hall said: "We've withdrawn the offer and moved on, and now are focused on how we grow as fast as possible organically." He added that Yahoo! would have helped in the email business worldwide - and in the instant-messaging arena in the US in particular.

Investors also wanted to know whether AOL might be Microsoft's next acquisition target. Hall wouldn't address that question but he did offer his take on AOL's strengths and weaknesses.

He pointed to AOL's strong position in email and instant messaging and as a portal in the US, as well as its strong messaging position in Germany and Russia.

He said: "[AOL] certainly have a large customer base today in those markets. At the same time, they don't have an ad platform."

Despite this, he pointed to the fact that AOL has been monetising its search results via Google for some time. He also noted that AOL has been losing ground to rivals overall.

He said: "They are not gaining share today, for sure," before going on to discuss where Microsoft itself is going, outlaying the company's key efforts around MSN, Windows Live and search.

Hall emphasised the strategic importance of Windows Live to the company, although it is a component of Microsoft's online business, one of its main purposes is to try to keep the operating system relevant in a world that has become very browser-centric.

He pointed to the growing number of desktop applications Microsoft has created that connect to online services, such as Windows Live Mail, Windows Live Photo Gallery and Windows Live Writer.

Hall said: "Our goal there is to clearly create killer apps for Windows, where people appreciate Windows more."

On the search front, Hall reiterated Microsoft's previous stance: that search results still are not all that good and that Microsoft sees opportunities to gain ground, particularly by integrating search experiences directly into its online tools.

He said: "We think we can do a lot more to drive contextual search. We see a lot of opportunity to push the envelope there."