Is Social Networking a Good Fit for Microsoft?

Microsoft has launched Wave 3 of its Windows Live service which now looks very much like a social network positioned to compete with other products in the field like Facebook. What Microsoft basically did was integrating all its disparate services into one social network and also offered integration with other web services, including Flickr, iLike, Twitter, StumbleUpon, WordPress, to aggregate activity from those sites the way FriendFeed does.

The reaction from the traditional press and the blogosphere was rather positive with reporters noting the speed and responsiveness of the site along with sleek functionality. And of course since we rarely expect anything good from Microsoft when it comes to online projects, the expectations were low enough for anything more or less working could do pretty well.

The functionality of the new Windows Live is pretty standard for a social network with nothing extraordinary. This makes me wonder why Microsoft really decided that out of all the things it could offer to the mankind yet another social network was exactly needed. After reading the reviews today and playing with Windows Live myself I have come to a conclusion that Microsoft should not waste time and money on social networking for quite a number of reasons.

Microsoft itself and brand’s perception

First of all, Microsoft does not have the right image in the web crowd to try and pretend it can offer the web population a social network that will become popular. It is simply not cool here to think Microsoft is cool in any way. I myself tend to think that there are some things in which Microsoft is pretty cool but every time I try to mention them, I get tons of criticism.

The latest example was when I tried to mention a few things about Google’s Chrome browser that were described by media people as innovative and introduced by Google into web browsing but were in fact present in other browsers – including Microsoft Internet Explorer 8 beta. As a result of even trying to compare I got dozens of angry comments insisting that even if Microsoft was ahead of Google introducing this or that thing into web browsing experience, Microsoft still was evil while Google was the best company in the world that should never be criticized at all.

For tech bloggers and the early adopters crowd hating Microsoft in public is something of a standard behavior that is very similar to appreciating everything by Google and by Apple in public. And for a social network to work, there’s a real need for users’ affection towards the brand because a user won’t spend endless hours talking to his friends and sharing his or her photos with them in a place that does not belong to some cool company managed by equally cool people (like it is cool to be on a social network owned by such a cool young guy who the users have turned into a millionaire with our participation – something we are very proud of).

Unfortunately for many companies a social network is not about the quality of the product its members are supposed to use, it is mainly about how cool and hip it is to use this particular product and what your friends think about this product. And it will be difficult to find many friends telling good things about Microsoft, I’m afraid.

Software versus social networks

The second reason is also about Microsoft and its traditional line of business. Have you ever heard Microsoft named “internet giant” by a reporter? Me neither. But I’ve heard “software giant” hundreds of times (and used it at least a dozen of times myself). Microsoft is not about internet, this company is strictly about software. And while Microsoft constantly tries to enter the online industry, the attempts can rarely be categorized as huge successes. The most recent attempts are Microsoft’s venture into cloud computing along with the online versions of Microsoft office applications – but both of them are plans and promises for now and we will only be able to say if they are successful when they are actually in use eventually.

I do understand that Microsoft has finally managed to realize that internet is a huge industry and it wants to participate until it is too late to grab any market share. What’s more, I think Microsoft has all the chances to succeed in the software as a service business offering its productivity applications as web-based tools for those people ready to move their workflow from the desktop to the browser. But why everything that is online needs to have a social network around it? Honestly, I can hardly understand why the internet population would need yet another social network while I see enough space for competitive SaaS solutions – and this is exactly where I see Microsoft holding a strong position instead of wasting time and money on development of social tools.

Microsoft is about money, social networks rarely are

And finally, we all know that Microsoft knows how to make money off software sales. We also know how efficient the software giant is in working with enterprise customers and earning good money off corporate sales as well. Besides, I have a feeling that unlike numerous internet startups Microsoft will also quickly learn how to monetize web-based versions of its software instead of making it free and hoping to earn something off ads. I am pretty sure that once Microsoft finally lunches commercial use of its office suite online, they will turn it into an additional revenue stream that will eventually play an important role for the Redmond-based corporation as web-based tools will be gaining further popularity.

But where I don’t see Microsoft at all is in running Windows Live social network AND monetizing it efficiently with ads. Everyone already knows how hard social networks are in terms of monetization and Facebook has been experimenting with different types of ads for quite a while now without reporting significant success and even admitting that they are yet to come up with a real business plan. At that we should keep in mind that for Facebook social networking is the only business so the company puts all the efforts into monetizing it – and if it does not reach significant results, how can we expect Microsoft to do better with only partial efforts focused on it?

My point is that Microsoft is very much focused on making money since it is a real business lacking the psychology of an internet startup where users come first and money could potentially come second (or could never come). And social networking is nearly impossible to monetize as many entrepreneurs have learned the hard way – and I’m sure Microsoft should have already noticed it as well.

For these three reasons I tend to think that while this new version of Windows Live is no doubt good and is probably better than many of the other things Microsoft has tried to do online, social networking simply does not fit Microsoft’s line of business and mainly distracts the company from what it should focus its efforts on – like building working versions of online office applications and launching them as soon as possible until it is too late to enter the market. My belief is that some businesses just do not fit certain companies and social networking is exactly this business for Microsoft. So why trying to be everywhere when you can be better off focused on something that you really know how to do pretty well?