Microsoft rolls out Web services linked to Windows

By Daisuke Wakabayashi

SEATTLE (Reuters) - Microsoft Corp. released on Tuesday a suite of free Web services that connect to its Windows operating system, delivering a major element of its strategy to maintain the dominance of its software while extending its reach on the Internet.

The package of "Windows Live" services, which was first released in a test version in September, makes available in a single download updated versions of e-mail, instant messaging, photo gallery, blogging and event planning applications.

As part of the new software suite, users can access their free Web e-mail through a downloaded desktop application -- similar to Office Outlook used by many businesses -- instead of using a Internet browser to check, reply or write e-mails.

Similarly, Windows PC users with a single click can either save photos to the computer's hard drive or publish and store the pictures on the Web using Windows Live Photo Gallery.

Up against competitors looking to replace traditional Microsoft software that runs on a computer's hard drive with software run over the Internet as a service, the company faces a dilemma that strikes at the core of its business.

Does it dive headfirst into Web services at the expense of its dominant Windows and Office franchises? Or does it ignore the shift to Web services and risk outdating its bread-and-butter businesses?

Microsoft's solution is to straddle the line between the two with a strategy called "software plus services." The idea is to develop new Web services that complement, but not replace, its traditional software.

"Microsoft can't take a brand new approach with services on the Internet because it has to protect Windows and Office," said Morningstar analyst Toan Tran.