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MSN: The Inside Story

MSN was birthed in controversy and was then somewhat of a joke in the online community for several years. But about five years ago, MSN found its groove. Since then, this Microsoft division has become the most unheralded success story at the software giant, all while consistently nipping away at past perceptions and prejudices. Most important, perhaps, MSN is also making headway against the competition. While online giants such as AOL, Google, and Yahoo! still stand in its way, MSN has unleashed a startling array of integrated products and services over the past year. And this, I'm told, is just the start.

So here is the story of MSN's rebirth as an Internet services powerhouse. In part one, I quickly examine the convoluted history of MSN, which has been repurposed and re-imagined repeatedly during its decade-long life. In part two, you'll learn about the internal reorganization that finally put the division on the right path, the new customer-centric mantra that drives all of its product development, and its historic decision to take on Google in search. In part three, I'll examine MSN's other services, including MSN Messenger, MSN Spaces, and MSN Music, and Hotmail.

Part One: Beginnings

In the mid-1990's, Microsoft was at a crossroads as it struggled to reinvent itself during the ascendancy of the Internet. It's then-upcoming operating system, Windows 4.0 (codenamed "Chicago," but soon to be renamed as Windows 95), would be the last major product the company shipped that came without pervasive Internet features. Indeed, Windows 95 only included the "plumbing" necessary to drive the Internet: Low-level networking functionality such as TCP/IP.

Others at Microsoft realized the potential of the Internet as well. Ben Slivka, a software developer on the Windows team, saw the need for a Web browser in mid-1994 and started an internal project with several other developers to create a product later known as Internet Explorer (IE). Because of the time crunch leading up to the Windows 95 launch--then expected in early 1995--Slivka and his team licensed browser code from Spyglass. Though the IE 1.0 code was completed in time for the Windows 95 launch, IE was not included in the initial retail version of that product. Instead, IE 1.0 was included in the versions of Windows 95 that were bundled with new PCs, and was included in the add-on Windows 95 Plus! pack.

"The reason for this is that we had a deadline early in 1995 to finalize the box art for [Windows 95] Upgrade and Plus, and I was appropriately cautious and was not 100 percent confident that IE would be done at or before the rest of Windows 95," Slivka told me. "So we made that box art decision. When Windows 95 took just a bit longer to finish, the IE team worked very hard, and we were able to complete it in time to be part of Windows 95. So it was in every copy of Windows 95 pre-installed by computer manufacturers. But we had printed all those Windows 95 and Plus! boxes, and so we couldn?t put IE into the Windows 95 Retail Upgrade box."

Elsewhere, Russell Siegelman was pushing for Microsoft to create its own online service, dubbed The Microsoft Network, or MSN. These days, it's hard to remember the online services scene of the mid-1990's, but suffice to say it was a far different world than that of today. Back then, traditional online services such as CompuServe, America Online (AOL), Genie, and Prodigy ruled the online world, providing subscribers with walled-off content and no easy way to connect with members at other services. The Internet eventually changed all that, and those online services that couldn't embrace the change would wither and die. The question in 1994, of course, was whether MSN would jump on the Internet bandwagon.

Initially, it would not. From its earliest planning stages, the original version of MSN had one huge advantage over competing services: It would be included with Windows 95 and would offer users an integrated experience. That is, folders for Windows Explorer and folders that represented locations on MSN were virtually indistinguishable. To the user, MSN would be just another thing you could do with Windows 95. As 1994 came to a close, it seemed that MSN would simply be its own proprietary world like all the other online services. The Internet, it seemed, would have to wait.

Then came the infamous Bill Gates memo, "The Internet Tidal Wave," in May 1995. Alarmed by the quickening popularity of the Internet, Gates realized that his upcoming products, Windows 95 and MSN, were woefully unprepared for the coming online age. It was too late. With both products on the verge of shipping, the company turned its attention to the post-Windows 95 world and tried to imagine how it could Internet-enable its product-line to drive demand for new software.

You look Marvel-ous

The middle of 1995 was a fun time for me. My wife and I were living in Phoenix, Arizona and I had just begun writing books, including my first title, about Visual Basic 3.0. Gary Brent, then a professor at Scottsdale Community College (SCC), had taken me under his wing, and we were prepping titles on Windows 95, Excel 95, and Visual Basic 4.0. The betas came fast and furious out of Redmond. We were on the Windows 95 and Office 95 betas, of course, but that spring and summer other betas started arriving, for Plus! 95, and MSN. MSN--codenamed "Marvel"--was particularly intriguing because it didn't offer its own user interface per se, but rather integrated directly into the Windows 95 shell. I actually kind of liked it.

Little did I know that the initial MSN interface wouldn't last. Even as the first MSN customers started navigating slowly through the maze that was Microsoft's online service, the company was planning to rip apart all the work it had done on MSN and Internet-enable the service. MSN, naturally, was only part of a larger Internet push. Work had also begun on future versions of IE, the IIS Web server project had started, and plans for future acquisitions (like Vermeer, for FrontPage) and licenses (like that for Sun's Java) were underway.

What's most amazing about the first version of MSN, really, is the stir it caused. Competitors such as AOL and CompuServe complained to anyone that would listen that Microsoft's bundling of MSN with Windows 95 constituted an antitrust violation. Also, MSN was cheaper than competing services. Indeed, the bundling of MSN almost threatened to delay Windows 95. In the end, Windows 95 shipped with MSN included. But competitors had nothing to fear: MSN 1.0 was a dud. It was just the first of several defeats MSN would suffer over the next several years.

MSN Re-imagined

For the next few years, MSN was recast again and again as Microsoft tried to make sense of the Internet. The company tried a Web-based version with a custom MSN browser, all done up in Darth Vader-like black and red colors. Then, Microsoft tried the content route and pushed sites such as Mungo Park, offering viewers a unique combination of "Internet text, audio and video chat."

There were some high points during this era, however. Microsoft purchased the Hotmail Web-based email service in 1997 and turned it into an extremely popular MSN service, and arguably the largest Web-based email service on the planet. In 1999, MSN introduced its first instant messaging (IM) client, MSN Messenger. And in 2000, the MSN online service was recast yet again as a friendly and safe portal to the Web. That work continues today as MSN Dial-up and MSN Premium.

Still, MSN lacked any sense of purpose. Its few truly popular products were free and not integrated in any cohesive fashion. Its online services attracted only a portion of the audience that market leader AOL claimed. And as the Internet continued to grow in importance, it seemed odd that Microsoft couldn't pull together MSN into an Internet services powerhouse. Clearly, a change was needed.

That change came from an MSN product manager named Blake Irving (now the Corporate Vice President of the MSN Communication Services and Member Platform Group) and from two former members of the Windows team, who jumped ship to MSN at a crucial point. The first, Yusuf Mehdi, oversaw the development of IE 1.0 through 5.0, which went from Internet laughing stock to overwhelming market leader under his watch. The second, David Cole, oversaw the Client Windows Division and was responsible for developing Web client technology in Windows. Today, Mehdi is senior vice president of the MSN Information Services & Merchant Platform division at Microsoft, where he controls the global strategy, design, development, programming and marketing of MSN's many online services. Cole, meanwhile, is the senior vice president of the MSN and Personal Services Group. He has overall responsibility for all of MSN. Irving and Mehdi reports directly to David Cole.

Unfortunately, I wasn't able to speak with Irving, Mehdi or Cole. However, I did speak to various other MSN employees who have witnessed the transformation MSN underwent since the dark days of the late 1990's. Since then, MSN has become a different place, even a special place. It's the one part of Microsoft that has been able to consistently ship high-quality products, over and over again. For the past five years at least, MSN has been on a roll. And in the past year, especially, this Microsoft division has done amazing work, even to the point of shipping a desktop search product a year and a half before a similar feature will ship in Longhorn. And that's exactly the kind of gumption and chutzpah that characterizes the new MSN.

Next: Part Two: Fly, Butterfly

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