Microsoft’s Social Networking Vision

What a week.

Microsoft walks away from the Yahoo deal, to the cheers of many here in Redmond, but leaves the door open for other possible deals. Speculation is running amuck about possible talks with AOL, and then the report of interest in buying Facebook outright after making a $240m investment in them last fall.

The official word from Billg? Microsoft will pursue an ‘independent path.’ Brian Hall, general manager of the Windows Live Business Group, outlined some of the company’s ideas about cloud-based computing and social networking technologies in a speech at the 2008 Merrill Lynch Technology Conference on May 6th:

Hall predicted that applications will be moving to a world that combines the “best of the PC” with “the best of the Web.”

He depicted a software past in which social networking was once typically enabled by just a few “siloed applications,” such as e-mail and instant messaging. 

In contrast to this siloed approach, the future of social networking will bring more of a “people-centered platform,” Hall said, “where stuff moves wherever I go, and that doesn’t mean it’s all in the same place.”

Live Mesh, which Microsoft unveiled about two weeks ago at the Web 2.0 conference, is Microsoft’s planned approach for bringing together communications, applications and files.

“We see a fantastic opportunity to take the best of the PC, the Web and the phone and to create a mesh of files that is accessible from all of these places but is ultimately provisioned at your site,” Hall said.

One example of such aggregation is Windows Live Mail, which Microsoft released last summer in beta form. The application can pull together all of a person’s various e-mail accounts, Hall said. It solves the problem of dealing with multiple accumulated e-mail accounts.

Another way that Microsoft has been working to interconnect is with social networking partnerships. Hall said that Microsoft has established partnerships with “most of the leading social networks” to have address book synchronization and roaming. Users can provide their Windows Live or Hotmail credentials at those social networking sites, he said. It moves people closer to using “a single address book approach.”

Hall answered an audience question about Microsoft’s “software plus services” strategy.

“We see a future where the rich client and other kinds of software interact very closely with the services that are hosted,” he said. He pointed to Live Mesh as an important component in that strategy by creating a file system for those interactions.

He also answered a question about Microsoft’s failed acquisition bid for Yahoo.

“Certainly, [the acquisition of] Yahoo would have been an accelerator, but we made our offer, we’ve moved on, and now we’re focused on how do we grow as fast as possible organically,” Hall said.

Several news outlets are focusing on the meaning of that last word – organically. To those of us on the inside, it means that we keep going down our current path, making our systems and tools scalable, and focusing on the end-to-end customer experience in everything we do. Some other speculation from Kara Swisher over on All Things Digital:

But, as is no secret, Microsoft has selections all over Silicon Valley to help it improve its Internet chances.

Those would include buying bigger vertical sites in strong categories like autos or jobs or finance, and also scooping up smaller but fast-growing socially oriented sites like Digg, Meebo, Yelp or focusing on ad plays like Spot Runner (which just got another big dollop of funding).

There might even be some sense in spinning some of these and all Microsoft Web units off into a separate Internet company, which would be another way of integrating even bigger deals for properties like Time Warner’s (TWX) AOL or News Corp.’s (NWS) MySpace (which are longer shots, I think).