MSN Boss Talks Expansion

At Microsoft's Financial Analyst Meeting, Yusuf Mehdi said the company plans to build a premium-services business and develop direct-marketing solutions and a new advertising platform.

REDMOND, Wash.—Yusuf Mehdi, Microsoft Corp. corporate vice president for the MSN personal services and business division, on Thursday detailed the challenges and focus for his group over the next year.

In an address at the companys Financial Analyst Meeting here, Mehdi said these efforts included improving customer satisfaction and decreasing churn, building a premium-services business, making profitable customer acquisitions, winning in international markets, and delivering direct-marketing solutions and a new advertising platform.

For the coming year, MSN will also focus on customer and partner satisfaction and deliver customer value through software; it will also make significant investments in search technology, including algorithmic search.

"Only some 40 percent of the content out there is searched by even the best providers. Theres a huge opportunity there," he said, adding that while there had been an uptick in MSN customer satisfaction, "we still have room to improve."

The online advertising market is now "clicking" and growing strongly, and the broadband revolution is underway; some 80 million people worldwide now use broadband, Mehdi said. Consumer subscriptions had also hit the market this year, while communication remained the primary Web activity, he said.

Spam, intrusive advertising and pop-up ads were the major sources of user dissatisfaction with the Internet in 2003. Each spam message cost on average a penny to send and a dollar to read and remove. "Spam is up from 8 percent of all messages in 2001 to 47 percent this year," Mehdi said.

MSN revenue has grown to $832 million in 2003, while some 350 million people visit MSN each month. There are currently 100 million IM users, 9 million of whom are on simultaneously at any time, while Hotmail has 120 million users worldwide, he said.

The forthcoming Outlook Connector for MSN and the sharing of information that comes with it is a priority, he said, as is a major effort underway to reduce fixed costs and grow the companys subscription bases globally.

"We will also launch a global software subscription service that could be a huge area of growth and generate half of the groups revenue in a few years," Mehdi said.

In a demonstration of some features of the forthcoming MSN 9.0, Blake Irving of the MSN team showed the new pop-up guard, which will let users specify which pop-ups they want to see on different sites. "This will let consumers choose between wanted and unwanted pop-ups," he said.

Instant Messaging will gain personalization features in the upgrade. Users will be able to change their pictures and backgrounds, which can also be shared and swapped. Since this capability is based on a peer-to-peer platform, both people in an IM exchange will be able to play games together.

"Users can also, peer-to-peer, share pictures and different images among themselves. Users also want a very personal home page, so this has been made even easier to change, allowing components to be dragged and dropped," Irving said.