Earlier this year, details of a new social network by Microsoft were revealed when a teaser page appeared on Socl.com. It was codenamed Tulalip, and allowed users to sign in using Facebook and Twitter credentials. Apparently, Microsoft has been testing it in private, and will eventually launch it to the public. The features seem to be quite similar to those offered by Facebook, Twitter and Google‘s (NASDAQ:GOOG) Google+ social network. [1]
It is integrated with Bing, so you can search “socially”, and it also allows you to view videos with your friends online. Given Microsoft’s close ties with Facebook, it may even offer some kind of integration with it.
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Microsoft may be too late to the “social” party
Facebook is currently the king of social networks, while Twitter comes second. Google+ attracted a lot of users in the initial days, but it seems to have become a ghost town since, with user growth almost flat and active users falling off. Apple (NASDAQ:AAPL) tried to create its own social network too, with Ping, but it failed miserably. It is highly unlikely that Microsoft ‘s foray in the space will be successful. Microsoft is trying a slightly different approach, combining search with social, but Google has tried it already with Google+, and it doesn’t seem to have done very well.
Microsoft’s Online Services division has lost billions of dollars in the past year, as it continues to invest in Bing. We expect it to turn profitable in a couple of years, but if Microsoft focuses on its new social network and pours money into it, it may be delayed some more.
Online Services like Bing and MSN account for less than 5% of Microsoft’s $32 Trefis price estimate, which stands nearly 20% above its current market price.
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