The next version of Windows Live, Microsoft's web-based apps and services product, will see services such as email, instant messaging, photo hosting and other office applications merged into a single service.
The company has announced the plans as it looks to create a fully-integrated and easier-to-use online user experience for Live. Right now, the various components of Windows Live, such as email and web-based IM, exist as separate services within the Live environment.
Microsoft aims to use Windows Live to compete against popular social networks such as Facebook and MySpace, which both started to open their fast-growing websites to outside software developers last year.
The new Windows Live service plans to feature a main profile page that updates users to their friends' activities within Windows Live and on more than 50 outside web services including Yahoo's Flickr photo site and job-focused social networking site LinkedIn.
"It's a race to see who will work better and faster with everyone else," said Charlene Li, founder of consulting company Altimeter Group. "It's the recognition that you can't be an island of yourself."
The company's Windows Live strategy is also central to its plans to wrestle away online advertising revenue from Google, which has used its dominant search engine to expand into email, online word processing and other businesses that compete directly with Microsoft both online and on the desktop.
Microsoft plans to roll out the new Windows Live services, which will include a revamped email, calendar and a new photo application, in the US over the coming weeks and then make it available in 54 countries including the UK early next year.
Brian Hall, general manager of Windows Live, pointed to Microsoft's Outlook application, which brought together email, calendar and contacts programs into a single integrated software suite, as a model for how it wanted to tie together a loose network of web services.
He also noted that the latest Windows Live release is focused on creating a more polished user experience, which, in the past, may have been sacrificed in order to get new applications out quicker.
Microsoft also plans to increase the size of its free storage service to 25GB from 20GB.
Microsoft boasts more than 460 million Windows Live users and analysts said the goal for the company is to keep that audience in front of the company's sites for as long as possible and to prevent defection to other web destinations.
"I don't think Microsoft is going to steal a whole lot of eyeballs from Facebook or MySpace," said David Card, research director at Forrester.
Facebook has 120 million active users and many of those rely on its mail and chat applications to communicate with friends instead of traditional email and instant messaging services such as those offered by Microsoft, Google and Yahoo.
Last year, Microsoft paid $240 million (162 million) for a 1.6 per cent stake in privately-held Facebook.
