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A Little Piece of Microsoft Aids Small Business

So Microsoft is making a hostile bid for Yahoo.

Has it come to this? Is Microsoft’s innovation engine so dead that the only way it can grow is to buy other companies?

It’s sad, in a way, because under the right circumstances, Microsoft, or pieces of it anyway, are still capable of fresh ideas and polished work. The company itself may be a massive fallen redwood tree, slowly rotting in an old-growth forest. But sprouting from that decaying Windows/Office log are little green start-up shoots. They prove that even if the bureaucracy has made Microsoft top-heavy and leaden, innovation still thrives in pockets.

Nowhere is this old Microsoft/new Microsoft dichotomy more apparent than in the company’s suite of online tools for small businesses, which reopened Monday in an improved 2.0 version (www.smallbusiness.officelive.com).

What makes Office Live Small Business so compelling is its sharp focus on a single problem: that half the small businesses in America, and 70 percent of one-person businesses, don’t even have Web sites. Obviously, the percentage that exploits Internet marketing tools like e-mail newsletters, search engine ads and online stores is even lower.

Suppose you’re among them. Suppose you train dogs, or translate documents, or retouch photos, or sell knickknacks on eBay, or make seashell jewelry. And right now, your idea of a marketing plan is taping up fliers in the grocery store.

How are you supposed to get a Web site? Who will design it, and who will host it? Who do you pay to place search engine ads for you, and how will you know if they’re working? How do you send out e-mail newsletters without being blocked as a spammer? And how will you know if that effort is paying off?

And above all: how much is all this going to cost you?

Office Live Small Business (O.L.S.B.) is a centralized Web site where you can set up all of those small-businessy things — a Web site, an online ad campaign, e-mail promotions, in-company communications — all by yourself, even if you’re not very technical. For the first time, these big-league tools are within your reach, partly because you don’t have to hire somebody to set them up and partly because many of them are free.

The changes from the original 2006 version are apparent immediately. Internet Explorer used to be the required Web browser to set up your online presence, but now Firefox is O.K., too. And that means you can take advantage of Office Live even if you use (gasp) a Macintosh. That’s the New Microsoft, baby.

A credit card is no longer required to get started, either. You can start playing with the service by supplying nothing more than a name, e-mail address and ZIP code.

There are no longer three different tiers of Office Live service, with different fees and different features; that’s the Old Microsoft way (see also: Windows Vista). Instead, there’s just one free service that includes a wide assortment of useful tools, plus a handful of á la carte extras.

The freebies begin with a Web site for your business, complete with 500 megabytes of storage. Simple tools let you design clean-looking pages, with your choice of color and design themes, logo and photos, links, and so on, even if you have absolutely no experience doing this sort of thing. (You can see the results at, for example, whineranddiner.net, murphyoutdoors.com and ameliascakes.com — real sites created by actual Office Live users.)

Microsoft hosts your site free, and also offers free analysis tools. With one click, you can see a graph of your site’s traffic over time; where the visitors are coming from (for example, search engines or links from other sites); and even which Web browsers they’re using.

A number of useful Office Live features that used to cost you money are now free. For example, only paid subscribers enjoyed the ability to synchronize their Office Live address books and calendars with Outlook, so they could work on them when not connected to the Internet. That’s now free to everyone.

Similarly, if you wanted to design your own Web pages (or hire someone to do it) instead of using Microsoft’s canned page designs, you used to have to pay; now that’s free, too. As a bonus, you can now remove the small Office Live logo from your site — a welcome change.

The old fee-based tiers also included a long list of features for the technically inclined: list managers that help you track employees, resources, reservations, and so on; project and time trackers; a document-sharing module; and collaboration tools for internal company discussion. Those are all free now.

Unfortunately, Microsoft giveth and Microsoft taketh away.

The most famous feature of the original Office Live was the free domain-name registration. That is, your free Web site could have any dot-com name you liked — BobsFleabag.com, for example — and you also got 25 e-mail addresses to match (sales@bobsfleabag.com, info@bobsfleabag.com and so on).

Those unheard-of perks are gone; after the first year, Microsoft now charges $15 a year for those custom domain names and e-mail addresses (at least for new members). If you decline, your free Web site will be stuck with a clunky name like bobsfleabag.accommodations.officelive.com.

Nor is that the only way Microsoft intends to make money from this service.

A Little Piece of Microsoft Aids Small Business

For example, there are small ads on the Office Live Web site (the one with the tools — not the site you create). Because these ads are aimed at you, the small-business owner, they’re not especially bothersome, for the same reason that people don’t mind, say, ads for cameras in a photography magazine. Meanwhile, Microsoft can charge advertisers more for these ads because they are, again, so targeted.

Office Live offers an easy-to-use e-mail marketing system that includes newsletter design and address database. You can also track the results of your e-mail initiatives: how many people opened your mail, as well as how many clicked a link in it. Microsoft even does the e-mail sending for you, so your e-mail won’t get blocked by your own Internet provider as spam. That’s all free during the current testing phase, but Microsoft will charge a monthly fee after that.

Ditto for the terrific build-your-own-online-store feature. You get a traditional online shopping cart, integration with eBay, and auto-calculations of shipping and even taxes (according to the buyer’s state). But you’ll pay $40 a month for this high-end luxury, plus a $30 monthly PayPal fee if you want to accept payment by credit card right on your Web site. (Otherwise, your customers will be shunted off to PayPal.com to complete the transaction.) PayPal charges about 3 percent of each sale either way.

Finally, of course, you have to pay to place ads in the results of Web search sites; here again, Office Live tracks the results, making it crystal clear which of your ads are producing the best results.

This, though, may be the goofiest part of Office Live. You can place ads only on Microsoft’s search sites and Ask.com, which together represent less than 8 percent of search engine popularity. If you’re going to advertise, you’d almost certainly prefer the exposure of the Big Two — Yahoo and Google — but they’re not available through Office Live.

Now, plenty of companies sell similar services individually: Web hosting, for example, or online marketing. But Microsoft claims to have no competition for Office Live’s concept. Nobody else offers a complete one-stop self-contained unified Internet toolkit for small businesses — especially not at these prices.

The result is exciting for two reasons. First, Office Live Small Business gives the nation’s 25 million small businesses a chance to use the same online tools as the big boys.

Second, Office Live Small Business has all the hallmarks of a start-up: innovative, focused, fast-moving, game-changing, quick to respond to customer feedback and nimble in recovering from mistakes. When was the last time anyone described Microsoft that way?

David Pogue is a columnist for the New York Times and contributor to CNBC. He can be emailed at: pogue@nytimes.com.

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