MSN Israel is a classic example of a much-maligned brand. The days when the portal served as the homepage of the Israeli surfer are long gone, and its rating remains abysmal - a fact that puts it way down among the ranks of the second rate portals. In addition, its reputation as an Internet asset owned by Microsoft has hardly been helped by the wave of troubling events over the past four months, among which were the winding up of the partnership with Internet Gold (Nasdaq: IGLD; TASE:IGLD) subsidiary Smile Media Ltd., the departure of CEO Shraga Mor in a wave of controversy just one year after taking on the position, and a wave of highly publicized layoffs.
According to Microsoft, this is all now in the past. Having acquired full control of the portal after buying Internet Gold's stake, it has just launched the revamped online division, as part of a restructuring of its online presence throughout the world. The move is designed to advance Microsoft's online strategy, which no longer perceives the portal as a separate unit but rather, as one of its media assets.
"The new division indicates that Microsoft has realized just how important its online businesses are, and that they are no less important that its software business," says Adi Eyal, the CEO of the new division in a first interview with "Globes." "This is an important move in terms of the positioning viz-a-viz our the customers and viz-a-viz our main competitors Google and Apple."
Eyal is at pains to stress that except for the word MSN, there is no connection between the old portal and the new. "It's true that I have been given a damaged brand, but I am building something entirely new and I am interested less in what was before. The previous partnership wasn't working and it was no longer suitable for us. Today we have an entirely different strategy that enables us to reduce costs." Eyal is referring here to the previous ownership structure where Internet Gold held 50.1% of the portal with Microsoft owning the rest.
In addition to the new portal, 20 new Windows Live products or upgrades have also been launched, including Internet services and advertising-based applications, with the aim of creating a stronger synergy between Microsoft tools and the portal.
What are the main differences that will help you succeed?
Eyal:"The portal will be based on Microsoft technology, and all the infrastructure will be under the framework of a cloud computer instead of sitting on Internet Gold servers as it did in the past. There also won't be any more original content on the portal, but it will be based instead on a strategy of collaboration with leading content providers such as One and Walla! in Israel, and MTV and others overseas. There will also be a massive connection of various services to the portal. For example, you will be able to view Hotmail email messages on the portal, and surfers will be able to chat through Messenger, and talk around content featured on the portal."
These promises sound familiar. In December 2007, the previous CEO Shraga Mor told "Globes" that we would see the synergy with Microsoft taking shape in 2008 and in practice it hasn't happened.
What makes your announcement any different?
"Mor wasn't wrong; he realized what needed to be done, but in the previous constellation, implementing this was difficult. He found himself in an impossible situation through no fault of his own. We realized that to make the change, MSN Israel had to be under Microsoft's exclusive control. It came a bit late in the day, but it is the only way to successfully leverage Microsoft's technological capabilities and the various services it offers users."
Why was the change in ownership carried out in such an awful way, with workers learning that they had been fired through the media? It could have been done differently.
"Internet Gold was entirely responsible for what happened. We weren't involved at the legal and practical level. They had an interest in closing the deal in as profitable manner as possible, and they tried to be as fair as they could. As for the way staff were treated, I read about it in the papers too and I didn't like it, but we had nothing to do with it. The structure of the new portal does not require any technology or content people, and so we didn't hire any of the employees, save for five. Aside from this, we wanted in any case to rebuild everything from scratch and replace the original team. We're still on good terms with Mor."
According the monthly TIM website survey for September, MSN Israel was ranked eighth among the leading websites in Israel, with a weekly exposure rate of 24.8% (873,000 surfers a week). However, Eyal's main claim against the survey is that it does not measure the Messenger, or the exposure to other Live services. "Our aim is to become the surfers' gateway to the Internet. People like communicating online, consuming content, buying online, and searching for information, and we will be strong in all these fields, and will reach surfers in every aspect."
Will MSN Israel be among the top websites in Israel, a year from now?
"New CEOs tend to come out with declarations, but I don't intend to predict the future. What I can say is that I have a firm belief in the success of the Windows Live world. We're already seeing substantial month-on-month growth and this will intensify even further after the launch. All these products push traffic towards the website and I'm optimistic about the future. It will take a few months, but we'll get there."
Published by Globes [online], Israel business news - www.globes-online.com - on November 16, 2008
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