Microsoft launched its new social networking platform Windows Live Spaces (http://www.spaces.live.com) yesterday to replace MSN Spaces. The move reflects Microsoft's growing activity in the Web 2.0 market. Why are they interested? MySpace represents about %4 of all traffic on the Internet. That is a huge market Microsoft had little presence in. The situation is reminiscent of the early Internet days when Bill Gates thought the new medium would have little impact on Microsoft's core business. He was wrong and the company still suffers from the inertia that is an inevitable part of being the biggest boat on the pond. Once it gets going in one direction it is not good at turning.

Michael Arrington of TechCrunch writes:

The first is a Friends Module that can be added to a space. Users then invite friends who will then appear on the site. Clicking on the messenger icon will initiate an IM session with that friend as well. With another click you can view all of the friends of your friend, expanding your network (and racking up page views for Microsoft). This last feature is called Friends Explorer - see the first large screenshot below.

Second, Live.com gadgets can now be added to spaces with a single click. The last screen shot below shows a number of gadgets live on a spaces site.

Live.com Spaces still isn’t as “cool” as Myspace or have the music angle, but it is a significantly more flexible platform and has a huge member base (especially in Asia) that is growing rapidly. It’ll be interesting to check out the comscore numbers in a couple of months to see what kind of growth it generates.