Highfield faces Microsoft challenge

Microsoft surprised many with its appointment of Ashley Highfield as UK managing director and vice-president of consumer and online (MW.co.uk November 10).

Anxious to reinvent its search offering, Microsoft has turned to the man who launched the iPlayer, but, while content may be his forte, Highfield’s knowledge of sales and marketing remains questionable, according to experts.

Highfield, evidently happy to be poached from his role as chief executive of troubled Project Kangaroo – the joint video-on-demand venture between the BBC, ITV and Channel 4, which is currently mired in a Competition Commission probe – said the job was “an amazing opportunity which [he] couldn’t turn down”. Nevertheless, it is a job fraught with difficulties.

Microsoft wants its MSN and Windows Live portfolio to be a central hub for internet surfers, something which seems unlikely, based on its current market performance.

In search, Microsoft’s worldwide market share in December 2007 was 2.9%, according to comScore, compared with 62.4% for Google and 12.8% for Yahoo!

“It has little to show for its efforts. Microsoft’s online business has yet to turn a profit, and I don’t think that Highfield can turn that around without major support from the powers-that-be in the US,” says one analyst.

In his new role, Highfield will head Microsoft’s new UK consumer and online organisation – taking responsibility for all MSN and Windows Live branded content – including Messenger, Hotmail, MSN Music and Windows Live Search.

He has experience of taking charge of new digital content. At the BBC, as director of new media and technology, he overhauled its online content and launched the BBC iPlayer service.

BBC director-general Mark Thompson said he was “pivotal in transforming the BBC for the digital age”, and Microsoft will be hoping he can do the same for them.

Fred Burt, managing director of brand consultants Siegel & Gale, which works with Microsoft on global, strategic brand and digital projects, says Highfield’s experience will stand him in good stead.

“Highfield knows, more than most, that shifting brand perception is about delivery, not just promise. If he can make Microsoft, through key product innovations, turn the corner as dramatically as the BBC, he’ll be a huge success,” Burt insists.

Media sources say Highfield’s experience of internet video-on-demand, including his role at Project Kangaroo, could lead to MSN striking deals with UK broadcasters to show longer clips on the site, as well as expanding its music service.

Its video-on-demand channel, MSN Video, has been available in beta mode since September 2007, and includes Soapbox, the user-generated content channel, as well as footage from partners such as ITN, Reuters, National Geographic and the BBC.

According to Ovum, MSN currently has a 7.5% share of the online video market – tiny, when compared to Google and YouTube’s combined share of 52.3%. The BBC says that about 2 million viewers watch iPlayer streamings each month, and its figures continue to grow.

One media commentator says: “Highfield has always been very commercially driven, with a focus on giving consumers what they want. If he can do what Kangaroo is struggling to, and get past all the rights issues, MSN could become a major consumer hub.”

As well as driving sales and marketing of the consumer offerings, Highfield will be responsible for content and programming online, business development and partner relations. This includes running Windows Mobile and the Microsoft advertising platform – which offers ads on all MSN websites and .mobi sites, as well as in-game advertising on the Xbox Live network.

He faces a tough challenge here too. Microsoft is better known for its IT business than its MSN or Windows Live services. Highfield’s task is to “build a connection with consumers and grow the ad business” – in other words, transform Microsoft from a business-to-business solutions provider to an active consumer-facing online community.
The man he reports to, John Mangelaars, vice-president of Microsoft Consumer and Online for Europe, the Middle East and Africa, says: “If the last few years have been about the explosion of social networks, the next few are about simplifying the increasingly complex web.”

Friends and allies of Highfield say simplification is what he does best, and he should be able to breathe new life into the MSN portal. But, while his technology experience is unquestioned, Microsoft’s need for an increase in online ad sales will be a tall order for Highfield to achieve alone. Imran Khan, a technology analyst at JP Morgan, says he has a huge task on his hands.

“Microsoft has already had to cut its outlook for MSN, based on a deteriorating environment for display advertising. In the last financial year, its ad growth was only 29%, compared to Google’s 42%, and most of this was for business-to-business, rather than consumers,” Khan explains.

This pressure has intensified, following Microsoft Europe’s acquisition of the Ciao! shopping network earlier this year, which the company plans to integrate within the Live Search platform, in an effort to rival Google’s Checkout service.

The company has also pledged to bring its Microsoft Live Search cashback system to the UK, which allows shoppers to earn cashback on selected purchases made from an initial search using Live Search.

Sources say pressure is no obstacle for Highfield, pointing to the continuing investigations into Project Kangaroo and the long delays to the launch of BBC iPlayer as examples of this.

Before it was unveiled on Christmas Day last year, the iPlayer had been delayed for over four years due to technical problems. Sources say that Highfield paid Microsoft many millions to ensure the service was ready for the festive season.

As Highfield seeks to make MSN and Windows Live the place to be seen for brands, all industry eyes will be on him, waiting for the next installment in this gripping online drama.

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