The product is also integrated with other Microsoft properties, so users can contact sellers via MSN Messenger, and sellers can promote listings on MSN Spaces profiles. In addition, events, real estate, and other location-sensitive listings are displayed on Windows Live Local, formerly called Virtual Earth.

The closed pilot is for Microsoft employees, as well as alumni of the company, and was expanded last Thursday to students and alumni of Washington University. The service is currently monetized by contextual ads by Kanoodle, and in the future, Microsoft is considering featured listings--or possibly charging for certain verticals such as real estate or jobs.

Users of the service can post ads to their MSN messenger contact lists, or to "e-mail groups"--users who have the same e-mail domain as their own--and eventually, will be able to display their ads to the general public.

Garry Wiseman, Microsoft product unit manager, said the idea for the social networking tie-in came from an internal Microsoft classifieds board, called MicroNews Ads. "It was amazing to see how many listings there were for relatively few people. Thousands of listings," he said. "It's different from Craigslist or a newspaper, because there's a level of trust there. I know if I buy something from someone, they're not going to disappear the next day; they've got their own reputation to uphold. I know exactly which office door to kick down if my new car breaks down."

The product appears competitive with similar local listings, including offerings from competitors like Google and Craigslist, said Kelsey Group Analyst Greg Sterling. "One of the challenges is: 'How do you get listings?'" he said. "The fact that this is tied into MSN messenger gives them a big base to start with. They're no ordinary company launching a classifieds play. They have this huge base they can tap for listings."

According to Sterling, the biggest strength of Windows Live Expo comes from the integration with Windows Live Local; together, the features allow Microsoft to become a one-stop show for all local ads, both Yellow Pages and Classifieds. "Vertical search is the new black, where people are creating all these vertical search tools because they offer a degree of richness and structure that you can't get through the general engines," he said. "That explosion of new sites and new information has basically reinforced the value proposition of a general search engines, because you don't have to remember 10 million different sites."

Sterling said that Windows Live Expo could, if integrated deeply with Windows Live Local, become the general search site for goods and services. "Somebody who creates a comprehensive local marketplace has an opportunity to really do something very effective in local by providing a broader and richer dataset by combining local listings and classifieds, essentially bringing newspaper classifieds and Yellow Pages together," he said.

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