• by Shankar Gupta , March 1, 2006

Microsoft Tuesday opened the beta of its classified and local marketplace service, Windows Live Expo, to the public after a brief closed pilot program.

The closed pilot for Windows Expo Live began in early February--allowing students and alumni of the University of Washington to participate in the marketplace service, along with Microsoft employees and former employees, who participated in an internal test. The service incorporates social networking functions alongside the typical classifieds features--users can display items for sale only to users who are on their MSN contacts lists, or only to users who share their e-mail extension--@Washington.edu, or @Microsoft.com, for example.

Google also recently moved ahead with its classified offering, Google Base, by implementing electronic payments using Google Accounts. Select sellers on Google now can receive electronic payments from buyers with Google Accounts. Microsoft's Windows Live Expo does not include an online payment service, an MSN spokesman confirmed.

But it's not clear that Google's incorporation of electronic payments will give it an advantage over other online classifieds services. Kelsey Group Analyst Greg Sterling said Google's inclusion of electronic payments probably does not give it a significant edge over Windows Live Expo. "I don't think it's essential. Obviously, Craigslist has existed very successfully without a payment system," he said. "I think you're going to see payments more broadly available just as a convenience. It's not an essential thing, but it's a nice thing."

Sterling said that the real competitive battlefield in terms of a classifieds listings service is the user experience. In this respect, he said, Microsoft's Expo is superior to Google Base. "From my preliminary briefing with Expo, it's a pretty nice tool. I think that it's not going to harm them if they don't have a payment system," he said.