Microsoft is continuing to flesh out its Windows Live strategy, on Wednesday releasing beta versions of Windows Live Photo Gallery and Windows Live Folders. The additions will join Windows Live Mail Desktop, Windows Live Writer, and a number of other applications as part of the Windows Live Suite.

Although the company has arguably done a poor job of branding and marketing Windows Live up to this point (at one time there were over 40 products in development under that banner, while some have retained the MSN moniker), Microsoft is hoping to simplify things with a single, downloadable package it can offer to Vista users.

Windows Live remains incredibly important to Microsoft, both on the Web as competition to Google and Yahoo, and on the desktop, where applications are increasingly becoming "connected." While its rivals focus on Web-only applications, Microsoft sees a future where desktop programs simply interact with services on the Web.

The company calls this shift "software plus services" and has put much of its weight (and money) behind the effort in both the consumer and enterprise space. And Windows Live will serve as the backbone upon which this effort relies. Desktop search will mesh with Web search, mail clients will link up with Webmail services, and photo applications will integrate online publishing and sharing.

But coming up with a coherent message to customers has proven to be harder than it sounds for a company that seems to enjoy selecting tongue twisters as product names. Part of the problem is that the Windows Live effort was a defensive reaction to competition from rivals like Google, and initially functioned more like a headless chicken than cohesive strategy.

That's all about to change, Microsoft asserts, referring to its latest work as "Windows Live 2.0." The company has regrouped and focused its attention on building meaningful Software+Services applications that will provide added value to Windows Vista (and XP SP2... at least for now) users. Windows Live Hotmail debuted this month, with a desktop client in beta.

On Wednesday, the company rolled out beta versions of both Windows Live Photo Gallery and Windows Live Folders. Photo Gallery is essentially an improved version of the similarly named program in Vista. It adds upload capabilities, as well as improved image editing, tagging and importing features. Uploading, however, works only with Windows Live Spaces at the current time.

Live Photo Gallery will be free, and includes a new and useful "photo stitch" feature that pulls together multiple photos into a single, panoramic shot.

Windows Live Folders (not the final name, executives say), meanwhile, is the official incarnation of Microsoft's oft-rumored "Live Drive" service that is ostensibly designed to complete with Google's rumored Gdrive. Live Folders offers users 500MB of storage space, which is located on a new computer cluster Microsoft has built to handle Silverlight videos uploaded by streaming (a free service the company has offered to promote Silverlight adoption).

Similar to services like AOL's Xdrive, users upload files using an ActiveX control or Web page. Files can be made public or private, and users can share links to the files with friends. Eventually, Microsoft plans to integrate Windows Live Folders into Spaces and its other Live services.

But are a couple new beta applications and online integration enough to jump start Windows Live? Microsoft Watch editor and former JupiterResearch analyst Joe Wilcox doesn't think so. He points out that Microsoft's typical talking point -- the number of Spaces users -- isn't a true indicator of success since most pages (or spaces) are empty, and that Microsoft needs to open itself up in order to better compete.

"As is typical with Microsoft, the licensing is one way - from Microsoft's platform," Wilcox said. "The one-way approach makes sense to Microsoft in part because its next generation Live services will more tightly integrated among one another. For example, Windows Live Photo Gallery will be able to share photos by e-mail, but only using Windows Live Mail."

"Google and other Web platform companies are keeping step with Internet time. Live's metabolism is too slow moving," Wilcox added. "Right now, Live is more last generation than next generation, as is the approach of tight, one-way integration across services and back to the Windows platform."

Microsoft has published a Q&A session on the new Windows Live announcements, which it typically does for any major platform advancement. The introduction is a telling statement: Microsoft launched Windows Live in November 2005. Yet, the effort is still struggling to find footing amid increasing competition.

The company promises further Windows Live announcements later this summer. Microsoft corporate vice president Chris Jones says, "We see today’s releases as yet another important step on the path toward the next generation of Windows Live...And this is only the beginning -- in the next couple of months you will see new releases from us that will really start to show the integrated experience I’m talking about that will truly be representative of where we’re looking to go with Windows Live."

"Live is living but not necessarily the most healthy lifestyle," retorted Wilcox. "Hopefully, come August, the Live team will have something more "next generation" to show off."