As, Microsoft revealed plans to offer for free a number of things that its rivals charge for, including services such as virus scanning, Internet-to-telephone calling and Web hosting.
On the telephone side, Microsoft showed off the ability to call any traditional phone number from within the new Windows Live messenger client. That service is expected to be in beta testing by December, Microsoft said.
While instant messaging programs have had voice chat for some time, Microsoft's move would be broader by allowing free calling to traditional phone numbers as well. Vonage, Skype Technologies and others have offered such abilities, but have done so for a fee.
A Microsoft representative clarified later Tuesday that it won't charge for phone calls during the beta of Windows Live, but declined to comment further on the company's pricing plans.
Vonage maintains it has an advantage in that its service doesn't require a PC.
"We have been very successful at competing with free services for a long time," said Brooke Schulz, a spokeswoman for Vonage. "Skype has been around as long as we have. But what Skype and Microsoft are offering is really different, because the Vonage service isn't PC-based. Our usability is the same as traditional phones. And we see this as an advantage."
AOL has alsofor paid VoIP services, .
eBay spokesman Hani Durzy said executives from Skype, based in London, had not had a chance to see the specific Microsoft product and that eBay typically doesn't comment on other companies' products. "We at Skype will continue to remain focused on Skype's lead in online voice communications." The auction giant announced itsin September.
On the security front, Microsoft went beyond its already announced plans for the subscription OneCare service. In addition to that paid program, Microsoft plans a new Windows Live Safety Center--a free Web-based program that allows on-demand scanning and removal of viruses.
Microsoft is late to the game with its online security services, said David Perry, director of global education for Trend Micro.
"It is interesting that Microsoft is trying to put these services online. It is a good thing, but something that Trend Micro has done for eight years with our House Call service," Perry said. House Call scans for viruses, spyware and known vulnerabilities.
Live Safety Center is pretty much a "me too" service from Microsoft, which is looking to catch up with the established security players, Gartner analyst John Pescatore said.
"Since Microsoft is going to be in the antivirus business, this is one of the 'must haves' to compete. These sites are basically lead generation for selling the full antivirus software or service," Pescatore said. "Of course, Microsoft has lots of reach and can catch up quickly, if the antivirus vendors don't paddle real fast to stay ahead."
Symantec had no comment on Microsoft's announcements, and McAfee did not immediately respond to a request for comment.
Microsoft also demonstrated a business card sharing feature that allowed messenger buddies to exchange online business cards. Whenever a contact changed their phone number or other information, the update is automatically made for their buddies, not only online, but also on their PC and even Windows Mobile-based devices.
That could be a threat to companies like Plaxo, that have built their business around helping professionals keep their contact lists up to date.
Plaxo CEO Ben Golub agreed the Microsoft announcements are significant, but downplayed the impact on his company.
"If you are a Plaxo member we give you the ability to have your address book and calendar always synchronized and available from multiple, different accounts and platforms...People within my network are always up to date with my information and vice versa," Golub said.
And, though a little further off in the distance, Microsoft's Office Live services also represent a threat to those providing small businesses with e-mail and Web hosting services. Microsoft said that, for free, it will give businesses a domain name, a Web site with 30MB of storage and five Web-based e-mail accounts.
Any number of Web hosting firms, telecommunications companies and Internet service providers could see a chunk of business lost to Microsoft's free offer.
That effort is expected to take some time, though. Microsoft plans to roll it out slowly, beginning with an invitation-only beta test that is slated to start early next year.
CNET News.com's Elinor Mills, Marguerite Reardon and Joris Evers contributed to this report.