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Revving MSN's auto engine

MSN CarPoint CEO Ryan Hamlin is pleased that his unit has turned its first profit after more than seven years on the job. Now he's prepping the online automotive research site for a major tune-up.

There are no speed limits on the Information Superhighway--at least not for Microsoft's MSN CarPoint service.

Microsoft is in the process of overhauling the online automotive research site in conjunction with next month's expected launch of MSN 8. CarPoint will offer new "ownership services" for helping consumers better maintain their vehicles. Microsoft also will put increased emphasis on consumers who share vehicle information and experiences via chat and instant messaging.

Executives view the changes as an important next step for solidifying CarPoint, which turned its first profit in fiscal 2002 after more than seven years of operation.

CNET News.com spoke with MSN CarPoint CEO Ryan Hamlin about the upcoming changes and car buying on the Internet.

Q: How is CarPoint evolving?
A: CarPoint is a dedicated channel for MSN. CarPoint?s been around seven and a half years. We started off focusing in the research area in the early days. About four years ago, we went into the referral business--the buying new and used referral business, where we were selling referrals to dealers directly. That was a time when the (manufacturers) did not know how to view us, if we were competitors or partners. We decided about two years ago the right strategy was to partner with the manufacturers and not be viewed at all as a competitor...We sell those referrals to the (manufacturers) and then let the (manufacturer) manage them and sell them directly to the dealers.

At the same time about two years ago, we made a strategic decision to invest in automotive ownership. It's an area now that's paying some good dividends for us. A lot of the other portals--the AOL autos and the Yahoo autos--are starting to invest in this area now. I think we have about a year-to-18 months? lead on them, because we did start in that space a while ago. What I mean by ownership is kind of a personalized automotive experience. So instead of thinking of CarPoint as a great place to research your new or used vehicle, you think of CarPoint as a great place for your day-to-day experience with your automobile, whether that's service or repair--tires, breaks, oil and all that--around your vehicle. There's lots of information about that stuff.

What about filling up the tank with gas?
We shipped a feature about a year ago called My Car. It's a customized feature where you put your ZIP code in, the make and model of your vehicle. We'll tell you where the most expensive gas is, where the least experience gas is. We use MapPoint, which is a .Net service, to map those gas stations, and you can print that...We have over 20,000 gas stations that we aggregate data on. So CarPoint is more than just research. We are making a big investment in this automotive ownership space. Worldwide we have the largest presence. We're in 19 different markets and 11 different languages. Will you be doing any projects with Microsoft's Automotive Business Unit?
Yes. We've been working probably for the last 12 months pretty closely with those guys. With the telematics space, there was a lot of initial hype, and now that's settled down. We're now getting to the point where the Microsoft Automotive Business Unit is getting a distribution of folks beginning to install their units. We have a partner jointly...that we're looking to pilot in the next couple of months. It's a unit that you put in that has GPS (Global Positioning System) capabilities as well as a feature interface. You can upload and download information. It's the first time you'll be able to tie real-time auto information to a Web experience.

So, for example, you'll be able to go online if you have one of these units installed in your car and check at any moment where your car is located. You can also download a quick list of stats--how much gas is in the tank, if your brakes are functioning properly (or) how much coolant you have. You can drill down on information that before as a consumer you could never really have access to unless you pulled your car into the gas station and they downloaded it from the computer.

Will you tie this to other existing or forthcoming CarPoint and .Net services, such as finding someone in the area to repair the brakes if the unit reports they need fixing?
We decided about two years ago the right strategy was to partner with the manufacturers and not be viewed at all as a competitor.
Exactly. But that's something we already will be doing with MSN 8. As part of MSN 8 we will be adding a lot more features on service and repair...If you need your brakes fixed, we know where you are, where you live, and we have a service referral program. You would actually select a dealer in the area you want to do your service, and you could go online and schedule that. We're already working on that. MSN 8 has a pretty in-depth calendaring feature that they're shipping. The idea is to schedule it online. You can see the availability of when you want to get your car serviced, and you can actually place that in your MSN calendar. What are some of the other new CarPoint features you will be introducing with MSN 8?
One of the things we're focusing on in MSN 8 is the user experience. So you'll see common navigation for the first time across the network. You?ll have a sidebar that will be prevalent through the entire experience. You?ll have a consistent look and feel.

Another theme is communications services. Calendaring is a big part of MSN 8. I'll give you an example of what we're going to do. Chat, IM and bulletin boards are another big push that MSN is going to have. We're going to do some things on the automotive side. One of the most powerful automotive research features would be--you want to hear what other consumers have to say about the vehicles. Today, we have ratings and reviews--about 350,000 ratings and reviews--so you can actually read what someone has said about the Ford Explorer. But in real time, the scenario would be as an MSN 8 user you could go on, and maybe at the model level you could enter into a chat about Ford SUVs.

You can envision where you could get a network of folks who really share, because people can be really passionate about their vehicles, both positively and negatively. So we think we can leverage some momentum around the experience people have with their vehicles. We're going to do some pretty deep integration with chat and messaging.

The third thing about MSN 8 is services. The everyday useful Web is sort of the theme. Maintenance, repairs, parts and accessories are all things around the everyday Web. The last thing as far as the themes for MSN 8 are the subscription services. You can be an MSN 8 subscriber or you can be BYOA--bring your own access.

So you could be an AOL subscriber, but you want to get access to some of the premium services in MSN. One of the premium services that we're going to offer through CarPoint--and this is kind of an 8x feature, so it will go out 60 to 90 days post-launch--is a do-it-yourself corner.
You can imagine a scenario (where) you have many things around your vehicle--tires, brakes, whatever. You would click on a link that would say, ?Tires,? and we'll have a rich-media experience where you download a two-minute clip of things you need to think of when you're changing your tires, or your brakes or whatever. We're going to integrate with parts and accessories shops, so that in addition to finding out how to change your oil, you'll need supplies. So we'll have an online (option) where you can order those parts online and pick them up at a local shop.

When online advertising went down, we actually maintained our revenue and, in fact, finished last year as a profitable business unit.
The dot-com meltdown wiped out many Web operations. How does Microsoft make money on CarPoint?
Our business model is basically two forms of revenue. One is advertising, straight online advertising. The other is the transaction model through referrals--submitting a referral for a new or used car. We'll also have a referral when you schedule an appointment for service or maintenance. It's actually kind of a nice mix--a 60-40 mix advertising to referral.

We actually haven't leveraged ourselves completely on the advertising space. So last year, when online advertising went down, we actually maintained our revenue and, in fact, finished last year as a profitable business unit. Our fiscal year ended in June...that was our first profitable year.

The site is growing. Last month we had over 11 million unique users. We finished the year averaging about 8 million. In the first two months of this fiscal year, we?ve seen our traffic grow quite a bit.

Do you see your traffic growing with the launch of MSN 8?
Absolutely. A lot of it is going to be the consistency of navigation and that sidebar, the channel bar. You're going to have that presence throughout the network. Before we kind of had it on the home page, but once the user launched off the home page, you really had no way to get back. I take it you will be introducing more subscription revenue to the mix as well?
Subscription revenue will take awhile. This year I'm not planning on a ton of subscription revenue coming in. But it?s definitely going to play a much bigger role the following fiscal year. What would you say is the most important growth area for CarPoint right now?
I think the most important is this area of ownership services. It's the area the (manufacturers) are most interested in. It reminds me of the early days of doing online consumer research, where now the manufacturers are investing on their own sites a lot of time and money because they want to retain that consumer. It's a lot easier to have a consumer and upsell them on a product than go after them blindly. So it makes a ton of sense for the portals as well as the manufacturers to invest in (these) ownership services.