Any news late last week about Microsoft would have been overshadowed by its 800 lb. gorilla announcement about layoffs and weak earnings. So it's easy to understand why Microsoft's decision to merge Windows Live and Office Live into one online portal slipped through the cracks.

This isn't earth-shattering news, but it does represent a shift in Microsoft's focus to consolidate its services online, make them accessible and market them. This merging would have happened regardless of Microsoft's current financial predicament.

The bigger issue: The whole Windows Live platform is still confusing to users. Windows Live is a consumer online platform for e-mail, instant messaging, blogging and other social networking features. But it is struggling to find an audience. Most of my colleagues and friends do not know what Windows Live is. It is not the place where people are going for e-mail and IM, not as long Google (gmail) and AOL (AIM) exist.

Office Live serves as a online extension to the Microsoft Office productivity suite with services such as Office Live Workspace and Office Live Small Business. It is free to join and the service provides a way to view and manage Office documents online and share with other Office users.

But one of Office Live's weaknesses right now as it tries to compete with free, Web-based offerings from Google and Zoho is that it's not truly free or Web-based because you'll need to have the Microsoft Office suite to actually edit files in Office Live. Without the Microsoft Office software suite on your desktop you can only use the basic features of Office Live such as viewing, commenting, Web lists and Web notes.

The full-fledged, Web-based version of Office, called Office Web Applications, will include lightweight versions of Word, PowerPoint, OneNote and Excel that will allow people to view, edit and share Office documents in a Web browser. Office Web Applications is still pending and will be available in beta later this year, according to Microsoft.

Word has it that the Windows/Office Live merger is supposed to go, er, live around the time that Windows 7 ships or when Office 14 is available, whichever comes first (likely to be Windows 7, in the second half of 2009). I'm not sure how this will coincide with Office Web Applications as everything appears to be releasing at roughly the same time.

Again, there's too much confusion here, but the bottom line is that Microsoft needs to put Office fully on the Web. It's long overdue. It should've have happened a year ago.

But however late to the party, the Windows Live/Office Live Web medley could benefit Microsoft and befuddled users looking for some Windows Live clarity. Microsoft can show that it is getting its online services and Web-based apps act together, even if Office Live isn't genuinely Web-based yet. With an abundance of features, Windows Live could pull in users looking to manage work and personal data in one place. It could arguably do this better than Google, but pulling users away from gmail will be a tall order.

As for Windows Live e-mail, I didn't even know what it was called anymore. Is it Live or Hotmail or Windows Live Hotmail? To find out I created an account, and I now have an e-mail address ending with the name @live.com. So what happens to the hotmail name? Hotmail addresses are still out there of course, but will hotmail user Joe Smith wake up one day this year and his address will have changed to jsmith@live.com? Microsoft will have to make this transition smooth to avoid naming chaos.

And speaking of consolidation and brand marketing, could

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