Redmond (WA) - Microsoft’s ambitious project to deploy versions of its key services on its evolving Web platform, took an unanticipated step forward today, with an announcement that the part of the company some have described as its "basement" will also be going "Live."

Microsoft Research, a division which has funded some unique, ambitious, and yet still unpromoted projects throughout the company’s history, is being given a shot in the arm today. The company’s new chief technology officer, Ray Ozzie - formerly the creator of Lotus Notes and the founder of Groove Networks - announced that Microsoft Research will partner with MSN for "Microsoft Live Labs." In a statement today, Ozzie described the new project as a kind of online collaborative venture between his company, academia, and entrepreneurs who may be available for grants and fellowships to be offered by Microsoft.

Leading Live Labs will be Dr. Gary William Flake, whom the company apparently grabbed away from Yahoo ! Research Labs. Dr. Flake came to prominence as the leader of NEC’s experiments with data mining, before joining the team of Overture Research. There, he led that company’s experiments in "paid inclusion" services - Internet advertising centered around contextual engines. At just about the time it was perceived as the principal competitor to Google in terms of producing practical results with its research, Overture was absorbed by Yahoo ! in 2003. The fact that little track record exists between that time and April 2005, when Dr. Flake was hired as a Distinguished Engineer at Microsoft Research, speaks volumes as to the capabilities of a small firm versus a large conglomerate.

But Microsoft apparently intends to break that mold. Live Labs could conceivably reinvigorate Microsoft Research, whose previous ventures and investments in next-generation Internet transport protocols, and widely distributed object-oriented computing, have yielded magnificent research papers but no practical results - and more importantly, no products.

Incidentally, Yahoo ! didn’t raise much of a fuss regarding Microsoft’s hiring of Dr. Flake, especially compared to Microsoft’s stormy reaction to Google’s hiring away last year of the founder of Microsoft’s China research labs, Dr. Kai-Fu Lee.

The new Labs’ research areas, according to today’s statement, include multimedia search, data mining, distributed computing, and machine learning - four areas in which the Research division already has significant investments. A separate Search Labs project will also be launched, to be led by Dr. Ashok Chandra, the former director of computer science for IBM’s prestigious Almaden Research Center. There, Dr. Chandra will be looking into more social applications for search engine technology, Microsoft’s statement said.

By tying in Microsoft Research with MSN, Ozzie may be seeking to break the Research division out of the basement and into the wild, hoping that the buzz surrounding MSN’s work with advanced Atlas-based Web applications could stimulate outside participation. What could also stimulate outside participation is a little money. Today, the company announced it is offering up to $500,000 in grants, to be issued through requests for proposals concerning Live Labs’ key research areas. The deadline for proposal entries is 24 March.