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This is probably one of the best articles/interviews on the web to-date that explains Windows Live and what the goals are with the platform (yes, Windows Live is a platform).
For Windows Live, Microsoft is looking at decoupling some of the current “feature sets” that are in Windows - turning these feature sets into internet services. Of course these internet services make up Windows Live. Windows Vista introduces this attitude just a tiny bit with its Welcome Center where it offers links to several Windows Live Services.

Mary Jo talks about how with Windows Live, Microsoft can bundle less and less with Windows as a OS in the future. With this, Microsoft should see less and less complains from say the EU or DOJ because the features are available outside Windows, downlaodable off the internet at the user’s choice.
Windows Live will bring everything together for the user and let that user grab their information anywhere, anytime. Contacts, Bookmarks, E-Mail, etc. All under Windows Live - enables the consumer to access their information anywhere. Look at Windows Live today - the very same contacts you have on your buddy list on Messenger exist in Windows Live Contacts accessilble to Windows Live Mail and Windows Live Mail desktop. That is also merged with folks you can call “Friends” on your Windows Live Space. Also: Microsoft is currently beta testing a Mobile application code-named G2 that gives you a fantastic set of Windows Live options on your mobile phone - syncing your Windows Live Contacts to your phone. If you have a buddy has shared out their phone number on their Windows Live Contact profile - your phone will recognize that.
So if there is one thing I can say defines Windows Live - its “bringing everything together”.
Unfortunately Microsoft is burying the defining characteristics of Windows Live for absolutely horrible marketing. That marketing it what could kill Windows Live where it stands. Lets take a look at Windows Live Search - or excuse me “Live Search”. Apparently, Microsoft has dropped the Windows Live aspect of Live Search turning it almost into a sub-branding. WHY? They still don’t know what they are doing with their mapping technology (service previously known as Windows Live Local). Microsoft changes so much branding and marketing for Windows Live that users are unable to become familiar with any of it. Then when they do - its still confusing. When the average person sees “Windows Live” vs “Live Search” - you think just because they see the nifty blue “vapor” they won’t be confused?
I think Ray Ozzie has a great vision but perhaps he needs to go up to the marketing/branding teams and see what they are doing because its not looking good. If they can get their marketing in gear I think Windows Live has huge potential.