The goal is to increase the likelihood that Microsoft's investments in research will translate into products that will actually ship, said Stacy Drake, a spokeswoman for Microsoft.

"Economic conditions do play a role" in the changes, she said. Moving the Live Labs researchers into product groups will allow them to contribute directly to those products.

Drake would not say how many people were in the Live Labs group, but she said roughly half would remain there. They'll focus broadly on Web experiences including exploration, information retrieval and discovery, navigation, and organization approaches, she said.

Live Labs launched early in 2006 under the direction of Gary Flake, who will continue to lead what remains of the group. He came to Microsoft from Yahoo, where he ran the company's research lab.