Microsoft has a proclivity for giving products names that provide little clue as to what they do and who they're for. Windows Live Mesh 2011 is just the latest example, which is too bad because this one is actually worth some attention, despite its awkward name.
Live Mesh is an online storage service, but it doesn't work the same way that competitors like Dropbox or Box.net do. The name provides a bit of a hint: A mesh network is one in which each peer can exchange data with any other, without some central system serving as the conduit. Microsoft would probably like to avoid the term "peer to peer" in describing Live Mesh, because of that phrase's unfortunate connotations, but that's what Live Mesh really is.
After signing up for Live Mesh, you install and launch the Live Mesh software. With it, you can choose which of your folders you want to sync. For each folder, you may choose one or more destinations, which can include any of your other computers (on which you have installed and activated the desktop software) or Microsoft's free SkyDrive online storage service. You don't need a SkyDrive account to use the Live Mesh service, but that can be one of the places where you sync folders. If you do use SkyDrive with Live Mesh, Microsoft allows you to use up to 5GB of your 25GB storage allotment for syncing.
So far, Live Mesh may not sound all that different from other online storage/syncing services. But it starts to diverge when you share folders with other users. To do so, you go to the Live Mesh website and enter the email addresses of those you want to share with (up to nine people per folder). Those other users must have a Live Mesh account and the Live Mesh desktop client installed. Everything is done on the Live Mesh site. If you click on View Permissions in the Live Mesh desktop client, that will just open the permissions page on the Live Mesh website. You can't assign read-only or view-only permissions to a folder, it's all or nothing.
If you do start synchronising folders with other users, that happens as much as possible directly between your machine(s) and theirs, without the website as an intermediary. That requires an impressive amount of behind-the-scenes jiggery-pokery (described in a 2008 blog post, if you're curious). While that document provides details on the encryption keys and security tunnels used for peer-to-peer syncing, similar details are not available regarding SkyDrive's security. It is clear that all web and desktop sync connections are made through SSL/TLS sessions.
Security and sharing
Unlike other storage services reviewed, neither SkyDrive nor Live Mesh will store older versions or retain deleted files on its own, such measures are left to you. That makes Live Sync substantially less useful to collaborative groups: Shared storage can provide a backstop against accidental file deletion and the ability to roll back to earlier versions of files.
Although Live Mesh and SkyDrive are free, both show advertising on their respective sites. This seems a bit odd, given the attention paid recently to the insecurity of third party ads on social networking and other sites. It'd be nice if Microsoft offered some kind of paid tier that would let serious personal users or businesses avoid the ads.
Those same business users would also like better account-based management. They'd also appreciate things like pooled storage, the ability to purchase additional storage, and some granularity in controlling who can edit which folders. You can prevent invited guests from inviting other people, but all of those who receive a sharing invitation may edit any files in the folder. One other deficiency: There's no mobile app. Add the lack of versioning and undelete, and Live Mesh does not seem ready for business users.
Windows Live Mesh 2011 works just fine for informal use, particularly given the way it integrates with SkyDrive. But the relative paucity of storage, without any opportunity for paid upgrades, and its lack of retention for previous versions makes it a poor choice for group use.