From the inaugural post from the Windows Live ID team's blog entitled The beginning of Windows Live ID we learn

Welcome to the Windows Live ID team blog!  This is our inaugural “Hello World!” post to introduce Windows Live ID.
 
Windows Live ID is the upgrade/replacement for the Microsoft Passport service and is the identity and authentication gateway service for cross-device access to Microsoft online services, such as Windows Live, MSN, Office Live and Xbox Live.  Is this the authentication service for the world?  No   It's primarily designed for use with Microsoft online services and by Microsoft-affiliated close partners who integrate with Windows Live services to offer combined innovations to our mutual customers.  We will continue to support the Passport user base of 300+ Million accounts and seamlessly upgrade these accounts to Windows Live IDs.  Partners who have already implemented Passport are already compatible with Windows Live ID.
 
Windows Live ID is being designed to be an identity provider among many within the Identity Metasystem.  In the future, we will support Federated identity scenarios via WS-* and support InfoCards.  For developers we will be providing rich programmable interfaces via server and client SDKs to give third party application developers access to authenticated Microsoft Live services and APIs.
 
Over the next few weeks as we complete our deployment, you will see the Windows Live ID service come alive through our respective partners sites and services. 

I had a meeting with Trevin from the Passport Windows Live ID team to talk about their plans for providing server-based and client SDKs to give application developers the ability to access Windows Live services and APIs. I've been nagging him for a while with a lengthy list of requirements and it looks like they'll be delivering APIs that will enable very interesting uses of Windows Live quite soon.

This is shaping up to be a good year.