Microsoft delays key project

E-mail this article Print this article

An array of Internet services that are a key component of Microsoft's future business are being delayed and retooled, the company acknowledged yesterday.

But Microsoft vehemently denied a report in yesterday's New York Times that suggested the company is shelving the My Services products, introduced in March 2001 under the code name HailStorm.

Either way, the revelations confirm that it will take longer than expected for Microsoft to push its products from the computer and onto the Internet, where it hopes to collect subscription fees rather than sell people hard copies of its software every few years.

The delays also suggest that Microsoft overestimated its ability to provide the complex services this year and underestimated the resistance it would face in the marketplace.

A pivotal change is the decision to sell the software so other companies can run the services, instead of Microsoft itself running the services and charging for their use.

"The original model was predicated on MSN being the primary or sole provider of these services," said Charles Fitzgerald, general manager of .NET program strategy. "What we've really done is shift to a model where the underlying software is available."

The services were part of an ambitious plan by Microsoft to issue keys to everyone on the Internet. The keys could be used to access personal information such as music collections and bank accounts from any device that could connect to the Internet.

Microsoft was going to issue the keys free but charge for subscriptions to more advanced services, such as a calendar that would be updated automatically when the user bought tickets for a concert or when the Mariners released a schedule of games.

But the idea outraged privacy advocates. In addition, corporations worried over such a system's security, and software developers were reluctant to give Microsoft so much power.

"In the HailStorm scheme, not only did Microsoft want to control everybody's air supply, they wanted to control the atmosphere, too, and everybody said no," said Dave Winer, a Silicon Valley software developer who helped Microsoft develop some of the protocols underlying its services plan.

Fitzgerald said the strategy shift wasn't spurred by potential uneasiness over Microsoft's trustworthiness, adding that surveys show consumers hold the company in high regard. He said the strategy is evolving instead based on customer and industry feedback.

"We were really clear that this is the kind of phenomenon that doesn't happen overnight," he said. "This is kind of the five-year dream."

Microsoft has been quietly toning down its plans for months. Part of the change has shifted the focus from consumer-oriented services to services that businesses may use to distribute data among employees, customers and various computer systems.

A major change came in September when Microsoft decided to share the technology for Passport, which enables computer networks to identify and authenticate individual users online.

Under the change, businesses can buy the software so that they, and not Microsoft, control who accesses their networks.

The company has also shuffled its My Services team and moved developers out of the MSN division and into the Windows team, which is more broadly focused on building and selling software.

Another factor is the delay in releasing software for data-serving computers tailored to run the services. The .NET Server software is delayed at least until late this year, partly to improve its security.

Even if the server and the services were ready, business customers may not be ready to make big investments in the new technology, said Rob Enderle, a Giga Information analyst in Santa Clara, Calif. "The people who might be buying this don't have any money now," he said.

When Microsoft debuted HailStorm, it brought several companies onstage to demonstrate potential uses, including American Express, eBay, Expedia and a Microsoft-backed startup called Groove Networks.

eBay is using one of the services, called Alerts, which notifies auction bidders on the status of their bids. But American Express has yet to use the services and in fact joined an alliance of Microsoft competitors seeking an alternative to Passport.

Although American Express sees potential in Web services, it has reservations about services offered by a lone provider, spokesman Tony Mitchell said.

"There still needs to be a set of standards developed,'' he said. "But if a single entity creates a set of standards or a proprietary approach, that is not going to solve the problem from a consumer perspective."

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com.