Microsoft Looks to Take Net by HailStorm
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Monday March 19, 9:06 pm Eastern Time
TheStandard.com
By Dominic Gates
<<REDMOND, Wash. — Bill Gates launched a new business model for its Internet services on Monday, taking a bold step toward a world in which computer users routinely pay for software as a subscription service.
The project — code-named HailStorm — will see Microsoft roll out a suite of basic Web services, set up massive data-center operations to host end-user data and create a platform on which other companies can develop Web applications that use those services. Ultimately, the services will be accessible from any platform — not only Windows, but also Unix, Macintosh and Palm — and from any device connected to the Internet, including PCs, handhelds and cell phones.
The base services include e-mail, instant messaging, automated alerts, calendars, address books and file storage and will be free up to a certain usage quota, beyond which consumers will have to pay monthly subscription fees, payable by credit card directly to Microsoft. "Premium" services, with higher fees, will be introduced later.
In remarks after Monday's launch event, held on the Microsoft campus in Redmond, Gates characterized this latest initiative as a boost to the Internet Economy, "especially when things are so gloomy."
"Microsoft will operate HailStorm as a business," said VP Bob Muglia. "While HailStorm is a bold new kind of services platform, it brings with it an old-fashioned, retro business model. We think users will be willing to pay.
"With the meltdown of dot-com services, the Internet business model needs a reboot," he added. "This is an opportunity for the entire industry to rethink their business models. Everybody knows it has to change."
Executives from American Express, eBay, Expedia and Groove Networks — companies that plan to hook up to and use HailStorm services — joined Gates onstage Monday and offered demos of prototype Web applications that will use HailStorm services. Consumers will be able to use HailStorm to get notification that a bid has come in on an item of interest at eBay or news that a flight has been canceled. They also will be able to use instant messaging to talk to customer service representatives. All of the HailStorm services will be accessed using Microsoft Passport, which provides single-sign-on identification and authentication on Web sites.
Although the proposed HailStorm service apparently is good enough to impress veteran software aces such as Groove Network's Ray Ozzie, what Gates did not say when he proposed HailStorm as a panacea for Internet Economy woes is that it also has the potential to make a lot more money for Gates.
The first HailStorm services will be available with the launch of Windows XP, now expected in September. An entire suite of services is expected in beta form by year-end. Full services are expected in 2002.
Microsoft's ambitions with this new service platform are enormous. The software giant aims to build a community of paying subscribers that will dwarf AOL's 32 million-strong membership base. A source familiar with the software giant's plans said the company is building the infrastructure to handle a global Internet membership numbering as many as 100 million within a year of HailStorm services becoming widely available.
The prospect of this massive audience — not mere passive Web surfers but subscribers to services, and not only consumers but also corporate users — will be the bait to lure developers and Web site operators to the HailStorm platform. A Microsoft evangelism team led by 35-year-old VP Sanjay Parthasarathy is targeting high-profile Web site operators and enterprises to buy into the platform.
Among the HailStorm features aimed at developers is a software development kit that will allow them to build XML-based Web services on top of Microsoft's base. Web site operators, such as Amazon, Dell or eBay, will be able to license the HailStorm services for their Web sites.
In its effort to build a critical mass of users quickly, Microsoft holds three of the strongest cards imaginable: Windows, which dominates the desktop computer market; Office, the ubiquitous business suite; and MSN, now the most-used Web portal worldwide. This trifecta combined with HailStorm might raise antitrust concerns again, but Microsoft is proceeding regardless.
Gates said Monday that Microsoft's major products, Windows and Office, in their upcoming XP versions, will link users to HailStorm's Web services. Access also will be possible through MSN, which had more than 230 million unique visitors worldwide in February. The 160 million users who have signed up for Passports to use Hotmail will be the initial pool of consumers with the ability to access the services.
HailStorm services will not be limited to the Windows platform, however. They will be offered under license to Web site operators irrespective of whether their sites run Windows or Unix, making an already huge potential market even bigger.
This makes it clearer than ever that Microsoft's .Net Web services initiative is indeed Microsoft's answer to Sun Microsystem's write-once-run-anywhere Java platform. The fact that .Net services will run on platforms other than Windows will potentially serve to make the proposed Microsoft consumer Web services club much bigger and to rope in major consumer Web sites as partners. Ironically, given the fact that many .Net critics have feared that it would be inextricably tied to Windows, the upshot of that interoperability could be a significant extension of the Microsoft franchise onto the Internet.
Indeed, the biggest obstacle to the HailStorm plan, besides the possible interest of the Justice Department, could be .Net's scope. It aims to reach millions of people in ways that, at least initially, will trigger distrust. Microsoft will spend millions of dollars to set up data centers to handle billing, as well as power the .Net foundation services, including Passport. If .Net succeeds, those data centers will hold the personal information — names, addresses, credit card numbers — as well as the private correspondence and computer files of tens of millions of people.
Many people might be uncomfortable giving Microsoft such information. Many more will be worried about security risks given the well-publicized hacks on Microsoft sites in recent months.
Muglia addressed this directly Monday when he announced Microsoft's intention to operate large-scale data centers to run HailStorm's services.
"Being honest, some of that experience [running online operations] is not so good," he said. "We have made mistakes, but we know it is critical to our services that Microsoft be viewed as a center of operational excellence."
As for privacy, Muglia offered categorical assurances that Microsoft will not sell or market HailStorm users' personal information.
Microsoft hopes that consumers will not only try the new services, but like them, trust them over time and buy in.
The celebrity testimonial at Monday's HailStorm launch came from Ozzie, a longtime Microsoft competitor as creator of IBM's Lotus Notes, a product used by some 68 million people since it launched. Ozzie, 45, whose company is expected to release new peer-to-peer collaboration software soon, said in an interview after the event that Monday's launch puts Microsoft well ahead of Web services rivals such as IBM and Oracle.
"Microsoft is ahead of the game, not because of their technology is so different, but because they're putting money and belief behind this Web services initiative," Ozzie said. "Microsoft has a history of doing that when they make a decision to place a big bet. This feels like a very big bet.">> |
