Hailstorm rains on the enterprise, not Microsoft

A Microsoft Corp. technology that Bill Gates himself described last year as “probably the most important … building block service” of the company’s broad .Net initiative, is being redefined due to resistance from enterprise customers, company representatives acknowledged Thursday at Microsoft’s annual developer conference in New Orleans.

.Net My Services, previously known as Hailstorm, has long been described as a network of services controlled and managed by Microsoft and linked over the Internet that could be automatically accessed by consumers. Enabled by a technology known broadly as Web services, it would allow software and content to be delivered over the Internet to users on any connected computing device.

Now Microsoft is recasting .Net My Services into a technology that corporations or service providers will control and manage independent of Microsoft, while retaining the functionality it was meant to have all along, according to Microsoft.

First announced in early 2001, .Net My Services has come to include a set of more than 10 basic services such as calendaring, alerts and an electronic wallet that would be hosted by Microsoft’s Internet service MSN. Microsoft had been recruiting partners such as eBay Inc. and American Express Co. to customize those services or build their own that could then be plugged in to Microsoft’s central hosting service.

“The original strategy began as one big cloud that MSN would host and anyone who wanted could build an application that would plug into that,” Adam Sohn, product manager for .Net platform strategy, said Thursday in an interview at the TechEd event.

Microsoft handed developers an early set of tools at its Professional Developer Conference in October to begin building .Net My Services that would plug into that cloud. At the time, it discussed with attendees the business model for how it would sell software to developers.

However, Microsoft quickly learned that the model didn’t appeal to most of its enterprise customers, mainly because they didn’t want to have their customer data stored with MSN, Sohn said. Instead the enterprise customers interested in developing .Net My Services asked Microsoft to offer a packaged version of the technology that they could purchase to build and host services on their own. Examples of possible operators of such services included corporations that would create these Web services for their employees, as well as Internet service providers and Web portals that could offer services to their subscribers.

“We learned from everyone we talked to that the monolithic structure would not happen,” Sohn said, noting that customers signaled they were not interested in having a single store for all their customer information that was managed by Microsoft. “We know federation is the way to go.”

While Microsoft has sided with its critics and decided to make the shift to the new model, it kept quiet most of its plans to have customers host the service on their own. The New York Times first reported the news Thursday.

“We didn’t announce it because we’re delivering on the same vision,” Sohn said, noting that the new federated approach still gives consumers the same benefits of accessing services and content as its original model.

Microsoft had gotten some heat from consumer groups and privacy advocates around the concept of having vast amounts of user data stored in a single warehouse. Most of the controversy surrounding .Net My Services focused on the single sign-on authentication system called Passport, which allows users to access and manage their various services with a single name and password.

Ryan Freebern, programmer for Applied Science Associates Inc. based in Narragansett, Rhode Island, echoed some of those concerns, noting that Microsoft’s bruised history with security makes it a questionable candidate for managing so much personal data.

“Given Microsoft’s past accomplishments in the field of security, Hailstorm seemed like a risky idea at best, and a downright catastrophe at worst,” Freebern said.

There were also concerns that Microsoft would sell the information to marketers, said Barry Briggs, chief technical officer at Wheelhouse Inc., a customer relationship management software company in Burlington, Massachusetts.

“They swore up and down that they would not make that information available to third parties, but it would be worth billions to marketers,” Briggs said. “The temptation to make that (information) available would have been strong.”

One analyst said that Microsoft may have learned the hard way that it went about promoting its Web services strategy poorly by first pitching it as a consumer service.

“It sounds to me that they had put the cart before the horse,” said Dana Gardner, research director with Aberdeen Group Inc. Now “they’re focusing on the enterprise and not so much on the end user.”

Bellevue, Wash.-based Expedia Inc., has already built Passport and .Net Alerts into its system. The company, which was originally funded by Microsoft, said it is not fazed by Microsoft’s changes, according to Suzi LeVine, director of product management for Expedia.

“We welcome a shift in their model to offer the software to multiple operators. It continues to fulfill the goal of a more personalized and consistent user experience,” LeVine said. “It just engages other companies and services into that vision.

“Microsoft seems as committed as ever to those services (passport .Net alerts),” LeVine said.

Microsoft executives stressed here that the company isn’t abandoning its consumer services. However, it has not yet determined how it will package .Net My Services for enterprise customers. Microsoft also said that as corporations and other customers decide to build the .Net My Services technology on their own, it could be resurrected through MSN in the future.

“We’ve not changed our vision of user centric Web services available from any place. What’s changed is the question of the road we’re taking to get there,” Sohn said.

(Scarlet Pruitt in Boston and Stacy Cowley in New York contributed to this report.)

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