Quote:
Microsoft (news/quote) has quietly shelved a consumer information service that was once planned as the centerpiece of the company's foray into the market for tightly linked Web services.
The service, originally code-named Hailstorm and later renamed My Services, was to be the clearest example of the company's ambitious .Net strategy. It was intended to permit an individual to keep an online persona independent of his or her desktop computer, supposedly safely stored as part of a vast data repository where there could be easy access to it from any point on the Internet.
At the time of the introduction of My Services, Microsoft also proclaimed that it would have a set of prominent partners in areas like finance and travel for the My Services system. However, according to both industry consultants and Microsoft partners, after nine months of intense effort the company was unable to find any partner willing to commit itself to the program.
Industry executives said the caution displayed by consumer giants like American Express (news/quote) and Citigroup (news/quote) illuminated a bitter tug of war being fought over consumer information by some of the largest financial and information companies.
"They ran into the reality that many companies don't want any company between them and their customers," said David Smith, vice president for Internet services at the Gartner Group (news/quote), a computer industry consulting and research firm.
The lack of interest also indicates that in a variety of industries outside the desktop computer business there remain significant concerns about Microsoft's potential to use its personal computer monopoly and its .Net software to leverage its brand into a broad range of service businesses.
An early signal that the My Services idea was in trouble came last fall at Microsoft's annual developer's conference, attended by more than 6,000 programmers. The sessions on My Services were poorly attended, an attendee said.
"There was incredible customer resistance," said a Microsoft .Net consultant, who spoke on the condition that he not be identified. Microsoft was unable to persuade either consumer companies or software developers that it had solved all of the privacy and security issues raised by the prospect of keeping personal information in a centralized repository, he said.
Microsoft executives acknowledged the shift in strategy and said the company was still contemplating how it would bring out a revised version of the My Services technology. The decision resulted in a relocation of several dozen programmers in December from a consumer products development group run by Robert Muglia to the company's operating systems division.
"We're sort of in the Hegelian synthesis of figuring out where the products go once they've encountered the reality of the marketplace," said Charles Fitzgerald, Microsoft's general manager for platform strategy.
He said part of the decision to back away from a consumer version of My Services was based on industry concerns about who was going to manage customer data. The issue, he asserted, was more of a sticking point within the industry, rather than among consumers.
"We heard a lot of concern about that point from competitors in the industry but very little from our users," he said.
Microsoft is now considering selling My Services to corporations in a traditional package form, rather than as a service. The companies would maintain the data for their own users.
"Frankly selling this stuff to people who build large data centers with our software is not a bad model," Mr. Fitzgerald said.
Microsoft first introduced the Hailstorm services idea at a news conference at its headquarters in Redmond, Wash., in March 2001. At the time, the technology received endorsements from a handful of corporations including American Express, Expedia (news/quote), eBay (news/quote), Click Commerce (news/quote) and Groove Networks.
At the time of the announcement, Microsoft described Hailstorm as a way for a consumer to have a consistent set of services, like e-mail, contacts, a calendar and an electronic "wallet" — whether sitting at a desk or traveling and using a wireless personal digital assistant.
"Microsoft's `Hailstorm' technologies open exciting new opportunities for us to use the Web in ways never thought of before, helping us to continue to deliver service that is truly unmatched in the industry," Glen Salow, the chief information officer of American Express, said at the time in a statement.
More recently, however, American Express officials have told computer industry executives that they remain concerned about being displaced by Microsoft's brand in such a partnership.
A company spokesman said in a telephone interview today that American Express had intended to endorse the broader notion of integrated Internet services last March, not My Services specifically. He said he did not know if the company had discussions with Microsoft about becoming a My Services repository.
Several industry consultants who work with Microsoft said that the company was now planning to deploy My Services as a software product for corporate computer users some time next year, after the company introduces its .Net operating system.
"Enterprise customers were telling Microsoft, `We like this idea but we don't want to be part of this huge public database,' " said Matt Rosoff, an analyst who follows the company at Directions on Microsoft, a market research firm in Kirkland, Wash.
When it was introduced, the Hailstorm plan quickly became a lightning rod for privacy advocates who saw dangers in concentrating vast amounts of personal information in a single repository.
Last fall a coalition of privacy groups complained in a letter to the Federal Trade Commission about the potential risks inherent in Microsoft's collecting personal information from and about several hundred million personal computer users.
My Services also created thorny privacy issues for Microsoft in Europe, because of restrictions on transborder data transfers there. Microsoft has not resolved how personal information stored in one country can be easily transmitted internationally.
Are they finally learning something?