Commentary: HailStorm's consumer focus

By David Smith and Chris LeTocq, Gartner Analysts

HailStorm--the next step in Microsoft's .Net vision--has the potential for Microsoft to communicate to consumers and, to a lesser extent, emphasize the value proposition of Web services and .Net. It targets the company's main competitor in the consumer arena, AOL Time Warner.

HailStorm heralds the end of reliance on advertising revenue as the way to make money over the Internet. Increasingly, making money will require value-added services for which users will have to pay. Through Passport, which provides a single user authentication across all the .Net services, access will be nominally free but will require membership for any service of value, such as actual storage of profile information.

HailStorm can thereby ensure consistent individual identification and the sharing of information between services. That information may then be made available to merchants and advertisers through other Web services from sources other than Microsoft. (HailStorm and Passport fundamentally respect individual privacy and ask for users' consent before reusing their information.)

Passport to success?
Microsoft regards Passport as a key leverage point and will use its own established platform dominance to drive exclusive usage. HailStorm does not require Windows platforms or Windows XP, but both Windows XP and Office XP will provide a level of convenience for users and will drive use of HailStorm services. Windows XP will use Passport exclusively for its identity service.

However, for HailStorm to be as open as other .Net and Web service technologies such as UDDI and SOAP, Windows XP could use a UDDI look-up to allow selection from competing identity services. Microsoft has chosen not to do this. Along with other HailStorm services, especially notification for instant messaging, Passport aims to combat AOL Time Warner's advantage in instant messaging and in having a larger installed base.

	See news story: Microsoft's HailStorm unleashed

HailStorm will form a new business within Microsoft. Although technically part of its consumer division, HailStorm will not carry the Microsoft Network brand. HailStorm takes into account three types of customers and business opportunities: the user, the developer of third-party Web services and the service provider that would host services. Thus, HailStorm opens up opportunities for Microsoft to forge completely new partnerships--or to increase conflicts with some of its traditional competitors.

Microsoft and eBay announced a partnership earlier in March that portended HailStorm. As Passport already claims hundreds of partners (such as Dell Computer), opportunities for partnerships with other e-commerce heavyweights seem quite fertile.

As IBM and Microsoft have worked quite closely in Web services for some time--for example, by co-developing UDDI, SOAP and WSDL--Gartner would be surprised to see IBM go its own way. HailStorm focuses initially on consumer applications, for which Web services will likely happen first, while IBM has the key to the enterprise, something Microsoft covets. Gartner believes that IBM will endorse HailStorm and provide enterprise-oriented services for it by year-end 2002.

Service providers, such as application and Internet service providers and telephone companies, can help Microsoft overcome some of the problems related to availability.

The challenge to Sun, AOL
HailStorm represents a formidable introduction of context-based services--something that Sun Microsystems had hinted at in its Sun One launch. HailStorm offers prebuilt Web services, initially targeted at consumers, that will be delivered within the next quarter. By contrast, Sun has yet to deliver even a prototype of Web services--smart or otherwise. With other vendors such as Microsoft and IBM building products and launching actual services, Sun faces an uphill battle to distinguish itself as a Web service provider. Moreover, Sun's alliance with AOL represents another area of potential competition with Microsoft.

A longtime competitor in the consumer arena, AOL is the primary target of HailStorm. AOL's competitive advantages include its leadership in instant-messaging usage and its partnership with Sun (for instance, iPlanet), which could create an alternative to Passport, although it would probably fall short of Microsoft's Web service vision. AOL has a good reputation for reliability as well. However, to compete effectively with Microsoft, AOL would have to overcome Microsoft's ownership of the desktop. Alternatively, AOL could choose to partner with Microsoft rather than fight. Such a truce would enable each to focus on core competencies.

Finally, to succeed with this initiative, Microsoft must tackle a few problems in addition to executing on its plans for HailStorm. Microsoft has a reputation as a company with questionable business practices. Some industries and countries are loathe to put so much trust and control in the hands of any company, much less Microsoft. Although Microsoft continues to invest in such priorities as reliability, security and availability, major headlines frequently call Microsoft's capabilities into question.

(For related commentary on Microsoft's .Net platform, see TechRepublic.com--free registration required.)

Entire contents, Copyright ? 2001 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.