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Study: Customers wary of online IDs

A new Gartner study indicates that despite compulsory sign-up programs, consumers aren't interested in online identity and authentication accounts--and they won't be anytime soon.

Microsoft and other technology makers struggling to define new Web services business models have another obstacle: consumer distrust of online authentication systems.

A new Gartner study indicates that despite compulsory sign-up programs, consumers aren't interested in online identity and authentication accounts--such as Microsoft's Passport and AOL's Screen Name service--and won't be anytime soon.

Moreover, few people trust Microsoft and AOL to safeguard the personal or financial information necessary for conducting online transactions.

Study findings, made available to CNET News.com, also show that the majority of consumers with identity or authentication service accounts were unaware they had them, and that many consumers had signed up for accounts because they are required in order to use online services.

The survey of more than 2,000 consumers was conduced twice: once last August, and again this February, Gartner said. The firm will present the findings of the study at a conference next month.

Gartner analyst Avivah Litan, who authored a report based on the study, said Microsoft and AOL "are pushing this out and consumers have no choice. If (consumers) had choice, they would not be signing up for the service...It's low on their priority list."

Microsoft requires users to sign up for a Passport account to access services such as Hotmail and MSN Messenger. Similarly, AOL directs users to its Screen Name service for Web-based access to its My AOL service, e-mail, or calendar features.

The findings may come as a blow to Microsoft and AOL, which are attempting to drive customers to online authentication systems as the first step in establishing additional fee-based online services, such as Microsoft's .Net My Services plan. That plan, still on the drawing board, is intended to provide fee-based hosting and delivery of personal information while providing an array of services ranging from commerce to communication in partnership with Web retailers such as eBay. AOL is devising its own consumer Web services plan, code-named Magic Carpet.

see related story: Is Microsoft getting ahead of itself? In the continuing Microsoft antitrust trail, a Sun Microsystems executive claimed that Microsoft is hoping to drive Passport membership through compulsory enrollment in its Windows XP operating system and through other products. Documents introduced on Monday in part described Microsoft's consumer Web services goal as being to create "the largest and most extensive database of profiles on the planet." But attorneys were unsuccessful in their attempts to get Microsoft executives to admit that Passport would be necessary for collecting that data.

Both Passport and Screen Name offer a single sign-on that gives people access to Web sites without the need for multiple IDs and passwords. In addition, the Liberty Alliance Project, a coalition formed by Sun to define single sign-on technology, will join the fray this summer by releasing its technical specifications. The Liberty Alliance has secured support from many major companies, including AOL, United Airlines, Fidelity Investments, Vodafone Group and Visa.

Microsoft, AOL and others tout the services as a way to ensure consumers would not have to remember many different IDs and would be able to make secure purchases using built-in e-wallet components.

However, Gartner found most consumers simply don't trust the identity and authentication services and are much more concerned about security than convenience. For now, the majority of consumers do not trust technology companies like AOL or Microsoft to deliver online identity and authentication services, although many would consider similar services offered by credit card issuers, Gartner found. Forty-seven percent of consumers said they would put their trust most in banks for safely handling e-wallet services, followed by 12 percent for Microsoft, according to Gartner.

In the a survey, 38 percent of consumers said they did "not at all" trust Microsoft and 29 percent said they did not trust AOL with their personal and financial information. Gartner also broke out the question to cover specific technologies, such as Internet access or instant messaging. More than 50 percent surveyed said they did not trust the MSN online service with their personal and financial information, and 49 percent said they did not trust MSN Messenger. AOL fared better in the specific categories.

Conflicting totals
The Gartner study estimates there are 50 million registered online authentication users. Gartner concluded that by 2003, the majority of those 50 million users would access, at most, an average of three Web sites a month using the services.

IMAGE TEXT HERE Gartner also estimated Passport membership numbers which conflict with Microsoft's own totals. Gartner concluded that there are 25 million Passport users, but only 14 million of those users are aware that they have a Passport account. Microsoft claims it has more than 200 million registered accounts, although the company is quick to add that the total does not necessarily represent active users. Gartner says at least part of the discrepancy in account numbers is due to users with multiple accounts. Individual users sometimes establish separate Passport IDs for Hotmail, MSN Messenger and other services.

Microsoft has been aggressively promoting Passport through its own services, and through Windows XP. As a result, Gartner found that the number of Passport users jumped to 14 million from 7 million between last August and February, according to the research group.

Microsoft maintains that Passport is extremely popular with consumers and disputes Gartner's estimates.

Last week, during the Microsoft antitrust trial, David Cole, vice president of the MSN and Personal Services Group, estimated Passport does 3.5 billion authentications a month. During the continuation of his testimony on Monday, Cole characterized Gartner's estimate of the number of Passport users as "a number of magnitude off."

Gartner concluded that, for now, most consumers would use identity and authentication services for signing in to Web sites that require them, but not for making purchases or using Web services.

"Consumers aren't totally adverse to these services, but they're way down their list until security and privacy issues are resolved," Litan said. "I don't think people are going to gladly give their information away to use these identity services."

For example, Gartner claims that 86 percent of Passport account holders have not used the service's e-wallet service, with more than half citing lack of trust as the main reason. Gartner found that less than 10 percent of online consumers would be willing to exchange personal information in order to use personalized Web services, such as .Net My Services.

"People are paranoid; they don't want to give their information away and they have a right to be paranoid," Litan said. "This whole idea of customized, personalized Web services is still a dream, and I don't think consumers are going for it."

Adam Sohn, Microsoft's product manager for the .Net Platform Strategy, also disagreed with Gartner's conclusions about the value of identity and authentication services to consumers.

"This is an enabling a technology. That's what authentication is for," he said. "We think it's necessary in a world where very cool services are built around a user."

AOL representatives did not comment on the Gartner study and instead deferred to a Liberty Alliance representative, who agreed that protecting consumer data and winning consumer trust are important.

IMAGE TEXT HERE "The vision of the Liberty Alliance is to enable a networked world in which individuals and businesses can more easily conduct transactions while protecting the privacy and security of vital identity information," she said.

Another issue hampering adoption is interoperability between competing services. Gartner predicted Microsoft and AOL identity and authentication services, for example, wouldn't interoperate until about 2005.

"There won't be anything as single sign-on," Litan said. Instead, "consumers will have more user IDs. They'll have one for Passport, and to get into their bank they'll have to have another or they'll have their AOL ID. It's probably going to make consumers' lives more complicated rather than less complicated," he said.

Sohn said Microsoft is committed to interoperability. "We're actually working toward a day where it doesn't matter what authentication service you use," he said. The company has already announced that it will use a security model called Kerberos so Passport can be federated with other authentication systems, much in the same way that automatic teller machines are linked to a network to share banking information.

Likewise, the Liberty Alliance representative claimed that organization was striving for greater interoperability. The "Liberty Alliance is not attempting to compete with or displace other identity products or solutions," said the group's representative. "The goal is to facilitate interoperability between existing and future identity products and solutions."

Microsoft has the edge
Microsoft isn't the only company automatically signing up consumers for identity and authentication services, but the software giant's Windows monopoly would be a decisive advantage over competitors. Gartner concluded that as more people switch to Windows XP, Microsoft would gain market share from AOL. Gartner concluded Microsoft will eventually pass AOL in both instant messaging and e-mail account market share.

"People are going to go on signing up for Passport," Litan said. "They won't share their personal and financial information, but they won't try to disable Passport either. Microsoft is going to get its way to use Passport to conquer new Web markets."

The Gatekeeper: Windows XP But Sohn faulted Litan's conclusions. "The services in Windows XP that require authentication are Windows Messenger, video and voice chat," he said. "We think these are compelling user-centric Web services, and they need authentication. Given that these are Microsoft services, we use Passport as the authentication solution. None of that prevents a consumer from using other authentication or communications services, and millions do."

Even if consumers resisted using Passport e-wallet services for years to come, Microsoft would still benefit greatly from the forced generation of accounts, Litan said. The company that leads the identity race would gain market share in the sale of technology for supporting online infrastructure, gain an edge delivering software services and Web services, command better affiliate deals, garner more advertising revenue, and collect more transactional and billing fees.

"That's great for Microsoft, but I don't know about consumers who aren't interested in these identity or authentication services," Litan said.