Microsoft shifts Web Services plan toward companies

SEATTLE (Reuters) -- Microsoft Corp. has reworked its Web-based services strategy, shifting tactics from an initial plan to act as the main gatekeeper for customer data, to providing basic software to let companies build their own versions of such services, the company said on Thursday.

In March 2001, Microsoft unveiled a strategy to provide consumer and corporate Web services that would store personal data like passwords, address books and credit card numbers in a huge central database.

Initially called Hailstorm before the name was changed to .Net MyServices, the strategy has been pushed by Microsoft as the future of computing, in which people will be able to tap their data on any device with an Internet connection.

MyServices was originally slated to debut later this year, but executives and analysts have acknowledged in recent weeks that the project is being reworked and likely will not roll out until next year.

"The dream hasn't changed, what's changed is how we get there," said Microsoft spokesman Adam Sohn.

One reason for the shift is that after receiving sample software for building such services last year, developers told Microsoft they wanted to see more attention paid to the corporate market, Sohn said.

They were also worried about the idea of having a single company--Microsoft, through its MSN Internet unit -- be the sole repository for the personal and highly sensitive data needed to make the services work, he said.

"There was a shift in priorities, so simply rather than focusing, as step one, on a big MSN-focused data center that others could use, we would focus on delivering technologies they need to do it themselves," Sohn said.

Though the move is a change from the original plan, it is still in line with the vision of a "federated" model of separate-but-connected Web services that Microsoft also talked about when it first introduced Hailstorm, analysts said.

"Microsoft has done a lot of scrambling lately to reposition .Net as something that other parties could also host. That might be an individual corporation that sets up the equivalent of .Net MyServices internally for its employees," said Dwight Davis, an analyst with Summit Strategies.

"The problem turned out to be that in the business user realm, a lot of corporations and even medium-sized businesses balked a little bit at the thought of Microsoft being the gatekeeper for their data, for information about employees and so forth," Davis said.

Consumer service still in works
While the new plan puts more emphasis on the corporate market, Microsoft said it still plans to offer a consumer service through its MSN Web portal.

Sohn said a New York Times article on Thursday asserting that the company had "quietly shelved" plans for a consumer service was not true.

"People are asking what this means for Microsoft's consumer Web services strategy," Sohn said. "There is no shelving, no backing off from anything."

Microsoft has taken small steps toward consumer-style services with things like its instant message "alerts" that deliver bulletins on traffic, online auction bids or stock prices. It has also crowed about the popularity of its free Hotmail Web-based e-mail, which is adding premium features like extra storage for an annual charge.

But Microsoft has also faced challenges in convincing average consumers that broader Web services--which will likely entail monthly or yearly subscription fees--is something they will need, analysts said.

"One other core issue slowing all this is the user demand side. There has not been a groundswell for this kind of service yet. There has been some interest but by and large the broader consumer community isn't even aware of this," Davis said.

"It's still pretty vague how it will roll out," Davis said.