A joke is making the rounds on the Internet that Microsoft's .NET strategy is based on the old scheme that drug dealers use: Sure, the first one is free, but when you're hooked, you're going to start paying for it. Seeing this strategy applied to .NET isn't hard. Microsoft is making promises about the future, and the company is offering several prototypical .NET services—Microsoft Passport, MSN Alerts, MSN Calendar, and so on—that are available free on the Web. However, the more powerful and useful Web services will likely be paid services. Is Microsoft pulling a fast one?
Despite the rhetoric surrounding this question, I don't think so. Microsoft has always been upfront about the fact that some of its .NET services—the so-called basic services—will be free for the foreseeable future. The HailStorm services, which encompass personal information management, fall into this category. Using an as-yet unknown HailStorm user interface (UI), users will be able to store information such as their name, address, contacts, inbox email, calendar and scheduling data, documents, and credit card data on Passport servers. This information will then be available to applications, Web sites, and other Web services according to the privacy and security rules that those users define.
Just how Microsoft will make money on this type of service is unclear, but the company has some loose plans in place. For example, Microsoft is creating a "plus" version of Hotmail that will let users store more email online for a small monthly charge. In addition, Microsoft will likely create applications that take advantage of HailStorm services, which the company will continue to sell at retail. A good example of this strategy is the next version of Microsoft Office, code-named Office 11, which is still at least a year away from release. The Microsoft Outlook version in Office 11 will integrate with the Personal Information Management (PIM) capabilities in HailStorm in the same way that Outlook 2002 integrated Hotmail support. Microsoft Word 11's mail merge feature will probably work with HailStorm contacts lists. The list of integration possibilities is endless.
As we migrate from today's world of shrinkwrapped software to one in which we subscribe to and license services and applications online, other things will change, too. Future versions of Windows will integrate more and more .NET functionality until Microsoft arrives at a true Windows .NET product in 2003 or 2004. Code-named Blackcomb, this future version of Windows will be the first OS to feature the ".NET user experience," a new UI that's not just Web enabled but permeated with online integration. If Microsoft pulls it off, users will notice little if any difference between working with data online or off. As a paid product, Windows will be the ultimate .NET client and server, although of course it will have competition. But Microsoft is working toward obsolescing Windows in favor of .NET, so this changeover is as certain in the future as the end of Windows 9x is today: It's just a matter of time.
We can expect to see a healthy market of free .NET Web services and applications from Microsoft and other companies, just as there's a healthy third-party application market today for Windows, despite complaints about the number of features that Microsoft is integrating into its flagship product. Probably, .NET will be no different: Microsoft will continue to make its money by selling (or leasing) the underlying platform, while third-party developers add value by coming up with more targeted solutions.
That's where the fear comes in. Jokes about Microsoft and drug dealers are told nervously because there's always the underlying thought that Microsoft will use its desktop OS monopoly to shoehorn its way into other markets. Today, the company is facing a legal challenge in Europe for just that reason, and, of course, Microsoft's antitrust woes in the United States are well known. However, given that the underlying .NET technology is based on open standards and available for competitors and partners alike, it seems unlikely that Microsoft will come to dominate the Internet in the same manner in which it now dominates the desktop. Should Microsoft somehow manage to come out on top, it will likely be because the company has so wholeheartedly embraced a future of Web services. The company made a similar bet on Windows in the early 1990s and was able to displace DOS application champs such as Lotus 1-2-3 and Corel's WordPerfect largely by betting on the right horse. (Unfortunately, Lotus and WordPerfect backed OS/2—a move that quickly retarded the growth of the companies' products.) There seems to be a consensus in the industry that Web services are the wave of the future, and it's unlikely that any of Microsoft's competitors will ignore this trend.