Paying for Time

Microsoft has started informing MSN Calendar customers that the service will no longer be free after June 25. The move is consistent with Microsoft’s plan to shift the majority of its consumer Web services to MSN 8 and paying customers.

To recap: In March 2001, Microsoft officially unveiled an ambitious consumer Web services strategy known as “HailStorm.” The company promised HailStorm--including online calendaring and contact management, among 12 other services--as the first deliverable of .Net, Microsoft’s broader Web services strategy. But by early 2002, following a rebranding of HailStorm to “.Net My Services,” Microsoft’s consumer Web services strategy had run aground. The company concluded that consumers simply weren’t ready for a la carte Web services.

Microsoft refocused its consumer Web services strategy on the MSN online service and delivering extras to paying customers. Over time, Microsoft would enhance its collection of Web services but make many of them exclusively available to MSN subscribers. The company also took a back-to-basics approach, emphasizing its software development strengths to bulk up the MSN client’s features. The result: MSN 8, which Microsoft released in late October 2002. Subscribers benefited from better e-mail features--parental controls and spam filtering, among others--than what was available on the free Hotmail service; exclusive MSN Messenger 5 features and parental controls not available in the free version; educational reference and money management options that cost extra on the MSN Web site; and integration of Microsoft Picture It! software, among other extras.

MSN Calendar likely will not be the last, free Web service Microsoft shifts exclusively to paying customers. People using these services may want to seek out free alternatives or consider signing up for MSN 8, which costs as little as $9.95 a month for broadband cable or DSL service subscribers. The deadline is June 25, after which time Microsoft will delete the calendars of people choosing not to subscribe to MSN 8, according to the e-mail dispatched to MSN Calendar customers this week.

While the move might appear to some customers as a harsh, attempted upsell to MSN 8, the MSN Calendar change is consistent with Microsoft’s shift to “fee” from “free” consumer Web services and its attempt to make MSN profitable. During Microsoft’s third fiscal quarter, ended March 31, MSN posted $619 million in revenue but an operating loss of $92 million, according to the company’s Q3 10-Q filing with the Securities and Exchange Commission. Microsoft launched the perennial unproftiable MSN service in 1995 with the release of Windows 95. Bringing MSN into the black is an important Microsoft goal.

Posted by Joe Wilcox at May 21, 2003 12:02 PM