Cashing In

Do you want to hand over your online purse strings to Microsoft?

Ever dream of owning the printing press that cranks out money? Who hasn't? For most of us, that's a dream that will never come true.

But Bill Gates not only has the dream; he's got the plan. Before year-end, Microsoft will begin releasing the programming elements of a Web payment system called HailStorm. This is undoubtedly the most important part of Microsoft's long-term .NET initiative of selling its software as Internet services: It's how Microsoft will get paid. And Microsoft would like your e-commerce site to use its currency, too.

HailStorm doesn't involve physical greenbacks, of course. It's a collection of XML Web page tags and Simple Object Access Protocol calls that will let Microsoft and other Web sites access a database of information describing the financial condition of every HailStorm subscriber. The database will include Web site passwords, shipping information and billing information. Eventually, it will contain e-mail addresses, phone numbers and calendar entries. Social Security and driver's license numbers also could be added, and maybe even medical records. Rob Enderle, a research fellow at Giga Information Group, calls it "a virtual you-everything and anything that defines you will be stored for quick access electronically."

HailStorm could provide a far more intimate portrait of a subscriber's financial worth and future prospects than can be found anywhere today. It would bring all your financial data together in one place-although Microsoft .NET general manager Ruthann Lorentzen assures us users will control who can see what.

What does the HailStorm program offer subscribers? Initially, the convenience of not having to fill out ID, billing and shipping information on Web sites-and, eventually, the ability to transfer data among users. One example would be expediting the purchase of an airline ticket and sharing changes in a travel itinerary with the e-mail and calendar programs of clients and co-workers.

Hailstorm's precursor-Microsoft's Passport user-authentication system already boasts some 160 million accounts across Microsoft and third party Web sites. Only AOL and Yahoo! have comparable reach, so any system Microsoft adopts is bound to significantly impact Internet businesses.

For one thing, a widely used digital currency could grease the skids of Internet commerce. Moreover, HailStorm could provide a mechanism to help Web sites turn from ad-based to subscription-supported revenue models-or, at least, a hybrid in which consumers pay for value-added services. Microsoft itself plans to finance HailStorm primarily through subscriptions.

Microsoft will also charge application and Web site developers a one-time fee for use of HailStorm software tools, support and services, with additional charges for heavy use. But if it works, HailStorm could pay for itself in advertising savings alone. Forget about the expensive shotgun approach of most mass media ads. HailStorm is the ultimate loyalty program in which you'll have enough data regarding consumers' demographics and spending habits to send only customized messages that will likely be well received.

Microsoft promises heightened security and consistent privacy policies-two oft-cited hurdles to e-commerce. But that's where the ride gets a little bumpy.

This is Your Life
Elements of HailStorm's user database will include:
  • Financial and other personal ID numbers
  • Web site IDs and passwords for users' favorite URLs
  • Electronic wallet with receipts, payment instruments, coupons and transaction records
  • Electronic address book and calendar
  • An inbox for e-mail and voice mail from other mail systems
  • Settings preferences for desktop applications and Internet-capable devices
  • Document storage
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This article was originally published in the September 2001 print edition of Entrepreneur with the headline: Cashing In.

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