Analysts criticise .Net business model

Industry analysts argue that Microsoft's Web services pricing model is totally wrong.

Industry analysts argue that Microsoft's Web services pricing model is totally wrong.

Ovum analyst Neil Ward-Dutton told CW360.com that Microsoft has chosen the wrong business model for .Net. The problem, he noted, was that Microsoft has the technology and it wants to host as well.

"It would make sense to make .Net free because Sun and its Liberty Alliance will come and say we are going to do Web services for free," he observed. "But if Microsoft starts free, at what point does it start charging?"

Ward-Dutton believed the model was wrong because people would not trust Microsoft. Rather, he suggested: "It would make more sense for telcos or banks to host the services, because to some degrees they are already trusted."

Tim Jennings, research production director at the Butler Group, agreed that Microsoft was unlikely to charge for use of its .Net protocols. However, he could not see the business model working in terms of storing, securing and managing profile data. "I don't really see that works unless companies receive some revenue for the services," he said.

Jennings noted that Microsoft was planning to make a substantial investment in data centres to support the .Net strategy.

Eddie Bleasdale, director of NetProject, a consultancy that helps business use open source systems, said: "Microsoft is basically helping businesses advertise their services for a fee." Bleasdale agreed that the Microsoft business model favoured large business and could preclude people and organisations not prepared to pay the fee.

IBM has its own Web services strategy geared towards it WebSphere application server software. When asked whether the Microsoft charge was justified, Tony Occleshaw, regional marketing manager of IBM's software group, said: "I guess it's a bit cheeky for Microsoft to try to charge a developer for the pleasure of writing a proprietary application which would be limited to their platform."

Occleshaw said IBM had a three-tier developer programme, with the lowest tier free and the highest at $20,000. However, the charges were often waived. "Of the 180 top tier partners we had last year, all but two of them had their charges waived," he said. "The two that didn't simply failed to provide the necessary paperwork, so if you are serious as a developer and are making a commitment to IBM, it is free."

The other main Web services pioneer, Sun Microsystems, also believed the Microsoft business model did not make sense. Guy Norgrove, director of Sun Microsystems northern Europe, told CW360.com: "In terms of .Net pricing, I think it's difficult to price something Microsoft does not yet have."

He said that the industry was only just starting long-term Web services adoption. "The [full] roll-out could take anything from five to 15 years," he said

In spite of criticisms over the charging, Microsoft business partners see .Net and the My Services product as good for business. John Beech, customer services director of Access Accounting, said: "The extra costs involved are very minimal. The only additional thing they will require is the .Net licence, which costs £2,500."
This was last published in October 2001

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