April 17, 2002 8:25 AM PDT

Survey: Passport required--not appealing

Microsoft has doubled the number of people signed up for its Passport authentication service, but the majority of people are doing so because of product requirements rather than the allure of new features, Gartner said Wednesday.

The number of Passport users jumped to 14 million from 7 million between last August and February, according to the research group. Passport authentication, which is a central element of Microsoft's .Net software-as-a-service strategy, offers a single sign-on that gives people access to Web sites without the need for multiple IDs and passwords.

But most people are not choosing Passport for convenience' sake, Gartner said. Use is rising because the authentication service is required to use some Windows XP features, along with Hotmail e-mail, Microsoft's developer site and other Microsoft products. During the last six months or so, Microsoft has moved the Microsoft Developer Network, bCentral small-business services Web site, and online game Zone to Passport authentication.

"Consumer demand typically drives the adoption of new products and services, but the rollout of Passport services is clearly not following that general rule," Gartner analyst Avivah Litan said in a statement. "Most consumers are signing up because they have to and not because of a strong interest in the convenience features Passport offers."

In a recent consumer survey, Gartner found that 84 percent of Passport users signed up for an account to use Microsoft sites. That was up from 61 percent in August, or two months before the release of Windows XP. In the new survey, only 2 percent of consumers said they chose Passport for the convenience of single sign-in compared with 16 percent six months earlier.

Microsoft acquired the technology for Passport when it bought Firefly Network in April 1998. Although Microsoft shuttered Firefly in August 1999, many Firefly developers remained at Microsoft to work on Passport. The Redmond, Wash.-based software giant officially launched the authentication service in March 1999, later requiring its use in MSN Messenger and other Microsoft products.

Strong Microsoft brand recognition could work in the service's favor, despite consumers' reasons for signing up for an account. While 47 percent of consumers said they most trusted banks running identity or e-wallet services, Microsoft came in second at 12 percent, according to Gartner. Credit card issuers and America Online followed, respectively, at 8 percent and 6 percent.

Passport competes with single sign-on offerings from AOL Time Warner and others. The Liberty Alliance, a technology coalition supported by Sun Microsystems, has been a vocal opponent of Passport, setting the stage for possible incompatibilities between authentication systems. Microsoft in September said it would open Passport to the broader business market, which could include rivals.

Critics of Passport, including AOL, Sun, privacy groups and state trustbusters, have challenged Microsoft's use of Windows XP and other desktop or Web products to drive Passport adoption.

In court last week, during remedy hearings for Microsoft's antitrust trial, Sun Chief Strategy Officer Jonathan Schwartz sharply criticized Microsoft's ties between its products and Passport accounts.

"By exploiting its control of Windows, Microsoft can ensure that more PC end users will sign up for its .Net Passport service than any competing authentication service," he said.

Without a doubt, Passport is a crucial element to Microsoft's Web services strategy. The more people sign up, the larger the audience for Microsoft's Web services and products.

"This, in turn, earns Microsoft higher advertising revenue, more lucrative affiliate deals, and potential customer-referral transaction fees in the future," Gartner's Litan said. "Passport is considered an essential piece of infrastructure in Microsoft's bid to sell software as Web services, which is part of its overall .Net strategy."

Microsoft has been rethinking.Net, particularly .Net My Services, which is aimed at consumers. In March 2001, Microsoft launched .Net My Services--then called HailStorm.

see related story: Is Microsoft getting ahead of itself? .Net My Services will eventually allow consumers to access their personal information online from any device and to perform a range of tasks, including shopping, banking, and checking e-mail and calendar items. But the initiative has been sidetracked because of internal debates over a proper business model and a lack of industry support.

The plan has been the source of continual confusion among potential partners and customers, has encountered a series of problems with its underlying technologies, and has faced internal frustration that sources say even led to its lead executive being reassigned.

 

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