Microsoft's Hailstorm could be the deathknell for free services such as email and messaging, say analysts. The software company unveiled details of HailStorm on Monday, calling it a cornerstone of its software-as-a-service initiative known as .Net. HailStorm is a group of services, using Microsoft's Passport authentication technology, meant to provide secure access to e-mail, address lists and other personal data from virtually anywhere via PCs, cell phones and PDAs (personal digital assistants). But the catch is that users of the services will be required to pay fees. Analysts said that if the HailStorm model is widely adopted -- and if people will pay a premium for security -- the days of ad-subsidized Internet services, such as free e-mail and messaging, may be over. HailStorm is absolutely the test of whether you can make money on the Web," said Gartner analyst Chris LeTocq. "But to get there, you have to offer people something they are willing to pay for. That will be the test for Microsoft." Microsoft executives are confident that the time is right for HailStorm. "There's been a lot of stuff (on the Internet) in the last couple of years that was free and interesting, but people weren't actually willing to pay for it," said Charles Fitzgerald, director of business development in Microsoft's platform strategy group. "We want to pursue a model that lets us deliver a lot more value in an economic fashion so that we all can get paid every two weeks like we're used to." The current advertising-driven model has sent many Internet-based companies to an early grave. More than 320 dot-coms have shut their doors since January 2000, half in the last three months and 52 in February alone, according to Webmergers.com. "The ad-based model is basically a failure," said Prudential Securities analyst James Lucier. "The reason we've had so much content provided on an advertising model is that was the only model there was." Microsoft is convinced that the company and its partners can charge for services and content if they deliver value to consumers and businesses. American Express plans to use Passport to authenticate Internet purchases made with its Blue card and alert customers when their bills are due using MSN Messenger. LeTocq described the concept that Microsoft uses as that of personal context services, which is Gartner's name for the collective management of an individual's personal information. Using a Passport-authenticated service, a business traveler would be able to grab disparate data from both PC and cell phone to send instant messages to the last 100 people called. "That's really where the unique value plays," he added. "What Microsoft has put in place is an application architecture which has the capability to provide that value. That's what people would be willing to pay for." Strangely, Microsoft's strategy seems the antithesis of the company's focus for 25 years. Perhaps more than any company, Microsoft is viewed as the catalyst that broke people away from the server-in-the-sky mainframe-era model and brought information and power to the desktop. Microsoft's HailStorm model, in contrast, would take content, services and even software away from the PC. Fitzgerald dismissed the contention that Microsoft has shifted focus. "Our roots are around personal empowerment and giving people control over their environment," he said. With information going back to the server because of the Internet's dominance, "HailStorm is about personal-empowerment tenets--the idea you're in control of your stuff not just on a single PC but all the different technologies in your life." "There's PCs, phones, PDAs and all kinds of access devices, so getting information to them could be a good value proposition," said Technology Business Research analyst Lindy Lesperance. "But it all depends on what the pricing is going to be." Microsoft has yet to say what it will charge for HailStorm services when it launches them in force next year. Lucier sees HailStorm possibly "expanding the range of alternatives available to entrepreneurs. Will this replace free content? Possibly not, but free content hasn't really been able to support itself." But Microsoft's real asset could be offering the carrot of privacy. Because the company plans to collect subscriber fees rather than rely on advertising, the model is clean and free from conflict, Fitzgerald said. Lesperance said this could make all the difference for Microsoft. "I think people are willing to pay for their privacy," she said. "I think Microsoft could do well to offer people increased privacy over the Web." LeTocq agreed, but added a cautionary note. "Will people really trust Microsoft to safeguard their personal data? I can tell you there are countries in Europe that will not look favourably on Passport authentication." Take me to ZDNet Enterprise Microsoft has a plan to get the whole technological world talking to itself. It's a grand vision of all your gadgets sharing information and getting it to you in the best way possible. Is this a dream... or a potential nightmare of privacy and security concerns? David Coursey loves the vision, but is fearful of the reality. Go to AnchorDesk UK for the news comment. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read what others have said.