Gartner Survey Shows More Internet Users Signing Up for Microsoft Passport, But Mostly to Get Other Offerings.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--April 17, 2002

Survey Shows Lukewarm Interest in Single-User ID and

Password Capabilities Alone

Microsoft has experienced a large increase in the number of registered users for its Passport service, but most users are signing up to use it for other Microsoft offerings, according to a new survey by Gartner, Inc. (NYSE: IT and ITB).

The Gartner survey shows Microsoft has managed to double its number of registered Passport users in just six months, from 7 million who were registered in August 2001 to 14 million who were registered as of February 2002. However, Gartner believes that Microsoft's requirement of the Passport service to access its other offerings -- such as Hotmail, Windows XP, and Microsoft Messenger -- is a much more powerful incentive for registration than is consumer interest in using Passport features.

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

The Gartner survey showed 84 percent of consumers surveyed as of February said they registered with Passport because it was required to use other Microsoft services. That compares with 61 percent who cited the same reason in August 2001. In contrast, 2 percent of consumers surveyed in February 2002 said they signed up for Passport so that they could avoid multiple IDs and passwords, compared with 16 percent who said the same thing in August 2001.

Still, Microsoft benefits by relatively high levels of consumer trust when compared to other companies offering competitive or complementary services. Banks get the highest consumer vote of confidence when it comes to running an identity or e-wallet service (47 percent) but Microsoft came in second (12 percent), ahead of credit card issuers (8 percent) and America Online (6 percent).

Gartner analysts said Microsoft's rollout of Passport is critical to the company's Web services strategy. The more Passport users Microsoft enrolls, the more Web servers and services it sells to companies supporting Passport, and the more mass audience it commands.

"This, in turn, earns Microsoft higher advertising revenue, more lucrative affiliate deals, and potential customer referral transaction fees in the future," 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."

Litan will provide additional findings during her Gartner presentation on identity services, which will be delivered at Gartner's upcoming conference, "Information Security: Combating Enterprise Espionage and Protecting Corporate Assets," which will be held May 15-17 at the Sheraton Chicago Hotel and Towers in Chicago. For more information on this conference, please go to www.gartner.com/us/infosec or call 1-800-778-1997.

About Gartner, Inc.

Gartner, Inc. is a research and advisory firm that helps more than 11,000 clients understand technology and drive business growth. Gartner's divisions are Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Conn., and has 4,300 associates, including 1,200 research analysts and consultants, in more than 90 locations worldwide. The company achieved fiscal 2001 revenue of $952 million. For more information, visit www.gartner.com.