As the name implies Hohm is a Microsoft Web service to let consumers monitor and manage their energy use in the home. In many significant ways it follows in the footsteps of archrival Google and the Web 2.0 crowd.

Like Google's PowerMeter, Hohm is not so much a packaged application as a Web service running in the company's data centers. That's typical of a Google product, but quite new for Microsoft.

In fact, Hohm may be the first big app to run on Microsoft's Windows Azure cloud service released as a beta offering late last year. In a throwback to its good old days, Microsoft refers to Azure as a "cloud operating system," which is more of a marketing wish than an accurate technical description.

The reality is, cloud services run above the operating system at the level of hypervisors that host multiple guest OSes encapsulated in virtual machines. Operating systems are those things that run on PCs. They host desktop applications, those old programs developers used to write before Web services and smart phones.

Hohm—like PowerMeter--is free. Both Google and Microsoft would be so grateful if you help them debug it in their current public beta tests.

Here, too, the Windows giant is following the Web 2.0 model. The new software business is all about giving stuff away to attract masses of hits, then trying to find ways of selling ads—or something--around the traffic.

Thus Hohm is just the consumer hook. (Indeed at its core is software Microsoft licensed from Lawrence Berkeley National Labs, suggesting Hohm was a quick-to-market response to Google PowerMeter.) The real money lies in other software.

According to the press release, Hohm "leverages" Microsoft's new search engine called Bing and "the Microsoft Advertising platform" something I had not heard of before. These are the tools that let Microsoft "monetize" the free Hohm service.

Good luck. It's not the old Windows model of a high margin sale of a chunk of PC code on a locked CD that let Microsoft print money for years. The Web 2.0 rules are new--as Microsoft, MySpace and many others are painfully finding out.

What impact Hohm or PowerMeter have remains to be seen. The standards for smart grids—let alone the part of them involving home meters—are still being written.

Lots of companies have been writing apps for smart meters for years. But unlike Microsoft and Google they haven't been giving it away free, they actually want to be paid—imagine that!

Well, look out all you developers of smart metering software. The government is ready to give you a few billion stimulus bucks, but the Web 2.0 giants and the pre-Web Windows giant is coming after you. Can you compete with free?