All this talk about whether .Mac should or should not be "free" is missing one major point. Even if Apple didn't charge an annual fee for these services, it would not be "free" -- you need to buy a copy of OS X or a Mac that comes with OS X to use .Mac at all. Every time Apple releases a full version upgrade to OS X, we're paying $129 (or whatever) for that operating system...an operating system which tries awfully hard to integrate .Mac features into the user experience. There's Backup, Mail, iChat, iDisk...still more with the iLife apps, iWeb, et cetera. But having paid over a hundred dollars to get the OS, Apple wants me to pay a further hundred to get the full benefit of the OS I've purchased? Sorry, no. With this, as with the previously free features in QuickTime now available only in the Pro version, one feels Apple is trying to compensate for low market share by gouging the minority of loyal users.
If Apple just simply raised the cost of the boxed OS (or a new Mac with OS X installed) by a paltry five dollars (a number pulled out of my hat) and considered a year's membership with .Mac as part of what you're buying when you buy the OS, Apple would have a much larger user base for the service and it would still be a revenue source -- not "free" but not punitive either.
.Mac Needs to Be Radically Retooled