That's all fine and dandy for people who actually use all that stuff. The problem is that the service isn't compelling enough for people with either simple or advanced needs.
For those people who just want an email account, have no need to sync to other computers/cell phones/PDAs/Internet/Space Station/Pets/etc, and have no interest in making their own website, the $99 service is complete overkill.
On the other hand, people who need to build their own sites with their own domain name will find that the .Mac offering a quant little subset of the tools and resources they are already using. Why spend another $99 on top of what you're already spending for what you already have?
I'm not saying .Mac isn't a great service with some fabulous features. My problem is that it's trying to be a one-size-fits-all solution to a problem that many people either don't have, or have more than overcome.