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Looking at their client list, I'd say it's both.
It was fantastic.
I've had one former client who used DeepMetrix and swore by it. Never really knew anyone else to use it, but as shorebreak said, I suspect its greatest asset may be in its ability to be whitelabeled, which might be why MSN picked it up.
They can't give it away universally like Google can (could) with Urchin if it still is Windows servers only.
Mind you, it wouldn't stretch their own server capacity, becuase it would use your CPU.
I'd say the purchase my Microsoft of DeepMetrix is a good thing - DeepMetrix was one of the few analytics companies that had not been bought up yet. One thing everyone does agree on - DeepMetrix customer support is pretty bad...but maybe MicroSoft can improve it.
I think DeepMetrix will complement AdCenter very well and I'm happy they bought it. If you think about it, Microsoft needed an analytics package and it did not have one - now they do.