Hailstorm starts to clear over Redmond

At its annual developer conference in Los Angeles next week, Microsoft Corp. is expected to unwrap new tools for businesses looking to create services that are delivered over the Internet, and offer a first glimpse at the business model surrounding its ambitious .Net Internet initiative.

Due to kick off Monday morning, the Professional Developers Conference will be the setting for Microsoft's latest push around .Net, a broad effort to offer tools and software for building applications and services that can be deployed over the Internet. Taking center stage will be Microsoft's own set of Web services, formerly code-named Hailstorm and now called .Net My Services, a set of basic services Microsoft will offer to consumers and businesses.

Joining Microsoft as it evangelizes to developers will be a number of partner companies that have built early examples of their own Web services, as well as several Web service projects under way within Microsoft. In addition to giving examples of how the technology can be used in corporate environments, Microsoft Chairman and Chief Software Architect Bill Gates will tell developers they now have access to early versions of the tools they need to build their own .Net services.

The company will hand out the Visual Studio.Net Release Candidate 1, the latest version of Microsoft's development tool, and an SDK (Software Development Kit) for .Net My Services, a Microsoft spokesman said. Also unveiled will be ASP.Net, the .Net Framework and the .Net Compact Framework, the architecture needed to build Web services for PCs, servers and small computing devices, a source at Microsoft said.

With those in place, Microsoft hopes to lure additional developers to its environment for building and deploying Web services.

In addition to handing out new tools, Microsoft said it also will reveal more about what it calls the "business ecosystem" of .Net My Services. The task of developing the business model around .Net has been headed by Bob Muglia, Microsoft's vice president in charge of .Net services, who will join Gates at his keynote.

The business ecosystem covers everything from how Microsoft will charge consumers to use Web services, such as online storage and shared calendars, to how it will charge corporate customers and organizations that use .Net My Services with their own applications. Microsoft is also expected to talk about how .Net will allow a variety of companies to build their own Web services and repackage them for use by other businesses.

On the consumer side, the company will use a subscription model, with Microsoft's Passport authentication service acting as the entry point for a customer's set of services, said Adam Sohn, a Microsoft spokesman.

"We have always said that we envision the business model to be focused on end-user subscriptions," he said. Microsoft has not said when it expects to start charging users for its .Net services, though details may be revealed at the event Tuesday. Analysts said using a fee-based subscription probably is still a distant plan.

"They may introduce a lot free services to get everyone hooked. That's been a model for other services on the Web," said Michael Silver, an analyst with Gartner Inc. "Then they'll start charging for it as people buy into more and more and get more dependent on it."

For corporate customers of .Net, Microsoft can sell the individual Web services and the necessary infrastructure to run those services just as it does its other products, such as its .Net enterprise server products and desktop software.

Accenture Ltd., one of several partners showing prototype services at the conference, on Tuesday is due to show a prototype .Net-based service it is developing, called Dynamic Delivery. The business management tool will incorporate several .Net My Services, such as .Net Presence, .Net Calendar, .Net Notifications, .Net Wallet and .Net Locator. Microsoft plans to unveil 14 .Net My Services next week, the company has said.

It remains unclear how much new revenue .Net will yield for Microsoft, said Brent Williams, an analyst with Cleveland, Ohio-based McDonald Investments Inc. Eventually, most of Microsoft's software applications, such as Office, will be offered over the Internet as services, top executives at Microsoft have said. As revenue growth from its desktop software products slows, analysts expect Microsoft to try to compensate for that decline with a services model in which customers pay for software on a subscription basis.

"Sometimes what you have to do is build the infrastructure in order to put value-added services on top of that," he said. "It might be the case that Hailstorm is an infrastructure piece, and then Microsoft and third-party companies offer paid services on top of that."

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