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$50 million from HP, Microsoft for .Net

Hewlett-Packard and Microsoft plan to invest $50 million in a joint effort to sell corporate customers on the software giant's .Net Web services efforts.

Hewlett-Packard and Microsoft plan to invest $50 million in a joint effort to sell corporate customers on the software giant's .Net Web services efforts.

As previously reported, HP plans to devote 3,000 consultants from its HP Services unit to the effort and also train 5,000 people in its sales and support staff.

While acknowledging that .Net is still in its early stages, HP Services chief Ann Livermore said now is the time to start selling companies on the idea of using Web services to automate their businesses.

"We think the time is right from a customer perspective," Livermore said in an interview. "There are only two things (customers) talk about. The first one is cost...the second one is agility--how do they respond more quickly."

Livermore said Microsoft's approach to using the Internet to automate business tasks can help businesses react faster and save money.

In addition to training its services and sales staffs on .Net, HP will also set up 160 three-person sales teams specifically focused on selling companies on using the Microsoft .Net technology.

Meanwhile, Microsoft has a 1,000 person team that will support HP and other companies that install .Net services at corporations. The two companies will also use part of the $50 million to market the effort to customers.

"The investment is split pretty much down the middle," said Michael Sinneck, Corporate VP of worldwide services for Microsoft. Sinneck was speaking from an Austrian castle where Microsoft is set to unveil the deal at a meeting of its partners. HP will be the first company to gain the Microsoft designation of "worldwide prime integrator," although the title is not exclusive.

Specifically, Livermore said HP will work to sell companies on using Web services in four areas: collecting and analyzing business-intelligence data, putting core business processes onto the Internet, integrating the data stored in separate large business-software programs and using Web services to help employees collaborate on projects.

An early example of the type of work HP will do is its work for General Mills. As part of a larger deal, HP helped create an automated program for the grocery goods giant that lets it gather and analyze data on how well various goods are being displayed and sold at thousands of retailers.

The company plans to develop specific programs for industries like health care, financial services and e-government.

Microsoft's Sinneck said his company was initially working with pre-merger Compaq on the effort, but he said the merger provided a good opportunity for Microsoft to strengthen its ties with HP.

"When the merger presented itself, one of the things we sought to do was make sure that (the new) HP's commitment was as strong or stronger than Compaq's," Sinneck said.

HP and Microsoft have grown increasingly close since the merger, with the software giant calling on HP to help manage its internal help desk. HP will also be among the first to adopt new Microsoft technologies such as Tablet PC and its Windows XP Media Center devices.

"Our relationship has significantly improved," Jim Allchin, Microsoft group vice president, told CNET News.com earlier this month.

Despite a weak market for IT spending, HP Enterprise Systems Group head Peter Blackmore said the .Net investment should pay off.

"It is clearly one of those market making moves, which in a down market is the right thing to do."