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Spearheading the .Net strategy

Microsoft's future is riding on the success of its big Web services push, and Group Vice President Bob Muglia is in charge of making that happen.

LOS ANGELES--Despite the high death rate of dot-coms in the past year, Bob Muglia believes Microsoft can make money off the Internet.

As group vice president of Microsoft's .Net Services Group, Muglia is charged in part with developing new subscription-based Internet services aimed at consumers and businesses.

"There are ways to make money. There is an opportunity to...create new business models around this," Muglia told Microsoft's software developers during his keynote speech at the company's Professional Developers Conference here Tuesday. "We think we are creating a strong enough value proposition so users are willing to pay for these services."

For more than a year, Microsoft has touted its .Net strategy for moving computing to the Web. The strategy touches nearly all of the company's products, services, Web sites and development efforts. Muglia's job is to create, market and sell .Net My Services, Microsoft-hosted services that will offer content, shopping, banking, entertainment and other features through a variety of devices, all linked to the company's Passport authentication service.

Expected to debut in full next year, .Net My Services will allow consumers to get one-step access to contact lists and calendars; instant alerts on stock changes, weather forecasts and online auction bids; and automated transactions, such as online banking and ticket purchases, from Microsoft and its partners.

The Gatekeeper: Windows XP At its developers conference, Microsoft released a mix of test and near-final software tools to developers so that they can begin offering the company's initial .Net My Services and start building their own Web services for their customers.

Muglia, who previously was responsible for Microsoft Office and handheld appliances, such as Pocket PC and Tablet PC devices, now has to take the Web services vision developed by Bill Gates and turn it into a success.

In an interview with CNET News.com, Muglia discussed the merits of Web services, Microsoft's business strategy, and the forthcoming release of the new Tablet PC computing device.

Q: Will consumers actually want to use .Net My Services?
A: Yes. We will have things for end users for free, such as Passport, .Net Alerts and Presence, and merchant-funded services through MSN. And when I look at the broader services, such as sharing a work calendar with my wife and my daughter's calendar, there are tremendous opportunities. These services can change the way people live. People have had a willingness to pay for technology. They pay a lot of money for cell phones and for cable, so I believe these new software-based services will become apparent for people.

We are focused completely on Web services as the new programming model. I recently explained to two friends about your plans for .Net My Services. They don't work in the technology industry, but they're tech savvy--they've got cell phones and DSL installed at home, for example--but they saw no need for .Net My Services in their lives. Who's your target audience and how will you market the services to them?
A household where people need to stay connected. It's families. As for marketing, as these services roll out, we will demonstrate the value they have.

What is the overall message to software developers this week at the Professional Developers Conference?
We are focused completely on Web services as the new programming model. As we announced, it's the new breed of application involving client and server and creating a new user experience. To sum it up, it's a major step forward for developers, and Microsoft is delivering on that commitment. We are the leader and delivering the software into their hands, so they can get started in building Web services. We've been discussing Web services actively for over two years and in great detail last year. It took Sun 18 months to announce any strategy whatsoever. They are way behind where we are.

Can you talk about Microsoft's business model for .Net My Services? You've said you want to make the bulk of the profits through subscriptions to consumers, while charging nominal fees to businesses and software developers.
The developer pricing has three levels: entry-level for smaller-scale applications for $1,000 a year and $250 per application. The main one we think will be used by most businesses will be $10,000 per year and $1,500 per application. And for people who are doing serious business with this and need a high degree of quick support turnaround, we have custom pricing associated with that. We have a dedicated support engineer and a service-level agreement.

The applications are putting a load on us. These numbers are barely covering (our costs). We're not making money with these numbers. We think the place is to focus on users' value and charging (consumers) for that value. If your business model is not focused to do the right thing for end users, you do not behave the way you want to behave. That's the predominant reason. We want to make it as friction-free as possible to adopt this new platform.

The most important thing to gauge success is developer adoption. A year from now, how will you gauge the success of .Net My Services?
The most important thing to gauge success is developer adoption.

Microsoft has mostly talked about Web services for consumers. Can you talk more about Microsoft's plans to bring more Web services to businesses?
We think .Net My Services impacts businesses, and we can imagine business-related services. Right now we're pouring a good percentage of our research and development on the future of Web services. We're delivering now, but we also seek to continue our innovations, anything from the forms of business purchase orders for B2B transactions to the need to evolve traditional EDI (messaging) to the Web services model.

Bill Gates in his keynote speech hawked the Tablet PC. What's the potential for the new handheld device?
It's a great form factor to supplant notebook computers. Keyboards are also associated with them. You can carry it to a meeting. It will be priced about the same as notebook PCs. I'm excited about the home. You can be sitting with a wireless connection on the living-room couch and get the latest set of news, instead of (getting) it on paper form. You can't do that with a PC form factor. It doesn't lend itself to sitting on the couch and reading the news with a cup of coffee.

But is there a market for it, considering Intel recently killed its plans to build a Tablet PC and 3Com's Audrey Web-surfing device failed miserably?
All those were network appliances. It's a different marketplace. That was dumb terminals. This is a full PC. We're not taking anything away from users. The Tablet PC has handwriting input, and the application doesn't know if the user is handwriting with a pen or typing on a keyboard. It's a new form factor for people to work with. Imagine speech recognition to translate and put interviews into text.