Testimony highlights .Net "disarray"

During cross-examination of his testimony Tuesday, Jim Allchin, Microsoft's senior vice president for Windows, reiterated that the company's .Net My Services plan is still very much in flux, a situation that was previously reported by CNET News.com.

The .Net My Services plan is "in a little bit of disarray," Allchin said, according to a transcript of the testimony. "We basically aren't working on it the same way as we were in the past."

As originally envisioned, .Net My Services was to become a "digital safe-deposit box" for hosting and delivering personal information while providing an array of services, ranging from commerce to communications, in partnership with Web retailers such as eBay.

The company had hoped that consumers would pay fees that would cover the bulk of the expense to run these one-stop services, which would manage passwords, calendars and other personal information.

Allchin said a plan to offer .Net My Services as a set of tools for big companies is under review. "So our focus is to make sure that we have the products so that corporations can do this within their own (premises)" rather that using Microsoft as an intermediary, he said.

However, later during the cross-examination, Allchin said of the entire .Net My Services plan: "Frankly, it's in the middle of a fairly significant analysis and review. We got feedback both from the business model as well as the technology that we needed to go back to the drawing board on it."

Allchin made his comments during cross-examination by Kevin Hodges, an attorney representing nine states and the District of Columbia. The states are seeking stiffer sanctions than those in a November settlement that Microsoft made with the U.S. Justice Department and nine other states. The settlement, which U.S. District Judge Colleen Kollar-Kotelly has yet to approve, would impose some restrictions on Microsoft's business practices.

The demise of Netdocs
Allchin also revealed that a Microsoft plan under development two years ago to launch Web-based business productivity tools, code-named Netdocs, was "blown up," or discontinued, because Microsoft executives didn't think the technology plan was viable.

Netdocs was expected to be an integrated business application including e-mail, personal information management, document-authoring tools, digital media management and instant messaging. Microsoft planned to make Netdocs available only as a hosted service over the Internet, not as software that could be purchased separately or pre-loaded onto a machine.

The plan competed squarely with Microsoft's Office business software, which makes up more than a third of the software giant's overall revenue. As reported by CNET News.com, Netdocs was also at the center of an internal debate over Windows XP's look and feel. A group within Microsoft favored using Netdocs as the default interface for business versions of Windows, but eventually lost out to a group that advocated integrating MSN Explorer into Windows XP.

Allchin said Netdocs was being developed under a Microsoft organization called the .Net Services Group, headed by Bob Muglia. Microsoft "disbanded this organization," Allchin said, which had been working on development of Web services closely related to the. Net My Services strategy.

Allchin said the relationship between the now defunct .Net Services Group and the .Net My Services plan was "very, very unclear. That's some of the reason that this didn't proceed ahead." Asked whether there was a relationship between the two, Allchin responded: "Well, I don't think I can answer that, because this was Bob's (Muglia's) view. He and I disagreed on some of these things, and so I don't think I can...give you an answer to that."

Last November, Microsoft replaced Muglia with David Cole, who at one time ran Windows development. Cole is now head of a new Personal Services Group that oversees the .Net Internet strategy and reports directly to CEO Steve Ballmer.

Muglia was reassigned to run a new storage unit under Allchin. Sources close to the company said Muglia asked for the reassignment because of frustration in developing and implementing the .Net My Services business model.

The next steps
Microsoft still plans to offer .Net My Services. The original plan to offer fee-based services to consumers is still being worked out and has not been abandoned, said Adam Sohn, a product manager at Microsoft. Sohn added that the company still plans to offer the service to MSN subscribers.

In the near term, Allchin testified, Microsoft plans to introduce software that big companies can use to set up instant messaging and internal communications over internal networks instead of the Internet. "An example would be that within Microsoft, if I wanted to talk with someone through a video, say, on the PC, or in an instant message conversation, I wouldn't have to go to the Internet," he said. "And, (admittedly), I'm working on some new technology that lets me do this."

Sources expect Microsoft to tap Groove Networks, the peer-to-peer software company founded by Lotus Notes creator Ray Ozzie, for at least some of the internal communications technology mentioned by Allchin. Microsoft invested $51 million in the company last fall.

Peer-to-peer--in which one PC communicates directly with another via the Internet--is also expected to be a feature supported by "Longhorn," the next version of Windows, slated to debut in 2004.

Allchin said another plan in the works is to offer a "federated" .Net My Services to link companies that need to share information. "So if you needed to share a document between businesses, you would be able to federate your world with a world in the sky, if you will, on the Internet to another business," Allchin said.

Said Matt Rosoff, an analyst with consulting firm Directions on Microsoft: "Federation opens a lot of interesting and complicated scenarios, and I expect it to take awhile for Microsoft to work out the details."