Microsoft's chairman and chief software architect, Bill Gates, said, "in some respects we are further ahead, and in some respects (we have) not (moved) as fast (as we hoped)" with .Net, which the company introduced two years ago.
Gates made his remarks during a daylong conference at Microsoft's headquarters here as the company presented its plans for the .Net architecture.
Theplan includes new releases of the company's Windows operating system, called Windows .Net Server. It also embraces other server software, along with development tools and a framework to make programs more Internet-aware.
One new technology supported by .Net is Web services, which promises to make the linking of internal computer systems, and of systems residing in multiple companies, far easier than with current methods.
Although developers and analysts have given .Net high marks for its technical design, some Microsoft customers have called the company's marketing plan. Microsoft largely rebranded existing products under the .Net label but added little new technology. Gates on Wednesday acknowledged that shortcoming.
"Maybe the .Net Enterprise servers," launched in September 2000, were "prematurely called .Net. The first generation of .Net products was putting a layer on top of existing functionality," Gates said.
As part of the .Net agenda, Microsoft simultaneously launched plans for a consumer-focused Web services effort called .Net My Services that the company now is. Microsoft is expected to package the .Net My Services technology as a software server that companies can use to offer services to their customers.
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.
Instead, the plan has been the source of continualamong potential customers and has encountered a series of with its underlying technologies.
"There were elements of (.Net My Services) that in some ways were premature," Gates said. "We feel good about (the vision of .Net My Services), but we made a couple of missteps on this."
Microsoft's major misstep with .Net My Services was political, not technical, by assuming that people would hand over control of sensitive data to Microsoft, said James Governor, an analyst with Illuminata.
Gates said the biggest milestone for the entire .Net plan so far has been the release of Visual Studio.Net, the company's development tool bundle, in February.
Bringing the .Net plan, and the promise of Web services together, is "100 percent a software challenge, whether security, automatic data exchanging, designing of schemas, the end-user tools involved. This is one of the toughest software problems (ever) tackled," said Gates.
Gates said that Microsoft is doing "a bit of a reset" and over next 12 months or so will be moving .Net forward on several fronts. A major update to Office, as, will make better use of Web services and will include new communication and collaboration features.
Microsoft also reiterated security and privacy initiatives underway as part of the company's Trustworthy Computing initiative to improve the security of its software. The initiative will cost at least $100 million this year, Gates has said.
One key part of that plan is Palladium, a plan unveiledto ensure PC security through extensive changes to the Windows operating system.
Microsoft group vice president Jim Allchin on Wednesday demonstrated new privacy tools planned for Microsoft's Passport authentication software that will allow users to control the amount of information shared with Web sites on a site-by-site basis.
"We are in a crisis at a confidence level. The confidence is not in the stock market, but whether people can trust their computers," said Allchin.
The company also demonstrated new real-time communications server software code-named Greenwich, due in the first half of next year, that will use Web services technology to link people over the Internet.
Microsoft plans to release a new version of its SQL Server database, code-named Yukon, that will introduce a new data storage architecture intended to make it easier to find and use corporate data.
And further out, said Gates, is a new version of Windows, code-named Longhorn, that will use Yukon's data storage capability, as.
This fall the company will deliver a minor update to its Visual Studio.Net suite of software development tools, featuring better security and performance, Microsoft executives said. That version will be followed in 2003 by a more comprehensive update to Visual Studio.Net that will also take advantage of Yukon.
In addition, Microsoft released a near-final test version of Windows.Net Server Wednesday. It also delivered a new version of its Office XP Web Services, which allows businesses to link Web services with Office.
In assessing Microsoft's progress toward its initial goals for .Net, Gates said the company has done well in rallying the industry around Web services and in delivering development tools. But he gave Microsoft a grade of "C" for developing what he termed "building-block services" and for making the software-as-a-service concept a reality.
Gates said parts of the software-as-a-service concept are in place in the company's Hotmail e-mail service. But "a lot is still to be done there," he said.
Gates gave the company an "incomplete" grade for Microsoft's efforts at "federation," which is the establishing of a secure connection between two or more companies. He said it became evident that federation was important once the the company had mapped out .Net. Microsoft earlier this year announced a federation plan calledto link companies together. The TrustBridge technology is expected to be released next year.
Gates also gave Microsoft an "incomplete" for its goal of changing users' computer experience. "That's still not there, but it's coming," he said.
Analysts said Microsoft seems clear on the changes needed to the .Net plan. "They were tough on themselves, but were clear on where they could have done better: security, database store and ease of access," said IDC analyst Jean Bozman.
Despite the setbacks, Microsoft is "committed to the R&D necessary for this (.Net)," Gates said. "We knew when we did it, it would be a five-, six-year effort."
The software maker, realizing that budget constraints mean big companies are less likely to replace existing software with a Microsoft-only setup, has begun efforts to connect .Net to other makers' software.
On Wednesday, Covalent Technologies, which sells the Apache Web server, said it has worked with Microsoft to survey by research firm Netcraft.Apache to .Net. The move could give Microsoft access to a far larger audience of software developers. Apache is used by more than half of all Internet sites, according to an ongoing
On Tuesday, Microsoftit has developed software to link .Net to Oracle's database server.
News.com's Mike Ricciuti contributed to this report.