Microsoft Invests $50M in ASP to Push .Net Effort

Looking to plant the first seeds of its .Net initiative in the ASP (application service provider) market, Microsoft Corp. on Monday announced a strategic alliance with USinternetworking Inc. and disclosed plans to invest $50 million in the hosting services company.

In a teleconference scheduled for Tuesday morning, executives from both companies will discuss further details of how Microsoft and USi will partner to develop future hosted software offerings for businesses that make use of Microsoft's .Net effort.

Through .Net, Microsoft aims to provide software, development tools and services to help companies offer new types of Internet-based services, including offerings for commerce, information and entertainment. Part of the .Net initiative calls for Microsoft to offer a version of its Office suite of productivity applications that businesses can rent over the Web. The idea is to save companies from having to install, manage and upgrade the applications themselves.

The first applications services resulting from Monday's announcement are due to be available in December of 2000, with additional services being released through May 2001, USi said in a statement on its Web site. The meat of Microsoft's .Net offerings aren't scheduled to begin appearing until next year, and the initial service offerings are unlikely to include a great deal of functionality derived from the fledgling .Net technology.

USi also said it will make Microsoft's software, including Windows 2000, the primary platform for its managed applications services. Microsoft's $50 million equity investment in USi will be used to fuel continued growth of its business, USi said in the statement.

The relationship is part of an ongoing effort by Microsoft to attract new business from ASPs and ISPs, which today use Unix and Linux for much of their back-end server equipment. Last week, the software giant announced an aggressive price promotional campaign aimed at luring ISPs over to Windows 2000.

The alliance with USi builds on an existing relationship between the companies, and includes joint commitments to deliver hosted applications from the likes of Siebel, PeopleSoft, Lawson, and Ariba, as well as commerce services and managed infrastructure services built on Microsoft's SQL Server 2000 and other products.

A teleconference for press and analysts to discuss the alliance will be held Tuesday morning at 10:00 a.m. PST, featuring executives from both companies. The call-in can be accessed from within the U.S. by dialling 1-800-311-9409 and citing security code USi 2. A call-in number for international callers was not provided.

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