Microsoft invests $50 million in USinternetworking

Microsoft last week took another big step into the application service provider (ASP) market, announcing a $50 million equity investment in USinternetworking as part of a strategic alliance to develop, market and deliver managed application services built on the Windows 2000 and .Net platforms.

The Microsoft alliance was one of several developments detailed by USinternetworking, including a strategic alliance with wireless ASPs Aether Systems and a round of more than $300 million in equity and commercial credit funding.

With the Microsoft alliance, USinternetworking gains muscle in marketing managed application services. The two companies will jointly develop, market and deliver services that will be powered by the Windows .Net platform. .Net is Microsoft's overarching plan to transform Windows into a platform for the Internet. It will include a new operating system, server applications and development tools, with a heavy dose of XML.

Microsoft has been working diligently to bring ASPs into the .Net fold by offering incentives to host its products and laying out licensing schemes for hosting Office and Windows server platforms. Corio, Equant and others have similar relationships with Microsoft.

USinternetworking already offers Microsoft Exchange-based messaging and collaboration service through its iMAP portfolio of services. But the alliance builds on that relationship by bringing Microsoft's engineering and technical support to all USinternetworking's products.

The company has agreed to use Microsoft's technology platform for all its iMAP offerings. In addition to providing Microsoft products, USinternetworking will continue to offer corporate resource applications such as Siebel, PeopleSoft, Lawson and Ariba.

Microsoft will provide USinternetworking with engineering and technical support to launch new offerings and to move existing services to the Microsoft platform.

USinternetworking says the first of the Microsoft technology-based services will be available next month, with additional services to be released through May 2001.

In the wireless arena, USinternetworking has partnered with Aether to create enterprise-level managed application services for wireless devices. The first joint offering - wireless e-mail and messaging services for Microsoft Exchange via Blackberry - is available immediately. USinternetworking says wireless-enabled Web and e-commerce applications will be released in the next two months, with more wireless applications coming next year. In addition to its technology investment, Aether committed $10 million to USinternetworking.o