Microsoft Announces Web Services Pricing

Software giant details a three-level pricing structure for developers that includes a fixed annual fee and a charge per application certified.

LOS ANGELES -- Microsoft Corp. announced the first wave of pricing for its Web services here on Tuesday, detailing a three-level pricing structure for developers that includes a fixed annual fee and a charge per application certified.

Chris Payne, a vice president in Microsofts .Net Services group, told eWEEK that there will be an entry level, which applies to smaller-scale applications and will have a $1,000 annual fee and a $250 fee per application certified. The mainstream level is designed for most commercial applications, which will cost $10,000 a year and $1,500 per application certified.

Pricing for the commercial level, designed for mission-critical applications, has not been finalized and will be announced at a later date, Payne said.

"But [developers] do not pay us for usage; they do not pay us on a transaction basis even though Microsoft will be running a platform that is always available. I must stress that they will not have to pay us incrementally for the costs that they are driving into the system," he said.

Microsoft is trying to build up a ubiquitous platform and so is trying to make it as easy as possible for developers to build on top of this platform. "So were developing a model that we think of as friction-free for developers," Payne said.

Developers will now get the .Net My Services software development kit, announced by Microsoft Chairman and Chief Software Architect Bill Gates in his opening keynote at the Professional Developers Conference on Tuesday, for free.

Asked how Microsoft intends to define applications across the three levels, Payne said the Redmond, Wash., company is still in the process of defining that. "But they will be differentiated on the needs of the application and its providers service requirements. They are largely based on service-level agreements that will specify the number of services developers can access," he said.

Smaller-scale applications will need great reliability but clients will probably not be running their businesses on this solution. Applications in the mainstream level will be the predominant applications such as those already offered by early adopters.

One of these is Starbucks Coffee, which is offering a service where you can enter your coffee preferences, find the stores closest to you and then use the wallet service to pay for them, Payne said.

Those applications in the commercial level will require higher service-level agreements. "Frankly, there will probably be multiple options offered depending on the needs of the commercial operator," he said.

The business or developer can then decide how to monetize that from their users. Microsofts goal is simply to recover some of the costs of setting up and operating the service, and these charges are based on cost recovery.

"Our real business model, and those of the developers, is going to be charging end users for subscriptions," Payne said, declining to give any details about that pricing. "We are working toward our launch in 2002 and are refining it as we go," he said.

Responding to criticisms that Microsoft appears to have no strategy for providing Web services specifically designed for large corporate and enterprise customers, Payne said its .Net My Services are appropriate for both and that additional announcements in this regard will be made going forward.

He also declined to comment on Microsofts current Web services projects under development code-named Iris and Indigo.