Bill gives Microsoft a 'C' grade...Bill Gates has admitted that Microsoft's .Net strategy has not got off to the flying start he hoped for. Speaking at an analyst briefing day at the company's Redmond headquarters yesterday, he said certain elements of the strategy had been slow to catch on and were undergoing "something of a reset". Microsoft's web services initiative - the crux of the .Net strategy - has not taken flight as the company envisaged. In fact, the Microsoft chairman gave his company's performance in building these software services only a C grade. He said it was one of the toughest software problems he had ever tackled. Gates also announced a raft of products and roadmaps, telling analysts the company was now moving into phase two of .Net. This includes a new breed of servers with even heavier XML and SOAP support including Microsoft's Windows .Net Server, SQL Server and a real-time collaboration and communications server code-named Greenwich. Future server launches also include a SQL server database code-named Yukon. The first release candidate of Windows .Net server was announced yesterday. It includes native support for XML and UDDI. The broader support for XML is long overdue following initial disappointment over supposed .Net-ready products. This included Application Center 2000, BizTalk Server 2000, Commerce Server 2000, Exchange Server 2000, SQL Server 2000 and Internet and Security Acceleration Server 2000. Gates yesterday admitted that he had oversold earlier server products as .Net-ready stating that "perhaps labelling those .Net products was premature". He also outlined developments to the company's controversial Palladium privacy initiative and tools for developers to build on .Net. Passport has also undergone a minor transformation. In the past, customers have been hostile to Microsoft's web services as one of the key components called for important client data to be handed to Microsoft via Passport. Numerous media scares over the product's security deterred many customers. However, as part of .Net phase two, users will be able to limit the amount of data passed via Passport to third parties. He said the next-generation of Windows, code-named Longhorn, and Office are also expected over the next two years.