Microsoft has created an internal group that will be the focus of its effort to re-engineer its business around the recently announced .Net platform.

The .Net Services Group will include around 2000 people and become part of the newly established Personal Services and Devices Group, which will be lead by Rick Belluzo, the former Silicon Graphics chief executive.

Bob Muglia has been named as group vice president of the .Net group, which will lead Microsoft's efforts to deliver software as services over the internet, a key part of which is creating one set of building blocks that every .Net application can use.

Muglia, who formerly ran Microsoft's Office division, will oversee the development of software technologies, subscription services and fresh user interfaces to deliver the .Net strategy. His group will include personnel from the Network, Windows and Office groups, and will significantly raise the status of .Net platform development within the company.

Steve Ballmer, Microsoft's chief executive, said: "We have assembled a formidable team of leaders that, with our existing software assets and our commitment to investing significantly in R&D, strongly positions Microsoft to create valuable services for the PC and a whole set of connected devices."

Announced in June, the .Net strategy will lead to XML-enhanced versions of Microsoft's enterprise and consumer applications, and allow these to be delivered as services over the internet to a variety of devices, such as smart phones.