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In Microsoft's .NET strategy, web services are "rich software content that takes advantage of the distributive communications fabric of the Internet."

By "rich software content" Microsoft seems to mean a set of web sites and services, conforming to the .NET architecture, that provide server hosted applications. Server applications will be able to interact with each other to create more complex and powerful services.

By "distributive communications fabric" they basically mean high speed / broadband connections. With ubiquitous high-speed access (at least on the business side) Microsoft can build a model where software components are deployed at need, rather than needing to be installed beforehand on the user's local desktop. Both the application software and the data it operates on will be hosted on the server side.

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