The success of Microsoft's .Net web services strategy rides on its widespread adoption by a broad base of companies. But until there are real-world examples of the technology in action, it will be difficult to establish a market.

Step forward Expedia: the profitable online travel agency which is a heavy user of technologies integral to .Net, including Hailstorm, Windows XP and Passport.

So there were serious questions to ask when Microsoft sold its 70 per cent stake in Expedia to broadcasting giant USA Networks for as much as 20 per cent below the trading price before the deal was announced.

The answers probably lie in the development of interactive TV. Integrating a heavy user of .Net into USA Networks - owner of the Home Shopping Network reaching 75 million households - might be a big step forward for Microsoft's web services.

vnunet.com's sister publication Computing spoke exclusively to Expedia's UK managing director James Vaile about the importance of .Net to his company's future and vice versa.

How important has the backing from Microsoft been to your development?

We've been able to build a business with consumer-oriented IT rather than a travel industry perspective. The travel industry assumes that it knows what the customer wants, but we go out and ask them. We literally relaunch our site four times a year and between each launch cycle we go out and do extensive user testing.

When the sale to USA Networks goes through at the end of the year are you going to lose some of that closeness to Microsoft?

No, and both the .Net and Windows XP strategies are prime examples of why. Over the last five years, we've been able to build this platform using Microsoft technologies, but the next step is new media. Being a travel agency was never Microsoft's core competency or its goal.

Another reason given for the sale was that Expedia was dragging down Microsoft's bottom line.

$1.5bn for 70 per cent of a travel agency that went from zero to the seventh largest travel agency in five years? I don't think so. But maybe I'm biased.

You are one of the launch partners for Windows XP. What are you actually using it for?

Expedia's involvement is in the part of the XP platform Windows Messenger that used to be known as Instant Messenger.

What our tab on Instant Messenger will be able to do is give customers the ability to view itineraries, look for the latest hot deals and check flight status. From an XP perspective the whole Passport authentication wallet is a huge benefit for the Expedia customer.

Is Passport a large part of your platform at the moment?

In very simplistic terms, anybody who holds a Microsoft Passport, currently Hotmail and MSN users, will have the same ease of access to Expedia because of the information that is caged within their individual Passports.

Have you been used as a site for trialling new technologies such as Windows XP, and authentication technologies such as Hailstorm and Passport?

Not trialling as such. We probably had a better understanding of how the technology worked but we were approached at exactly the same time as the others, about six months ago. It's not something we have been cooking up and working on behind the scenes.

Noises have been made that the sale to USA Networks was relatively cheap and could benefit Microsoft by helping establish the .Net technologies you use in USA's database of 30 million customers.

It is not a database as we at Expedia know a database. USA Networks is a home shopping channel and it has a 'push' approach to disseminating information whereas ours is a lot more interactive. USA Networks made the approach to purchase Expedia because we were identified as the leader in the category.

But will USA Networks be taking any technology lessons from Expedia in terms of Hailstorm and Passport?

I am sure there will be learning on both sides. Although we are perceived to be part of the Microsoft family, we have been running as an independent company since November 1999. The most important thing we can share with USA Networks is all about interaction.

But a lot of your interactive technology is based around Hailstorm.

It is. But bear in mind that USA Networks' platform at the moment is TV. It isn't interactive. It might be in the future and maybe at that stage we can share our experience.

Analysts predict that by 2003, 31 per cent of western European homes will have interactive TV connectivity. That is not to say we will have a product, or there will be demand for that product, but the exciting thing is we have the ability to overtake the US in terms of market size.

In the worst case scenario, if .Net isn't a success, will Expedia be dragged down?

No. It is nice to have but it really is a value-added technical feature that gives us access to an audience and allows Expedia customers access to greater technologies.

But do you intend to stay on top of any developments in .Net technology?

As a preferred partner, yes. It's safe to say that once the deal goes through there is always going to be that. Favouritism isn't the right word - pride in terms of what Expedia has achieved. But it's incredibly difficult to quantify what that will involve.