Slowly but surely, Microsoft is rolling out the hosted services for small-business customers that CEO Steve Ballmer outlined vaguely this summer.

In July, Ballmer sent his annual letter to Microsoft employees. In it, he mentioned that the MSN, Windows and Office teams have been working together on a number of Microsoft-branded, hosted services for small businesses. The services would help "smaller businesses and consumers to enhance security, lower costs, and improve the end-user experience in areas such as communication, collaboration and desktop management," Ballmer told employees.

Ballmer and other Microsoft execs hinted earlier this year that a blogging service, a personal information management service and security service(s) would be among the stable of the new hosted IT services.

And over the past two months, word seeped out about two of these services: MSNSpaces, Microsoft's new blogging service that went to beta this month; and Microsoft Office Outlook Live, the soon-to-be-unveiled e-mail service that uses Hotmail as its back end.

But Microsoft is working on yet another hosted IT service that has yet to get ink, according to sources close to the company.

That service will likely be a hosted backup-and-restore service, designed to offer small office/home office (SOHO) and consumer customers the opportunity to have Microsoft back up their personal files on CD and/or DVD. Users also will be able to back up financial files, legal documents, digital photos, online music and home videos, and even put their most important files into a "digital safe-deposit box," hosted by Microsoft, sources said.

The hosted storage service will be available via subscription, and is set to go live in 2005, sources added.

The whole idea behind Microsoft's hosted services push is that most small businesses don't have dedicated IT departments. Microsoft is advocating that small businesses should leave their infrastructure management to Microsoft and its telco vendor, cable company and other hosting service provider partners.

Earlier this deacde, Microsoft was unsuccessful in convincing enterprise customers that they should trust Microsoft to host their data and information. As a result, Microsoft was forced to shelve its "Hailstorm" .Net My Services project a couple of years ago.

MSN officials declined to comment on the company's plans to roll out hosted small-business services.

(This is an edited version of an article which appeared in the November 8, 2004, issue of the Microsoft Watch newsletter. Want to see what other Microsoft news nuggets you might have missed? Sign up today for a free two-week trial subscription to Microsoft Watch.)