You have to understand that Microsoft had spent most of the 90s being clueless about the internet. Then actively trying to kill it. But by 2001, their strategy was to embrace and extend internet protocols and technologies so they would be forever tied to Microsoft.
My impression was that .NET was a marketing term for a number of unrelated technologies that all served this overarching goal, that all came out roughly around 2001. They were saying to big corporations, that your choice wasn't Microsoft versus the internet, Microsoft WAS the internet. Only better.
C# and the CLR were there to counter Java and the JVM.
Their concept of Web Services was to make web technologies a mere transport layer for an RPC protocol called SOAP, which you would build with Microsoft IDEs.
Hailstorm and Passport were an attempt to make Microsoft the centralized broker for all sensitive information on the internet. Think Facebook Connect, only imagine it was more corporate and business focused, and knew your credit card number.
Anyway, Hailstorm/Passport and Web Services are dead, but The ".NET Framework" lives on in the CLR and C#, which were actually rather good even apart from Microsoft's strategizing.