Microsoft gives analysts a glimpse of coming year

Microsoft president Rick Belluzzo kicked off the company's annual financial analysts meeting here on Thursday by outlining Microsoft's business objectives for the coming year.

The company will increase its R&D (research and development); add to its staff by about 4,000 employees, half of what it hired last year; and focus more on cost containment, he said. Belluzzo added that cost containment involves knowing which businesses to de-emphasize and which to pursue more fervently, specifically Expedia Inc. and Great Plains efforts, respectively.

Belluzzo also said that while the last 12 months to 18 months have been about developing new products and enhancing the existing ones, the next year will be about delivering on that work.

"We'll see exciting products this year. We're in a good product cycle," Belluzzo said.

Some of those products include Windows XP and Visual Studio.NET, both of which are cornerstones of the .NET platform and Web services strategy and are slated for delivery by year's end.

Microsoft's Chairman and Chief Software Architect Bill Gates on Thursday followed Belluzzo and used the opportunity to reiterate the "Digital Decade" tenet he has been pushing of late.

"Software will be more important and more magical in the next decade than it has been in the last 25 years," Gates said. He continued by saying that in the coming years the industry will actually be able to implement the fruits of what it has been working on collectively for many years now.

The tangible product he is referring to is the .NET platform, with XML as its foundation, and the Web services that will be built on top of it.

Gates said that it is a very ambitious approach, and part of it is using the Internet in a way it has not been used before.

The Internet will change from delivering HTML pages to be a data bus for XML software, he said.

At the same time that software is improving, Gates added, hardware is becoming cost-effective enough to enable a digital world with anytime, any place access to data.

"We're getting the hardware we need to really push the software out to new levels," he said.

Gates also said that Microsoft will pump US$5.3 billion into R&D, almost exclusively on software. The biggest focus areas will be on an "Always Works" initiative that helps users more easily fix problems they encounter to keep their systems up and running and e-commerce efforts.

"Our view is that the opportunity has never been as great as it is today," Gates said.

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