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5/23/2006
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Gates Says Next Windows, Office Will Show The PC Is 'In No Way Standing Still'

The new versions will change a lot about how the PC operates, from how it boots up to how data, photos, and music are accessed.

Microsoft chairman Bill Gates posited new test versions of Windows and Office as proof that the PC is still vital, during comments at a conference for computer engineers in Seattle Tuesday. Also at the conference, a senior Microsoft executive said the company may disclose more details on how it will use the recently-announced $2.4 billion spending hike it plans next year.

During a keynote speech at Microsoft's Windows Hardware Engineering Conference, Gates unveiled beta, or test versions, of Windows Vista, the next operating system for desktop PCs; Longhorn Server, an upcoming system for server computers; and the company's next-generation Office suite. Gates said Microsoft is changing many of the PC's underlying technologies in Vista, such as its boot-up routine, Internet software stack, wireless technologies, and the way machines retrieve data from disk and memory. Hardware and software companies need to "give performance back to the user" by making communications among the PC's components more efficient, and designing software that takes advantage of new chips, he said. "We see the PC changing," said Gates. "The PC is in no way standing still."

Gates cited the 250 million PCs expected to be sold this year, an increase of 10% over last year, as evidence that desktop computing is still evolving. Microsoft's newest software won't appear on those machines, though. Broad commercial releases of Windows Vista and Office 2007 are scheduled for January, though versions for large companies will arrive in November. Longhorn Server is scheduled for release in the second half of next year.

During Gates' speech, a Microsoft staffer demonstrated Windows Vista working with a touch-screen monitor that let her drag icons around the desktop using her finger. She also demonstrated the ability to quickly share files across two laptops running Vista using a peer-to-peer network. Other improvements in Windows Vista will include a new method of retrieving data from RAM to read from disk less often, speeding performance and reducing power consumption. Gates also urged software developers to take full advantage of the computing power offered by new multi-core chips. "If we're going to keep those cores working for the user and not just sitting idle, it's going to require some very innovative work," he said.

Microsoft is also sending a "clear message" that 32-bit computing for servers is on the wane—the next version of its Exchange E-mail software will run only on 64-bit computers, said Gates.

On the desktop, Gates added that digital content will evolve beyond music and photos, to systems that can keep track of a users' memories using multimedia cues. Microsoft's research labs are working on a system that can store vast numbers of audio files, documents, and photos, then let a user search for them by key events in his life. Said Gates, "Software can do a lot more than it's doing today."

Microsoft in March launched a $500 million marketing campaign to promote to businesses the benefits of Windows Vista and Office 2007, both due in January. But the company last month said it would incur $2.4 billion more than expected in operating expenses for its 2007 fiscal year, which starts July 1. Microsoft also lowered its earnings forecast for the upcoming year, which sent the price of its shares lower. In a memo to Microsoft employees in late April, CEO Steve Ballmer said the company is spending more on marketing, manufacturing, and hiring, and "investing heavily in our services strategy." Microsoft chief technical officer Ray Ozzie has said the company could spend billions of dollars building data centers to support Internet-delivered software as Microsoft competes with Google and other companies.

In an interview Tuesday, Jim Allchin, co-president of Microsoft's platforms and services division, said the company may disclose more details on what the $2.4 billion in additional spending will fund. "Steve may have something up his sleeve," Allchin said. "There's more that needs to be explained."

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