Microsoft honours its research roots

By PETER GRIFFIN

SEATTLE - Amid computer company mega mergers and continuing anti-trust court action, Microsoft founder Bill Gates used this week's event celebrating 10 years of Microsoft research and development to explore a subject close to his heart - technology.

The software-maker's chairman and chief software architect also took the opportunity to unveil some new creations from Microsoft's labs.

Speaking to journalists and analysts at Microsoft's headquarters in Redmond, Washington, Mr Gates said wireless devices and digital media were developing rapidly, but were being held back by the sluggish roll out of high-speed internet access.

Latest developments included sensors costing just $US3 ($6.60) that can be added to a standard handheld computer letting it know when it is being picked up, tilted or dictated to.

Software that can create 3D images from standard photographs was demonstrated as well as speech recognition software that translates Mandarin into written Chinese characters.

Microsoft's new operating system Windows XP, Office XP and the . Net strategy have all developed out of Microsoft Research.

But although the research unit was prolific in its developments, Mr Gates said its emphasis was on long-term goals in software development.

"We don't say 'how many inventions did you make last month?' We're planting seeds that take many, many years to take off," he said.

Mr Gates acknowledged that the research unit sometimes came up with less successful projects - such as "Clippy" the animated office assistant, which has been disabled in the recently released Office XP.

"The expectation of people in dialogue with that kind of agent is much higher than current technology will allow."

Referring to an IT industry that has slashed research budgets in response to sagging economic conditions, Mr Gates said Microsoft would buck that trend to maintain the pace of development.

"Research has more than paid off for us. We're increasing that investment as the economy goes through ups and downs."

That investment is enormous. Microsoft spends around $US5 billion a year on research and development, 15 per cent of which goes to universities in the form of grants and fellowships.

Formed with $US10 million funding in 1991, Microsoft Research now has a staff of 650 with centres in Britain and China.

After struggling to attract academic talent in its early days, the research arm of Microsoft has gained credibility to rival the well-respected research units of Bell Labs, IBM and Xerox.

But while Microsoft chiefs predicted an exciting future for computer technology, no mention was made of the week's main event - Hewlett-Packard's multibillion-dollar merger with rival PC maker Compaq. The deal was initially valued at $US25 billion but HP has lost nearly one-quarter of its value since the announcement, meaning it is now valued at under $US20 billion.

One analyst attending the event said the merger could prove to be a logistical nightmare for the software maker:

"It's likely to come as a bit of a shock [to Microsoft]. They've got their own way of dealing with both these manufacturers, now they're entirely going to have to change the way they do business with Hewlett-Packard."

Compaq is widely considered to have a closer relationship with Microsoft than Hewlett-Packard, which has maintained a greater level of independence in its technology development.

Compaq has collaborated with Microsoft on a range of technology developments, the most successful of which has been the Ipaq handheld computer which employs Microsoft's Pocket PC software.

Comments earlier in the week from H-P's chairman and chief executive, Carly Fiorina, that H-P would be the surviving brand, point to the phasing out of well-established Compaq models.

Formed 18 years ago to ride on the success of the IBM PC, Compaq has nurtured a brand associated with reliability and quality. Branding company Interbrand fingers the Compaq name as the 24th most valuable brand in the world, valued at $US12.35 billion.

* Peter Griffin is in Seattle as a guest of Microsoft.