Microsoft plans to boost R&D, jobs

At a meeting with financial analysts here, Gates said the company plans to boost research spending by more than 8 percent in its new fiscal year, to $6.8 billion. "We believe we are just at the beginning of what we can do with software," he said.

The company said in a press release that the increase will result in up to 5,000 jobs being added in the current fiscal year, which began this month, including 3,000 to 3,500 in the United States.

At the same time, Gates said the technology industry is faced with slower growth combined with a host of problems created by the Internet boom, including security risks and unsolicited e-mail.

"I get a lot of spam," Gates said, "probably as much as anyone in the world."

The billionaire co-founder of Microsoft said he normally uses rules to filter his in-box, but in a lighthearted moment he showed several pieces of spam that slipped through. Some were on target, he joked, pointing to one that promised to help him get his college diploma. Others, such as an offer to get out of debt, seemed misplaced. One that was particularly intriguing, he quipped, was an offer to solve his legal problems for just pennies a day.

During the meeting, Microsoft also previewed a number of new products, such as a tool that makes it easier to combine personal and work e-mail and calendars. The Outlook Connector is slated to debut later this year when Microsoft ships the next version of MSN.

Gates also talked about a product called Music Mixer that lets people blend photos and music on the Xbox, taking advantage of the gaming console's hard drive.

Further growth, Gates said, lies ahead in technologies such as wireless networks and displays that will boost productivity. For example, he envisioned 20-inch LCD flat-panel screens becoming standard for most workers within the three years.

Later Thursday, executives from each of Microsoft's seven business units are scheduled to give presentations, as are CEO Steve Ballmer and CFO John Connors.