In the consumer arena, where Microsoft faces competition from companies like Google, Nokia and Apple Computer, products are being updated rapidly, as often as every six months.
"In the business space, it's more stair step," Gates said, noting that business programs tend to get larger updates, but only every two to three years. The result is that many of the communication breakthroughs have come through consumer technologies such as instant messaging.
Another challenge Gates highlighted is the need to move information between two different realms--the unstructured world of e-mail and Office documents, and the highly structured world of business applications.
"We need to take Excel and make sure it understands rich, structured data much more than it does today," Gates said.
He showed off a few of the ways Microsoft hopes to bridge the gaps with its next generation of products, offering a demo of the next version of.
Gates' speech came at the conclusion of the Convergence 2005 show for Microsoft's business applications unit, which makes accounting and enterprise resource management software.