From Microsoft, a new Office, Tablet PCs

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"A big part of our R&D focus is how to help people get the most out of their time and intellect," Raikes said. "We are big believers in productivity for information work."

Raikes announced that the new Office version, being developed under the name Office 11, is scheduled to ship by mid-2003. That version will include better support for XML (Extensible Markup Language), an industry standard for data description and exchange and a key technology behind Microsoft's .Net Web services plan.

The current version of Office, Office XP, shipped last summer.

Raikes also demonstrated the next version of the company's Outlook messaging software.

The new XML capability of Office is intended to make it easier to link desktop programs, such as spreadsheets and word-processing documents, into corporate data stored in customer relationship management and other business systems.

Raikes discussed boosting the productivity of what the company terms "knowledge workers," or typical PC users in large companies. The software maker sees features that integrate Office programs into larger corporate data systems as a key reason for large companies choosing Office over competitors such as Sun Microsystems' StarOffice or OpenOffice.

"We pay very close attention to competitors and what's happening broadly in the market," Raikes said. "Customers (say) their Office tools are fundamental to their productivity. Continuing to make sure the capabilities of Office advance to help them connect to business systems and data...that's what is most important."

While Microsoft still dominates the desktop business software market, customers may be taking a closer look at competitive packages such as StarOffice. One reason: a new licensing plan aimed at businesses which takes effect July 31.

Though the plan is intended to make revenue more predictable for Microsoft, it could also significantly raise prices for customers, according to market researcher Gartner. As of last month, two-thirds of Microsoft's largest customers had not yet signed up for the plan.

Raikes said Microsoft has not seen any reasons to be concerned about competitors. "Anytime there is a challenge in the marketplace, people like to talk and write about it. But what we see is that today people want a relationship with Microsoft to get the latest Office technology to get their jobs done."

Tablet PCs on the agenda
As expected, Raikes unveiled Microsoft's Tablet PC initiative.

He demonstrated nine different models of the Tablet PC and talked about the eventual integration of paper, computer screen and phone.

Raikes disclosed that three PC hardware makers--Toshiba, Acer and Fujitsu--will debut the first Tablet PC models Nov. 7. At least six other makers, including ViewSonic, Motion Computing and Via Technologies, are expected to follow with Tablet PC systems later this year, Raikes said.

Tablet PCs, in their most generic form, are modified notebooks; they will weigh about 3 pounds to 4 pounds, can connect to the Internet wirelessly, and may include keyboards. Unlike notebooks, though, tablet PCs will come loaded with new applications, such as Microsoft Journal, that let people input words or drawings into the computer by writing on the screen.

The highlight of Raikes' Tablet PC talk was a presentation of Microsoft's electromagnetic pen, which was met with applause by the audience.

Raikes demonstrated how the pen can move the cursor when it hovers above a Tablet PC and can create an ink-like line when it touches the screen.

Prototype Tablet PCs with a beta test version of Windows XP Professional Tablet PC Edition will begin being tested by several Microsoft customers within 30 days, Raikes said.

Raikes also demonstrated the Pocket PC 2002 Phone Edition, a version of the company's operating system for handhelds, which combines a personal digital assistant with wireless voice and data access. The software will debut later this summer on systems from VoiceStream/T-Mobile, Raikes said.

News.com's Tiffany Kary contributed to this report.