The long-term outlook for the technology industry is bright, according to Bill Gates, chairman and chief software architect at Microsoft Corp. Speaking on July 25, 2002 to an audience of more than 300 financial analysts, investors and journalists at Microsoft's annual Financial Analyst Meeting, Gates shared his optimism about the technology sector and highlighted the company's achievements in fiscal year 2002, as well as the major investments the company is making in the coming year to foster future growth and innovation.

Microsoft's position in the enterprise is strengthening, Gates said, as a result of continued product enhancements in scalability, reliability and manageability, with Microsoft SQL Server 2000 leading the way with top industry benchmarks and improved ranking from key industry analyst firms. Another momentum driver has been Windows XP, which has now sold more than 46 million licenses, making it the fastest-selling Windows operating system ever.

"We saw some remarkable successes in 2002," Gates said. "For example, Web services are gaining broad appeal, and even some of the original skeptics have re-evaluated their position on the technology. WS-I, which is promoting Web services standards, now has more than 100 member companies, and Visual Studio .NET developers are now deploying all kinds of Web services applications."

Business successes and economic issues aside, the heart of Gates' talk was forward-looking. Gates outlined three "waves" of software that will form the core of activity at Microsoft over the next couple of years:

  • The Now wave consists of software the company expects to release throughout fiscal year 2003, including Windows .NET Server, Windows Media(TM) 9 Series, Windows XP Media Center Edition, MSN(R) 8, Windows XP Tablet PC Edition, Windows CE for Smart Displays, an update of Visual Studio .NET, Xbox Live and innovative, new Xbox games.
  • The Yukon wave will center on the next major release of Microsoft SQL Server, which, while furthering the industry-leading scalability and programmability of SQL Server, will also deliver the unified storage architecture foundation for future products in the Microsoft .NET Enterprise Server family as well as the Longhorn wave of products.
  • Further out, the Longhorn wave, surrounding the next major release of Windows, promises the greatest breakthroughs to date for information workers. Applications, operating systems and Web services will be tightly integrated in how they store, present and manipulate data.

Each wave connects the four customer "domains" –information workers, IT professionals, business processes and consumers – with .NET, and each wave enables new user scenarios and new solutions. "As we continue to move into the 'Digital Decade,' we're seeing the boundaries between systems and applications start to dissolve," Gates said. "It's this fluidity that will power incredible, tangible change in how all of us use technology."
Gates said Microsoft expects to increase its employee base by 5,000 over the coming year. In addition, Microsoft's research and development spending in fiscal year 2003 will increase to $5.2 billion, more than 16 percent of net revenues. This represents growth of more than 20 percent over R&D spending in 2002.

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