Microsoft Corp said today it would boost spending on research and development by 20 per cent to $5.2 billion in the current fiscal year while increasing its work force by 10 per cent.
Mr Bill Gates, Microsoft's chairman and chief software architect, said the software giant would make "aggressive" investments as it prepares to bet the company's future and its mainstay, the Windows operating system, on Web-based services.
"We are increasing the level of investment for the future," Mr Gates told a gathering of about 240 analysts.
Mr Gates said the software giant would add 5,000 employees to its 50,000-plus work force for the current year than ends in June 2003.
Spending for thousands of new workers and billions in investment dollars is needed to deploy .NET, Microsoft's over-arching plan to change the way information changes hands so that software and services no longer depend on individual computers.
In his presentation, Mr Gates outlined Microsoft's strategy over the next few years, saying the company would look to migrate customers over to Web-based computing and services in three phases over the next several years.
The first phase - which he called the "Now Wave" - would center around new consumer-oriented software to be released this fall, including a new media-friendly version of Windows XP, the Tablet PC and a beefed-up browser for online service MSN, as well as a new server and updates for .NET infrastructure.
The second wave's would be marked by the new release of Microsoft's database SQL Server, code-named Yukon.
The third and final phase will be marked by the next overhaul of Windows, a project recently code-named Longhorn, that promises to work seamlessly with .NET, Mr Gates said.
Shares in Microsoft were down almost 7 percent to $43 in late afternoon trade on the Nasdaq. Other major technology shares were also down sharply, with the Nasdaq Composite index shedding more than 4 per cent.