Gates pushes upcoming Microsoft Windows, Office

By Reed Stevenson

LOS ANGELES (Reuters) - Microsoft Corp. chairman Bill Gates pitched software developers to build programs for the next versions of Windows and Office software and showed off features on Tuesday that he said would drive a new wave of personal computer sales.

The world's largest software maker is preparing to launch its most ambitious attempt yet to drive growth in its two largest businesses, which together account for more than $33 billion, or three-quarters, of yearly revenue.

"In late 2006 when these products come out, they will be a wave," Gates told an audience of software developers, calling on them to build software that will run on its newest products.

Redmond, Washington-based Microsoft has promised to launch Windows Vista -- formerly code-named Longhorn -- in the second half of 2006. The next version of Office is also expected to launch in the same time frame.

With the longest gap ever between major releases of Windows operating systems -- the current version, Windows XP, was launched in late 2001 -- the key for Microsoft is to get its partners and developers excited about Windows Vista so that they will write new programs that will ultimately convince users to upgrade.

"It's very important for Microsoft to win the hearts and minds of the developers," said Michael Cherry, an analyst at Directions on Microsoft, and independent researcher based in Kirkland, Washington.

Without getting those third-party software companies on board, Microsoft won't be able to really show off the full capabilities of Windows Vista when it launches, Cherry said.

Jim Allchin, Microsoft's Group Vice President in charge of the division that includes Windows, stopped short of saying whether Microsoft had succeeded in delivering its message.

"This is where we have to deliver," Allchin said in an interview, "we'll know much more after the conference."

Microsoft, which had its slowest revenue growth ever in its latest business year, is betting that its new products will help drive new sales growth and also spur more purchases of PCs, hardware and software.

Gates said Windows Vista will be designed to better connect and exchange data with corporate databases, find information buried in hard drives, and deliver fast, detailed graphics.

"Software is redefining how people do things," Gates told an audience of software developers, "We're nowhere near what we can do."

In a demonstration of Windows Vista, semitransparent windows on the computer desktop allowed users to see objects underneath, including moving video, while search results were displayed in real time as queries were typed in.

MARKETING MUSCLE

The final look and feel of Windows Vista wouldn't be available until a later preview version due out next year, Microsoft said. At the conference, Microsoft is demonstrating the underlying technology to developers first so that they can start building applications before Windows Vista launches.

Microsoft also said it would release an interim version of Windows vista before the next major preliminary, or beta, release.

To encourage software developers to build and offer programs for Windows Vista, Microsoft also said it would offer $100 million to help them market and distribute applications written for the operating system.

"We will have the largest marketing activity that we've ever had," Gates said.

In order to help software vendors sell their products to more people, Microsoft announced that it would start a new digital marketplace service that will allow users to buy and download their software products over the Web.

Microsoft also unveiled a new interface for Microsoft Office, its collection of business programs for word processing, spreadsheet and e-mail.

Microsoft has been trying to turn Office into a platform for custom-designed applications that can handle business tasks such as accounting, customer service and business planning.

"This is the most significant release of Office since Office 95," Gates said.

In the next version of Office -- code-named Office 12 -- Microsoft showed in a demonstration how the look and graphics tabs within an Office application changed depending on the type of data being manipulated.