Microsoft’s chief software architect said his company is not just outspending technology leviathan IBM but that Microsoft is dedicating all its money to software, to the benefit of end users and developers, while IBM funds both hardware and software.

The majority of Microsoft’s future spending will go into Windows, Office and Visual Studio, according to Gates.

Microsoft has told financial analysts it would spend $6.9bn on R&D during the company’s current fiscal year, up from $4.3bn last year. IBM’s annual R&D is around $5bn .

Gates, opening Microsoft’s VSLive! developer conference in San Francisco, California, also said Microsoft is quite committed’ to mobility, with Smartphone and Pocket PC Windows operating systems for mobile phones and handheld devices.

Acknowledging the presence of Nokia Corp and Palm in mobile computing, Gates said: We have a very high level of investment in this area. We have a lot of momentum.

Gates delivered a vision-based conference keynote and announced a technology pre-alpha, preview edition of Visual Studio 2005, due tomorrow, along with the launch of Windows Mobile 2003 Second Edition and Speech Server 2004.

He did not refer to his company’s $606m European Commission fine for abusing its market position or the EC’s ruling that Microsoft must build a version of Windows without Media Player.

Focusing on investment and innovation, Gates said Microsoft’s R&D spending would help deliver on Microsoft’s vision of seamless computing. Gates believes seamless computing is coming with increased convergence between fixed and mobile devices, between different types of mobile devices, and with the convergence of different development environments.

Previewing the delayed Visual Studio 2005, Gates said Microsoft’s application development environment for desktop, server and mobile devices would provide a 50% reduction in code used to program common application development scenarios.

Other planned enhancements include re-introduction of an edit and continue to edit live Visual Basic.NET code, the use of generics, C Sharp partial types and C++ templates. To improve quality and security of code generated in Visual Studio 2005, Microsoft is including static code analysis with an internally developed tool called Prefast.

Windows Mobile 2003 Second Edition helps developers that are writing applications for different hardware platforms by providing an expanded set of APIs. These APIs allow the Windows Mobile user interface to switch between horizontal and vertical mode, without customization by the developer. Screen resolution has also been improved using QVGA to double the number of pixels for brighter and crisper images.

Gates also announced availability of Microsoft’s Speech Server 2004, which processes speech and general telephony activity, and is designed to provide voice-based interaction with PCs and applications. Speech Server 2004 runs on Windows Server 2003 and uses XML-based specifications for voice input called Speech Application Language Tages (SALT).

Microsoft envisions Speech Server 2004 will be used in mainstream, voice-based deployment, in healthcare, financial services and customer relationship management (CRM) not just call-centers for IVR. Microsoft demonstrated speech-enablement of applications built in Visual Studio for Speech Server.

Microsoft is very committed to speech, Gates said.

This article is based on material originally published by ComputerWire