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Microsoft will continue to ramp up its patent filing and intellectual-property licensing efforts, chairman and chief software architect Bill Gates said Thursday in a meeting with financial analysts at the company's Redmond, Wash., campus.
Microsoft plans to file more than 3,000 patents in fiscal 2005 compared with "something over" 2,000 patent filings the previous year, Gates said. The company's planned "cycle of innovation" includes securing intellectual-property rights on Microsoft products and licensing that technology to other companies, signing license agreements to use other companies' software within Microsoft's own products, and providing indemnification protection to customers. Gates said Microsoft is still in the early stages of its licensing program.
Businesses continue to adopt new products and technology at a slower pace than consumers, due to security, compatibility, and complexity issues, Gates said. To get businesses to upgrade, he added, "You've got to make the cost-benefit there very straightforward."
In a separate presentation, Will Poole, senior VP of Microsoft's Windows client business, said Microsoft's much-anticipated Windows XP Service Pack 2 upgrade is on track to ship in August. Poole said the security-focused operating system update will ship primarily via the Web.
As Microsoft looks for growth, it sees opportunity in selling PCs to consumers who don't already have computers and, for those who do, in converting the large number of pirated copies of Windows into revenue-generating licenses. Microsoft estimates that about 60% of U.S. households have PCs and that in other parts of the world the percentages are significantly lower.
And Windows piracy isn't just a problem in emerging markets. Poole estimated that 22% of the installed base of PCs in the United States run unlicensed versions of Windows. That translates into 12 million PCs. By comparison, in China, where the piracy rate is higher but the installed PC base is lower, about 13 million PCs run unlicensed versions of Windows.
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