Microsoft chief executive Steve Ballmer has admitted the technology industry "faces some big challenges" this year, but hopes the company's new operating system, Windows 7, and a further push into mobile phones will lift flagging sales.
"Our world and our industry faces some big challenges, all of us are feeling it," Mr Ballmer told thousands of computer geeks in his first keynote speech at the Consumer Electronics Show (CES) in Las Vegas on Thursday. "It feels like we have entered a period of reduced expectations, a time when we might be tempted to temper our optimism and scaled back ambitions," he said.
Mr Ballmer implored computer engineers to keep their faith and continue to develop new products as he believes that only companies that innovate will succeed. He said Microsoft invested $80bn (£53bn) in research and development last year and pledged that the company will continue to invest more than its competitors as "its is the the power of ricideas and innovation that drives us forward, regardless of the economic environment".
"No matter what happens with the economy or how long this recession lasts, I believe our digital lives will only continue to get richer," he said.
In is first opening keynote speech since Microsoft chairman Bill Gates stepped back from day-to-day operations, Mr Ballmer announced a raft of new products and services, including Windows 7, its widely anticipated new operating system which will supersede its much-maligned Vista system. The company made a beta (test) version of the news operating system immediately available to technology experts to trial and suggest improvements.
Matt Rosoff, analyst at independent consulting company Directions on Microsoft, said: "Vista created a pretty negative impression... Microsoft wants to make Windows 7 just work, right out of the box."
Mr Ballmer said Windows 7 is designed to speed-up and simplify daily tasks. Most significantly, the new operating system will allow customers to easily link-up PCs, laptops and mobile phones facilitating much greater interaction between devices and the ability to access files remotely.
Windows 7 could also lead to the death of the mouse, as it is designed to work on touchscreen computers, in a similar way to the iPhone and the Blackberry Storm. "I believe Windows will remain at the centre of people's technological solar system," Mr Ballmer said.
Microsoft also announced a new-improved version of its Live Search engine, which will integrate with Facebook, the social networking site. Live Search has been lagging far behind rivals Google and Yahoo!, and bloggers had suggested Microsoft might be considering selling the division. Microsoft also announced that computer-maker Dell will preinstall Windows Live on most of its consumer PCs.