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Gates: Microsoft to Double R&D;

MELBOURNE, Australia — Microsoft Corp. Chairman Bill Gates Tuesday predicted the software giant's huge research budget would double as the computer revolution gathered pace.

Microsoft now boasts one of the corporate world's biggest annual research and development budgets at $2.6 billion.

Gates, speaking to more than 4,000 customers and software developers during a two-day visit to Australia, said the Redmond, Wash.-based Microsoft's long-term research priorities included artificial intelligence.

"We spend the highest percentage of our revenue on R&D; of any company in the United States of any size," he told a seminar at a packed basketball stadium in Melbourne.

"We are spending over $2.6 billion this year and that's up by a factor of 60 (times) from a decade ago. I can see it more than doubling in the foreseeable future," he said.

Gates had told a dinner with Australian Prime Minister John Howard and business leaders Monday night that computers would speak and, one day, even read people's moods.

"We will also teach the computer to recognize handwriting and teach it visual recognition," Gates said. "It will recognize you, tell what sort of facial expression you have — happy, sad or confused. It will be a little bit like interacting with a human being."

Picking up the theme again Tuesday, Gates said Microsoft would keep accelerating its research effort at a time when other big companies were winding back their research budgets.

Microsoft's $2.6 billion research budget for its financial year ending June 30, 1998, equals almost a quarter of its 1996-97 sales revenue.

The group is in final development of a car-based computer software that recognizes a limited number of voice commands and enables a driver to tune the car radio, make a telephone call and ask directions to a destination without lifting a finger.

But Gates, who speaks with a nasal drawl, said some bugs still needed to be ironed out.

"I borrowed the 'Auto PC' for a weekend and got very frustrated when it didn't understand my voice very well," he said.

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