Microsoft will spend about $7.5 billion on research and development in fiscal 2007, $1.3 billion more than previously committed, Chief Executive Steve Ballmer said Tuesday.
Ballmer gave the estimate in response to a question at a business lunch in Madrid.
"I estimate off the top of my head that approximately half a billion of that will be spent in Europe", he said.
The figure is a significant increase on the investment Ballmer announced in May — $6.2 billion, a figure that surprised financial markets.
Microsoft is under pressure to show investors it can compete with Google (GOOG) and Yahoo (YHOO) in the Internet search business.
Ballmer has said for years that Microsoft faced no competition to recruit staff. "Finally, we have some competition (from Google) for talent", he said.
Ballmer, who was invited to talk on the subject of business innovation, said more than half the staff Microsoft has hired to work in research and development in the United States were recruited from abroad and included 1,000 Russian speakers.
News source: USA Today