Microsoft plans to spend $9.5 billion on research and development this year, which a senior executive said is more than any competitor.
The figure is $3 billion more than the next closest technology company, said Kevin Turner, Microsoft's chief operating officer, who gave a keynote speech at the CeBIT trade show. Much of Microsoft's investments center around "cloud" services, or online computing provided to users from hosted data centres.
"Especially in light of the tough difficult macroeconomic times that we're coming out of, we chose to really lean in and double down on our innovation," Turner said.
Turner contended that Microsoft has more cloud services than any other company, ranging from its consumer email service to hosted enterprise products such as its Dynamics CRM (customer relationship management) system to its Azure cloud operating system.
"We're going to change and reinvent our company around leading in the cloud," Turner said.
However, Turner said Microsoft will still have a significant on-premise software business. Microsoft has come under increasing pressure from companies such as Google that sell office productivity suites that are entirely online rather than installed on PCs. Microsoft has argued that there will always be a need for client software, which can deliver more features.
Turner defended the company's forthcoming Windows Phone 7 Series operating system, which will be available on phones later this year. Microsoft faces heavy competition from vendors such as Apple, Nokia and other manufacturers using Google's Android operating system.
Turner said the mobile OS is a complete overhaul from previous ones and is tightly integrated with other Microsoft products such as its Xbox gaming and Zune music products. Windows Phone 7 Series is "not a 'me too' product," Turner said.