Microsoft flexing its muscles

MSN: $1.1 billion in R&D (up from $500 million two years ago), and $500 million on capital expenses, up from $100 million two years ago.

Ballmer: "I believe only two or three companies can really deliver the infrastructure that's required to keep pace."

Ballmer: "Ad-supported software services are an integral part of Microsoft's plans to give consumers access to a broader variety of digital media, whenever they want and on whatever device they prefer," said Ballmer. "Our close partnership with the ad community is extremely important to us as we evolve Microsoft from a software company into the world's largest, most attractive provider of online media through MSN, Windows Live(TM) and adCenter."' 

Gates: "I think this is a rare case where we are being underestimated. That doesn't happen very often."

The upshot: At least Microsoft and Google becoming massive media companies, controlling tens of billions in ad placements, and Web compute utilities serving billions of consumers and thousands of businesses with every kind of application. Software is media.

See also: Nick Carr's post on Google in the enterprise, Richard MacManus on Microsoft the media company, David Berlind on Google-prise...

File photo of Ballmer