LAS VEGAS -- The man who helped create the world's largest software company says software is the main hurdle standing in front of a productive enterprise.

"We've got to get the fundamentals right," Gates said during his keynote address that kicked off the Comdex IT trade show here. "All of the issues around security, reliability, manageability... these are software problems. They are not easy software problems. Some of these are things that have sat around for 20 years."

To that end, Gates demonstrated a new version of Microsoft's next-generation Internet Security and Acceleration (ISA) Server, an application-layer filtering security technology for virtual private networking (VPN), firewalls and Web caching that lets organizations better protect their networks from malicious attacks. The ISA Server 2004 is expected to be available for public beta in early 2004.

"Security continues to be a top priority for Microsoft. We are totally focused on creating more-secure software, and providing tools and technologies that can be easily and quickly deployed to help win the war against malicious code," Gates said.

As part of Microsoft's battle against unwanted e-mail, Gates showed off Microsoft's new SmartScreen Technology, an anti-spam filtering technology used in Outlook 2003, MSN and Hotmail that assigns a probability score to each incoming message based on user feedback. The technology will power the newly announced Microsoft Exchange Intelligent Message Filter (IMF), an add-on for Microsoft Exchange Server 2003.

Another area of improvement, according to Gates, is Microsoft Systems Management Server (SMS) 2003, which was introduced last week. In addition to its application deployment and inventory management capabilities, SMS 2003 focuses on three key areas: it supports mobile devices, enhancements to the metering and reporting functions, and integration with Active Directory, which allows organizations to centrally manage and share information on network resources and users while acting as the central authority for network security.

The latest version of SMS 2003 supports a full management feature set, including software distribution, asset management and remote troubleshooting -- without requiring a set of local servers or services.

The new focus on security comes as the Redmond, Wash., company redoubles its efforts to assure IT customers that its products are safe from security breaches after major virus and worm breakouts in September tarnished the company's standing on security.

Gates also outlined forthcoming safety technologies, including a set of security enhancements for Windows XP Service Pack 2 and Windows Server 2003 Service Pack 1 that will be delivered to customers in 2003, and discussed the extended support options for previous releases of Windows.

From "My Computer" to "Stuff I've Seen"
Gates said the spotlight on fundamentals is designed to breakdown the last barrier to his vision of "Seamless Computing", one where devices are always working together.

"If we look at business apps we have boundaries, such as the ones between productivity software and structured ERP -- boundaries between corporations and the ease of moving information around is still way too difficult," he said. "So if we work on removing these boundaries between the system and the software, the software and the software, the software and the devices... we can do things we've dreamed about since this decade got started."

For example, Gates pointed out features in Windows Server 2003, including an integrated application server, Web services support, and advances for information workers including Windows SharePoint Services and Windows Rights Management Services.

Gates demonstrated advances in Microsoft Office System programs, including Office OneNote 2003, a note-taking program that lets users capture, share and reuse their notes in a new and flexible way, and Office InfoPath 2003, a new information-gathering program the company said offers rich, dynamic forms to simplify business processes and enable companies to make smarter business decisions.

"Our vision for seamless computing is both revolutionary and evolutionary," Gates said. "The changes users will see in the technology they use will be gradual, but the difference between the computing experience of today and the experiences that will be possible a few years from now will be like night and day."

Already Microsoft boasts Office 2003 has experienced a strong response from customers and partners that is in line with Microsoft's expectations, with estimated initial retail sales doubling that of Office XP. In addition, the number of business customers that have already purchased the rights to install Microsoft Office 2003 through volume licensing is about twice the number of customers that had purchased the rights to install Microsoft Office XP when it was launched.

On the consumer side, Gates said rich programmability and flexibility is moving on to the client, with support for advanced networking and Web services, managed APIs, rich user interfaces and a new file system in the next-generation Windows client, code-named "Longhorn."

"Along with a new generation of applications, we believe that 'Longhorn' PCs will be at the center of the seamless computing experience for most consumers and information workers," Gates said.

Celebrating the first anniversary of a new computing platform, the company also announced its next version of the Microsoft Windows XP Tablet PC Edition operating system. Available in the first half of 2004, The software will be free for Tablet PC customers. The new OS features deep integration of pen support in Windows XP, making it easier to create text anywhere in Windows and familiar Windows-based applications, as well as enabling software developers to add inking capabilities to both new and existing applications. During his keynote, Gates noted that Tablet PCs are finding increasing adoption as a mainstream laptop PC replacement in a wide range of businesses. He also announced three new Tablet PCs from Gateway , Toshiba and ViewSonic.

On the cutting edge, Gates demonstrated an advanced search technology project from Microsoft Research, code-named "Stuff I've Seen". Similar in concept to the "Recent Documents" feature, the technology is consolidated into a single user interface to retrieve diverse kinds of information on a PC (such as e-mail, Web browsing history, Office documents and other file types).

Gates said his company spent $6.8 billion in R&D this year to bring much of the search technology to fruition as well as compete with the likes of Google, denying that the two companies were ever in acquisition talks.