Acknowledging the need for a breakthrough improvement in search technology to successfully compete with Google, Microsoft's code name for the new technology is Kumo (screenshot) now in internal testing. Balmer called the technology a "set change" for live search that is more than a face-lift for the current search tool (are they abandoning live?) The new tool, according the Balmer, is a step up in user interface, has a unique task orientation and will employ technology to help "predict user actions" based on their search patterns.
Regarding Yahoo: last year's failed bid to take over Yahoo's search platform may get a second wind thanks to the investment in Kumo and the change in guard at Yahoo resulting in Carol Bartz taking the helm. Balmer's interest in Yahoo is less about buying the search technology (hence Kumo) and more about economies of scale: "the more users you have the more advertisers you can attract" and the more you learn about the mass of users' search patterns the better you can tweak your product to drive more users, etc. When pressed about the possibility of another tender to Yahoo Steven Balmer acknowledge cooperation between the two companies makes strong "economic sense".
Research & Development: Microsoft spends nearly $9 billion in r&d and Balmer is a firm believer in innovation. During the session he stressed the importance of government investment in innovation by funding science and education. Regarding his company's commitment to r&d Balmer indicated r&d has not been cut but leveled so that staff growth that is the result of successful r&d projects is being tempered but no actual cuts in spending on development have been made.