Microsoft is increasing its R&D efforts for the China and Asia-Pacific markets with the formation of a new technology group — the Advanced Technology Center (ATC) — aimed at developing software products for the region, which will fall under the purview of Microsoft Research Asia (MSR Asia) in Beijing early this month.

Microsoft is currently finalizing the details of the ATC, which would hire 80 people over the next year.

"ATC is the next natural step for MSR to accelerate technology transfer," a spokesman said. The five-year-old MSR Asia is Microsoft's only research lab in the Asia-Pacific, and employs 150 full-time research scientists, who work on areas of next-generation user interfaces that include voice recognition, text-to-speech, digital ink and language processing; digital entertainment; multimedia; wireless; and networking.

Microsoft has been facing increased competition from local Linux vendors in China, especially after the Chinese government announced that all state ministries and commissions were to use homegrown software products. But all is not lost — Microsoft has done much to improve its relationship with the government and customers, for instance, by allowing governments to view its source codes, pacifying customers that are dissatisfied with its licensing model with free technical support, and rolling out initiatives to make its products more secure.