From now on, IT executives will see short-term, midterm and long-term innovation from Microsoft, company CEO Steve Ballmer pledged Wednesday.

"All of our major businesses can have a short-twitch capability every six to nine months to a long-twitch capability. We can't make customers wait three to four years for things they need every few months," Ballmer told several thousand attendees in a keynote panel discussion at the Gartner ITXpo in Orlando, Fla.

In response to on-stage questions posed by Gartner analysts, Ballmer stressed that Microsoft remains innovative and agile, despite its size and longevity compared to newcomers such as Google. When asked by Gartner Fellow Tom Bittman to detail Microsoft’s changed operating-system development strategy, Ballmer said the Redmond, Wash., software giant made big decision in August 2004 to change how it will deliver new capabilities. Skeptics said this was because Microsoft overpromised and underdelivered such key capabilities as the WinFS file system.

Ballmer characterized it differently.

"We made a call that the integration challenge of trying to bring together a new operating system with a new presentation system, file system, user interface, communication system and have all those things be co-dependent was not good. [We took a] time out and decided on a different cycle," Ballmer said.

That’s when the major subsytems--promised for Longhorn, the next generation of the Windows Server operating system--were pulled forward to work with the current Windows XP platform, according to Ballmer. "Now the key is to make sure, for every line of business, that something pops every six to nine months, as well as every three years," he said.

It’s also key to come up with services that tie into Microsoft's bread-and-butter Windows and Office franchises, as well as predictable updates to the core products, Ballmer noted.

"Each of our products will have perhaps its own cadence, but we need service offerings associated with each product to feed innovation in the nine-month cycle,” he said. “Other innovation [will come] in every-few-years cycles for major releases. And sometimes we talk about and work on things that take more than two years but want to give customers visibility [into that]."

Bittman cited WinFS as an example of a Microsoft effort with a long time frame. "When did you start talking about that?" he asked.

"This time, it's three years--this time,” Ballmer said. “We've worked on an advanced file system before, and our customers should be happy to know we don't give up on something important. We thought initially that we should announce when it would ship. That was probably not smart. Now we're saying it's coming, we provide beta releases to play with and we'll do more customer focus/interaction before we set a shipping schedule. We think that's spot-on."

Drawing the most applause was an attendee question, viewed on videotape, about Microsoft’s software licensing and what the company could do to simplify it.

"The simplest thing we have today--and about half of our enterprise customers implement it--is the Enterprise Agreement,” Ballmer said. “We put together a license agreement that takes a lot of the counting and complexity out. We recently simplified other license agreements. It used to take two years of post-graduate education to understand our licenses. It's down to ninth-grade now."

Another attendee, requesting anonymity, said volume licenses remain a mystery to many large customers but that Microsoft is constrained in what it can offer in a "bundled" way by constraints in its antitrust settlement.

Since launching Licensing 6.0, which was widely viewed as a price hike, Microsoft has worked to simplify its licensing language. The company has said it will treat multicore processors as single processors and will come out with a virtualization license strategy. Nevertheless, Microsoft has not really addressed pricing per se.

When Gartner analyst David Cearley asked what Microsoft will do between now and next year to "trounce" the competition, the CEO exhibited some of what might be seen as DOJ-fostered reticence.

"We don't trounce our competition," Ballmer said, as the audience laughed. "We compete."