Gates says big changes in store for Internet in next decade

"We can expect that the variety and quality of software will accelerate in the years ahead," the Microsoft co-founder said.

Gates added that "natural interaction" between hardware and software was finally becoming possible, citing as an example speech commands to computers.

"The whole environment will be very, very different," he said.

Microsoft also said Tuesday that it will invest $280 million to build a research and development center in China's capital Beijing, and will double the number of its full-time research staff in China to 3,000 in three to five years.