Speaking to financial analysts at a daylong meeting on its Redmond campus, the company laid out many broad areas where it will be making big investments over the next few years. The plans include greatly boosting its efforts to compete against Web-based competitors such as Google Inc. and Yahoo Inc., expanding its entertainment offerings and getting into new areas such as advanced communications technologies.

"The approach we're taking is broad-based and long-term," Chief Financial Officer Chris Liddell said.

Steve Ballmer, Microsoft chief executive, conceded there are questions about the software maker's future, but he insisted that the company can compete against Web-focused competitors and others.

"The opportunity and prospects for innovation and growth has never been better," Ballmer said.

Still, in a sign of how nervous Wall Street is about the company's prospects, Microsoft shares dipped 2 percent after another executive said a new version of its Windows operating system is on track to be completed as planned, but cautioned that could change if quality concerns arise.

Microsoft is facing intense competition, particularly from Google, Yahoo and other companies that are increasingly offering software and related services over the Internet to both consumers and businesses.

Some of those competitors could eventually challenge the hold Microsoft has in the market with Windows and its Office business software.

Microsoft has aggressive plans to go up against those competitors, but it also has conceded that they could be costly. Analysts were caught off guard when Microsoft announced the increased spending plans several months ago, and Liddell also said Thursday that it hopes to communicate its strategy better in the future.

That's not the only concern the company faces.

The new versions of both Office and Windows - the company's cash cows - have been delayed.

Microsoft's share price has essentially been stagnant for years.

Ballmer insisted Thursday the company is ready to adapt to big changes in the industry, pointing to several initiatives under way to offer more Web-based software and services.

Microsoft recently launched adCenter, a platform for online advertising designed to help it compete against Google and others. It also has announced a spate of new Web products under the "Live" name for such things as e-mail, instant messaging and maintaining customer relationships.

Ballmer said Microsoft has no intention of letting up on its commitment to put its considerable cash and other resources behind the Web-based efforts.

"We keep working on things and working and working and working and working," he said. "We're not afraid of initial resistance to our efforts."

With those changes and co-founder Bill Gates' plans to scale back his duties by mid-2008, Ballmer called it "the beginning of a new era for Microsoft Corporation."

While Microsoft has made online efforts a top future priority, for now Windows and Office remain the company's main profit sources, and any further delays in either were at the forefront of people's minds Thursday.

Kevin Johnson, co-president of the Microsoft division that includes Windows, said the company appears to be on track to ship the new version of Windows to businesses in November and consumers in January. But he made clear the company would not hesitate to again delay Windows Vista, which is already years overdue, if further problems crop up.

"We will ship Windows Vista when the product is ready," he said. "Product quality is job one."

Microsoft shares fell 50 cents or more than 2 percent to close at $23.87 in trading Thursday on the Nasdaq Stock Market after the words of caution made investors jittery.

Johnson conceded the market for Windows is growing more difficult. Microsoft expects more business for Windows to come from developing markets such as India and China, where piracy is rampant.

It also projects that a higher percentage of its Windows sales will come from consumers than in the past, which raises difficulties because the versions of Windows sold to businesses are generally pricier.

The company is projecting that overall PC shipments will grow by 8 percent to 10 percent in its 2007 fiscal year ending in June. Consumer PC shipments are expected to increase 11 percent to 13 percent, while business PC shipments are expected to increase by just 6 percent to 8 percent.

Johnson said the company hopes to find ways to sell higher-end Windows versions to home users.

Analyst Roger Kay with Endpoint Technologies Associates said he thought Microsoft was trying to tell analysts to be patient as it makes investments needed to grow.

"I think they're trying to gain the sympathies of this population so that they don't get punished too badly for going into investment mode," he said.