Microsoft has taken the wraps off an R&D centre in Germany as part of a $75m worldwide investment programme aimed at squeezing Windows into "smart, connected, service-oriented" devices.

The company said that the move would accelerate collaboration between US-based Microsoft embedded Windows product groups and their counterparts in Europe.

Around two-thirds of the three billion embedded devices shipping this year will be connected to a network or management service, according to Microsoft.

The company expects the market for connected devices in the enterprise to grow at a rate of 23 per cent per year between 2006 and 2010.

Microsoft's embedded product line up includes Windows Embedded CE, Windows XP Embedded and Windows Embedded for Point of Service.

"Due to the immense engineering talent pool and high concentration of enterprise customers and key Windows Embedded partners in the region, we see tremendous growth opportunities for the Windows Embedded Business in Europe," said Kevin Dallas, general manager of the Windows Embedded Business at Microsoft.