Microsoft was granted the third most U.S. patents of all companies in 2010, with Apple way down the list at number 46. But despite of being on the top of the list, the common industry impression was why, then, does Microsoft lag so far behind Apple when it comes to developing innovative products?

Agreed that Microsoft, in general, doesn't release such innovative products, but the remarkable Kinect gaming system generated last year is an exception to that rule.

And in addition, Microsoft recently made public a patent application for technology that would give its Xbox 360 Kinect sensor the ability to read users’ facial expressions and body language, thus enabling Microsoft to send them ads based on their emotional states.

According to many industry veterans this move is certainly going to give back the lost laurels to the company. Studies show that your words account for only 7% of the messages we convey. The remaining 93% is non-verbal. 55% of communication is based on what people see and the other 38% is transmitted through tone of voice, thinking about all of these Microsoft has surely nipped a winner.

In December, 2010, Microsoft filed this patent application, registered under No. 20120143693, the patent is for "a computer system, a computer-implemented method, and computer readable media configured to target advertisements based on emotional states".

Consumers are already getting used to the idea of being tracked by the trails they leave online and in-store, but this proposed technology takes consumer tracking to a whole new level.

According to the text of the patent application, Microsoft plans to target consumers based on a new set of data - body-language. No doubt the motion-sensing technology of Kinect will be the link to collecting and processing of this information.

The proposed technology would mean that whatever the Kinect spies you doing - crying, laughing, eating, reading - it can tailor ads accordingly.

For e.g. people who are generally happy might get fewer advertisements for weight-loss programs and more advertisements for new gadgets, while sad people might get fewer advertisements for local night clubs and confused people may get ads from “a technical support firm to help them out.” It will be interesting, to say the least, to see how people react to their own Xbox telling them that they’re depressed, stupid or overweight.

"No club or party advertisers want to appear when the user is sad or crying. When the user is emotionally sad, advertisements about club parties would not be appropriate and may seem annoying or negative to the user," says the patent. "Advertisers using the advertisement engine are more likely to surface emotionally compatible advertisements to users."

There are no indications whether Microsoft has plans to roll this out, and the 18 month old patent was only made public last week.

Microsoft spends an estimated $9 billion annually in research, development, and acquisitions. An in-depth Reuters report about Microsoft noted this about the company's approach to research and innovation:

There is a growing feeling that the $9 billion a year Microsoft is now spending on research and development totaling almost $69 billion over the last decade has not brought the breakthroughs it should. 

 Microsoft has made a conscious decision to do pure research as well as applied research, which necessarily means that research dollars may never turn into actual products.

Microsoft deserves a great deal of credit for the amount of money it's willing to put into research and development, and particularly into pure research. And its researchers deserve a great deal of credit for the number of patents they've received and finally there is a ray of hope for the company.

Data sourced from Bizreport.com.