Microsoft Canada has given the University of Waterloo $2.3-million in the first installment of a $10-million program to finance technological research at academic institutions across the country.

Called the Microsoft Canada Academic Innovation Alliance, the fund was described at its launch Wednesday by Microsoft Canada president Frank Clegg as instrumental "in building closer relationships with the Canadian academic community."

UW president David Johnston hailed it as "a very important step in our very important relationship" with the Canadian subsidiary of the software giant.

The University of Waterloo, with 5,000 engineering students and a reputation for its computer-engineering studies, will put the money into three projects. One is to develop a mathematical engine for the Tablet PC, a new ultra-portable computer for which Microsoft has developed an operating system and which is scheduled to reach the market this fall. Another is to teach Microsoft's C# programming language to students, in a course to be launched in the fall of 2003. The third project intends to teach the concepts of circuitry by having students work with Microsoft's new .NET servers.

The Tablet PC mathematics project will involve the development of a handwriting-recognition feature for mathematical uses. The current Tablet PC is geared to recognizing handwritten language.

In that project, six graduate students will work with three professors who will receive Microsoft fellowships. Microsoft will also fund a programmer and the university will finance a postdoctoral fellow.

Mr. Clegg said the fund has been set up because he expects that over the next 10 years there will be "more development and innovation than the past 40 years," in the high-technology field.

Microsoft is looking for applications "involving innovation" in any area, he said. "We want to hear about it."

He said grants be given in four areas: academic research, using computers in education, integration of technology into the university curriculum and "industry outreach," in which universities and business work more closely together.

"The key thing is that the project is challenging," said Microsoft director of education George Kyriakis.

Mr. Clegg said that his company has had a long relationship with the university, and noted that 40 of his 600 employees are University of Waterloo graduates.