Good analysis by Peter Harsha on the Computing Research Policy Blog.
While it's great news that two of the titans of the IT industry are stepping up to fill some of the gap left by DARPA's withdrawal, their $20 million investment over 5 years represents just a tiny fraction of the DARPA shortfall. The difference in DARPA funding for university computer science between 2001 and 2004 was $91 million annually ($214 million in FY 01 to $123 million in FY 04 in unadjusted dollars), and anecdotal evidence suggests that shortfall may be even larger now. The Microsoft-Intel investment is a bold move and big commitment to address a key challenge in computer science that's a primary concern for the two companies in the future. But it doesn't represent a sustainable alternative to filling the hole left in the IT R&D portfolio created by DARPA's absence.