The arrival of Google's chief executive Eric Schmidt in Killarney to attend the company's sales employee summit was shrouded in the type of secrecy usually reserved for visiting heads of state flying in for a G8 summit. Perhaps they feared Microsoft assassins along various grassy knolls on the way to the Kingdom?

Schmidt is a high-flyer, literally: he owns and pilots a Gulfstream jet in which he landed at Farranfore. Yet his appearance and demeanour are more in line with his background – software engineering. He speaks in soft, measured tones, often answering a question by throwing back another. And he's not the young, casually-dressed buck you'd expect at the helm of such a hip (sort of) internet company. He's your bank manager or your accountant, and yet he flies a very fast (his words) plane which I'm sure gives him some cachet.

Interestingly, one of my colleagues who recorded a video interview for a tech website showed me the sound file graphic of Schmidt's responses; they were all the same length. Clearly the Google CEO has been well media-schooled, or he just knows when to shut up and move the interview to the next question.

Schmidt was upbeat about certain things. He claimed Google was seeing an upward turn in its advertising – a sign that, for Google anyway, the recession is starting to beat a retreat.

"What we do know is that we are an early signal for advertising and we would be early in the cycle of advertising recovery. And this is a reasonable proxy for a lot of consumer businesses. We saw the bottom in April and May. There's no question things are better now," he said.

The Google CEO also threw several bouquets at the IDA, at the standard of education in this country and at Google's Irish workforce. Schmidt also guaranteed that the Irish operation in Dublin, which employs around 1,200 people, will grow.

"A majority of our global revenue goes through here and so, as our global revenue grows, we'll be expanding consistent with that. Global revenue is growing faster than US revenue."

On the privacy issues that have dogged the company in recent years, Schmidt was insistent that the company was pro-consumer, and if someone felt uneasy about using the search engine they were only one click away from using a competitor. He hoped the company was getting it right and that it had credibility in this area.

Schmidt offered some advice to the Irish government on broadband infrastructure. He said leadership in broadband was a precondition for strong economic growth in the next 10 to 20 years. This was because a huge amount of information will be transmitted across broadband networks.

"Access to information is the thing you need to build information industries such as university research or entertainment. Many countries are beginning to realise the competitive advantage here and are using government funds or are taxing their citizens directly to increase their broadband infrastructure," he said. "The future is fibre. Ireland needs to be lit up with fibre over the next five to ten years. With the quality of the workforce here you could really take advantage of that – you have the people."

It was also a big week for Microsoft – its new operating system (OS), Windows 7, was launched. The incumbent OS, Vista, has had such a horrible stink attached to it that the company surely breathed a sigh of relief when the preview copies garnered glowing reviews. The consensus is that Windows 7 is everything that Vista should have been. It's sleeker, easier to manage, navigate and much lighter on PC resources. In a survey by Credit Suisse, around 60% of corporate users were dissatisfied or extremely disappointed with Vista, whereas with Windows 7, only 20% were unhappy.

Of course there are dissenting voices, particularly from those who consider the proprietary operating system a fossil with the future in the cloud (the geek way of saying a service over the internet). Marc Benioff, CEO of Salesforce.com, which houses its products in the cloud, said the operating system is irrelevant now.

"It's all about the cloud – cloud applications for consumers and businesses, and cloud platforms like Force.com, Amazon Web Services, and Google App Engine."

Bruce Francis, vice president of corporate strategy at Salesforce, also had a dig at Microsoft's new operating system, saying that when the world's largest software company markets its flagship product as 'more stable', "you know that there is something terribly wrong with the state of innovation at Microsoft".

Nonetheless, Windows7 will still run in 95% of all PCs and Microsoft is kicking around a cloud computing strategy of its own.

Having said that, the company faces huge challenges from Google, VMware and Apple, all of which are considered by many in the tech community to be more innovative. Some commentators also wonder whether Steve Ballmer, Microsoft's mercurial CEO, can provide the leadership to guide the company through potentially its most difficult phase. Only time will tell if this is a turning point or the start of a decline for the world's biggest software organisation.