Windows Phone 7, Kinect, Cloud Defined Microsoft’s 2010

by Nicholas Kolakowski

Microsoft CEO Steve Ballmer used his Jan. 6 keynote address at the Consumer Electronics Show to show off three tablet PCs powered by Microsoft software, including one built by Hewlett-Packard. However, a Windows-powered HP tablet wouldnt enter the market until near the end of 2010.

Throughout 2010, Ballmer found himself deflecting criticism that Microsoft was falling behind Apple and Google in appealing to consumers.

Microsoft revealed its Windows Phone 7 Series (later shortened to Windows Phone 7) smartphone platform during a Feb. 15 press conference at Mobile World Congress. Windows Phone 7 is intended to reverse several quarters of Microsoft declines in the smartphone space.

Windows Phone 7 aggregates Web content and applications into six subject-specific Hubs, an innovation Microsoft hoped would make its smartphones stand out from competitors such as Google Android and the Apple iPhone.??í

Meanwhile, Windows 7 continued its strong sales run. By November, some 240 million licenses had sold, according to Microsoft, and the operating system was gaining market share among consumers and businesses.

Microsofts Kin phones, with baked-in social networking applications, failed to gain traction among its intended audience of teenagers and young adults. Not even 50 days after the release of the Kin One and Kin Two, the lines were pulled from Verizons store shelves, although the carrier revived a neutered version of them later in the year.

In the midst of the Kin debacle, Microsofts Entertainment and Devices Division underwent a massive May shakeup that saw the departures of J Allard (shown), senior vice president of design and development, and Robbie Bach, the units president. Ballmer indicated he was making organizational changes.

Also in May, Microsoft released Office 2010 and SharePoint 2010 to businesses. The next-generation Office included a stripped-down, free Web component along with a variety of new features.

Despite its history as a producer of desktop-based software, Microsoft decided in 2010 to aggressively promote an “all in” cloud strategy. Related products include Office 365 and Windows Azure, although those initiatives have yet to show the revenues of more traditional platforms such as Windows 7.

Microsoft Chief Software Architect Ray Ozzie, widely acknowledged as one of the minds behind Microsofts cloud push, announced his resignation from the company in October. Ozzies FUSE Labs incubator had encouraged social-networking applications such as Docs.com, which allows Facebook users to create and share Word, Excel and PowerPoint documents.

Microsoft devoted substantial resources to developing and promoting Kinect, its hands-free controller for the Xbox. The company hopes Kinect will extend the life of its gaming platform, while appealing to casual gamers who previously gravitated toward Nintendos Wii.

Kinect uses a 3D camera to translate the players movements to a digital avatar. There have been indications—such as its recent acquisition of Canesta, which makes 3D-image sensor chips—that Microsoft will leverage that same technology for other devices and applications.

Microsoft hopes its increased focus on the cloud and collaboration tools will allow it to blunt the market impact of Google Apps and other upstarts, especially when it comes to businesses.

While Kinect has proven a strong seller during this holiday season, sales numbers for Windows Phone 7 remain unclear in the weeks following the smartphones November rollout in the United States.

Ballmer has indicated that Intels upcoming Oak Trail Atom processors will drive a new family of Windows tablets. Whether those devices can make a substantial dent in a market dominated by the Apple iPad and a growing number of Android tablets remains to be seen.