Windows Phone, Barnes and Noble Fight, Ad Deal Marked Microsoft Week

Microsoft's week marked the start of the company's huge Windows Phone push, a new online ad deal, and a twist in a long-running battle with Barnes & Noble over Android.

Microsoft started its huge Windows Phone push this past week.

On Nov. 7, the company unveiled a six-story mockup of a Windows Phone in the middle of New York City's Herald Square, which attracted its own share of media attention. New Windows Phone devices, loaded with the wide-ranging Mango update, will appear in stores over the next few weeks. Microsoft executives are talking up the platform as ideal for both businesses and consumers.

For Windows Phone, it's very much do-or-die time. In the year since the platform's initial release, it has failed to carve off substantial market share. It continues to face robust competition from mature platforms like Google Android and Apple's iPhone. And most of its manufacturing partners, with the exception of Nokia, have a vested interest in promoting other smartphones in addition to Microsoft's products.

In a bid to counter those headwinds, Microsoft is pumping enormous amounts of cash into its development and marketing process. It is also betting heavily on Nokia, which abandoned its homegrown operating systems such as Symbian in favor of Windows Phone. Despite its falling market share in the wake of that decision, Nokia continues to enjoy significant presence on the global stage, which Microsoft hopes it can leverage into far greater Windows Phone adoption.

Part of Microsoft's overall strategy also involves expanding Windows Phone beyond its current high-end niche and into the midmarket. "We are dramatically broadening the set of price points in Mango-related phones that we can reach," Andy Lees, president of Microsoft's Windows Phone division, told the audience during the Asia D conference Oct. 19. "That's particularly important because going lower down in price point opens up a more addressable market."

Microsoft has loosened its minimum hardware requirements for the platform, with its hardware specifications now listing "primary camera" and "front-facing camera" under "optional hardware." The rest of the "standard hardware" remains much the same, including three hardware buttons (start, search and back) and an accelerometer. Those specifications were last updated Sept. 23.

Nokia plans on offering a midmarket Windows Phone, the Lumia 710, to complement its higher-end efforts.

Microsoft's Windows Phone strategy extends to pumping up its executive bench. On Nov. 7, the blog Boy Genius Report posted news that Gavin Kim, formerly Samsung's vice president of consumer and enterprise services, had become Microsoft's general manager of the Windows Phone team.

"I will be responsible to help set the future direction for the Windows Phone platform and to accelerate Microsoft's trajectory to win the hearts and minds of consumers, carriers, device manufacturers, developers and partners," Kim told BGR. "In my experience, there is an already fervent base of Windows Phone supporters out there and they all get it."

Microsoft's recent partnerships haven't been limited to Windows Phone. On Nov. 8, Reuters reported that the company had entered into an advertising alliance with AOL and Yahoo.

However, Microsoft declined to frame its deal as a response to online competitors such as Google. "Other players in the industry are welcome to join us," Rik van der Kooi, corporate vice president of Microsoft Advertising Business Group, told the news service. "This is not in response to anybody in particular."

Under the terms of the agreement, each of the three companies can sell premium display ads belonging to the other two. That will allow the trifecta to more efficiently unload premium advertising inventory, although their competition over advertiser spending and other segments will continue apace. Although Microsoft's product portfolio gives it diverse streams of revenue (in contrast to Google, for example, which depends on advertising for an overwhelming percentage of its bottom line), its recent emphasis on Web and cloud services makes advertising a more prominent concern.

However, Microsoft's week wasn't all product pushes and partnerships: The company also faces a potentially complicated issue related to its Android-licensing push.

For the past several quarters, Microsoft, insisting that Android violates certain key patents, has offered Android device manufacturers a choice: Pay us royalties for each unit you make, or risk a lawsuit. So far, it has locked 10 manufacturers into agreements, but Barnes & Noble, which produces the Android-based Nook e-reader, has opted to battle the matter out in court.

According to Bloomberg, an Oct. 17 letter from Barnes & Noble to the Justice Department describes Microsoft as "embarking on a campaign of asserting trivial and outmoded patents against manufacturers of Android devices" in order to "drive out competition and to deter innovation in mobile devices."

Whatever the outcome of this attempt to launch an antitrust probe, the two companies' patent-infringement battle will begin February 2012.

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