Apple App Store Fight, Muglia Departure Marked Microsoft Week

Microsoft's week involved the announced departure of one high-ranking executive, and a brewing fight between the company and Apple over the term "app store."

Microsoft's week saw one major executive departure and several small battles with rivals in the cloud and smartphone space, both of which could be harbingers of larger things to come.

On Jan. 10, Microsoft CEO Steve Ballmer sent a companywide e-mail to the effect that Bob Muglia, president of the company's Server and Tools Business, would depart his post this summer. "While Windows and Office are household words, our Server and Tools Business has quietly and steadily grown to be the unquestioned leader in server computing," Ballmer wrote. "We are now ready to build on our success and move forward into the era of cloud computing."

Given that evolution, Ballmer continued, "now is the time to put new leadership in place for STB." Muglia will apparently continue to run the division until summer, while his soon-to-be-former CEO conducts "an internal and external search for a new leader."

Muglia is just the latest in a raft of executive departures from Microsoft. In October 2010, Ballmer announced the resignation of Chief Software Architect Ray Ozzie, who had helped shape the company's cloud strategy.

"The CSA role was unique, and I won't refill the role after Ray's departure," Ballmer wrote in an Oct. 18 e-mail to the company. "Following the natural transition time with his teams, but before he retires from Microsoft, Ray will be focusing his efforts in the broader area of entertainment where Microsoft has many ongoing investments."

And in September 2010, Microsoft Business Division President Stephen Elop stepped down to take the CEO reins at Nokia. That followed a shakeup earlier in the year that saw the simultaneous departures of Robbie Bach, president of Microsoft's Entertainment & Devices Division, and J Allard, that unit's senior vice president of design and development.

The executive departures have led some outside analysts and pundits to declare a Microsoft "brain drain," but it could also be symptomatic of Ballmer trying to reorganize the company's executive suite in a way he sees fit. Although the company continues to draw massive revenues from traditional product lines such as Windows, it has been trying to establish a new market in cloud offerings, as well as revive its fortunes in the smartphone and mobile arena.

Smartphones were another focus of Microsoft this week. On Jan. 10, the company filed a motion for summary judgment with the U.S. Patent and Trademark Office's Trademark Trial and Appeal Board, asking that Apple be denied the right to trademark the term "app store."

"Microsoft opposed Apple's Application Serial No. 77/525433 for APP STORE," reads the filing, "on the grounds that -app store' is generic for retail store services featuring apps and unregistrable for ancillary services such as searching for and downloading apps from such stores."

Microsoft's legal counsel then insists: "The undisputed facts further show that by the combined term -app store' is commonly used in the trade, by the general press, by consumers, by Apple's competitors and even by Apple's founder and CEO Steve Jobs, as the generic name for online stores featuring apps." Therefore, it adds, Apple should be denied an exclusive lock on the name.

Microsoft's recently released Windows Phone 7 boasts an online marketplace of 5,500 apps and growing. However, despite the company's newfound aggression in the mobile space, it faces an uphill battle against both Apple's iOS and Google Android, which have respectively sold millions of units over the past few years. While Microsoft claims that manufacturers have sold some 1.5 million Windows Phone 7 units to retailers, it remains unclear how many of those devices are in the hands of consumers.

Microsoft is planning a series of software updates for Windows Phone 7 over the next few months, including one that reportedly closes a loophole allowing owners to unlock their devices. That bit of news came this week from the developer team that created such an unlocking application, ostensibly to enable the downloading of "homebrew" applications that would otherwise never appear on Microsoft's applications Marketplace.

"Although this has been subtly communicated before, we'd like to reiterate Microsoft has informed us the -coding error' used in the ChevronWP7 unlocker will no longer work after the next Windows Phone 7 update (officially announced at CES 2011," the ChevronWP7 team wrote in a Jan. 12 posting on their official blog.

Inevitably, Microsoft had become very interested in ChevronWP7's development, although it seemed to take a more proactive approach than the usual "cease and desist" orders. "Earlier today, we were contacted by Brandon Watson, director of developer experience for Windows Phone 7, to discuss the ChevronWP7 unlocking tool," the developers wrote in a Dec. 1 posting. "Through this discussion, we established a mutual understanding of our intent to enable homebrew opportunities and to open the Windows Phone 7 platform for broader access to developers and users."

Microsoft's other Windows Phone 7 updates will include cut-and-paste functionality and, supposedly, significant performance improvements when loading and switching between applications. The company is also reportedly investigating claims of a Windows Phone 7 bug devouring users' data, even when not running apps or cruising the Web, but the number of devices potentially affected remains unclear.