HP, Nokia, Apple Deals and Battles Marked Microsoft's Week

Microsoft's week involved a complicated dance with a number of partners and competitors, including Hewlett-Packard, Apple and Nokia.

It proved to be a big week for Microsoft-not because of any product rollouts or software updates, but because of its partners and rivals.

Or rather, make that partners that will become rivals.

A March 9 Bloomberg report detailed Hewlett-Packard's alleged plans to port its recently acquired webOS operating system onto laptops and desktops, with CEO Leo Apotheker quoted as saying the move will create a "massive platform." HP computers will apparently run webOS alongside Windows.

HP inherited webOS when it purchased Palm for $1.2 billion in 2010. Although Palm had limited the operating system's use to smartphones, HP evidently has a much more sweeping plan: In addition to reviving and expanding on Palm's original line of mobile devices, the manufacturer is planning a tablet and, now, laptops and desktops that all leverage webOS.

Given HP's prime position as a Microsoft OEM, its embrace of a new operating system spells potential trouble for Redmond as it seeks to maintain the viability of its various business lines. Despite Microsoft's aggressive push into new areas such as the cloud and consumer smartphones, legacy products such as Windows continue to provide the bulk of the company's revenue.

That being said, HP faces a long slog in making webOS a significant presence in the OS market. According to the latest Net Applications data, market share across all versions of the Windows franchise stands at 89.69 percent, followed by Apple at 5.19 percent. In addition, Google plans on launching a Chrome OS that will also compete for a piece of the market pie.

Whether HP can carve its own space from those competitors, its webOS strategy is likely to antagonize Microsoft, at least according to some analysts.

"I have little doubt this further soured the relationship between HP and Microsoft, who likely wasn't given any heads up on this and has undoubtedly had to explain it to board members, financial analysts and a number of customers by now," Rob Enderle, principal analyst of the Enderle Group, wrote in a March 10 e-mail to eWEEK. "HP remains Microsoft's biggest seller of Windows PCs, and anything they can do to weaken the franchise-and this does that on paper-is a problem for them."

HP's webOS plans for desktops and laptops supposedly go into effect in early 2012.

Outside of the traditional desktop and notebook market, Microsoft continues to advance its strategy in smartphones, where it hopes to take a little market share of its own from the Apple iPhone and Google Android. Earlier this week, reports leaked that Nokia's agreement to use Windows Phone 7 as its primary smartphone platform will cost Microsoft roughly $1 billion over five years.

In return, Nokia apparently plans on paying Microsoft a license fee for every copy of Windows Phone 7 it installs on a smartphone. As detailed by Nokia's publicly released Form 20-F 2010 report, though, the partnership also carries substantial risks.

"If we fail to finalize our partnership with Microsoft or the benefits of that partnership do not materialize as expected, we will have limited our options and more competitive alternatives may not be available to us in a timely manner, if at all," reads one section of the report. "Our expected transition to the Windows Phone platform may prove to be too long to compete in the smartphone market longer term."

With those and other uncertainties in mind, Microsoft and Nokia are working to put Windows Phone 7 devices on the market within the next few years. In the meantime, Microsoft continues in its quest to encourage mobile developers to create apps for the platform; this week, it adjusted its policies for those developers, including a raised limit in the number of zero-fee certifications that can be performed for free apps, from five to 100.

Microsoft is making other tweaks to its policies, including switching from mandatory to an optional one that governed the inclusion of contact information for app support. The company claims its Windows Phone 7 ecosystem has grown to 9,000 apps, with a base of 32,000 developers.

On the consumer side of the smartphone equation, Microsoft also announced that its next major Windows Phone 7 update will be delayed until the second half of March.

"After careful consultation with the team and our many partners, we've decided to briefly hold the March update in order to ensure the update process meets our standards and that of our customers," a Microsoft spokesperson wrote in a March 10 e-mail to eWEEK. The update will include cut-and-paste functionality, as well as faster app loading.

In February, Microsoft introduced a Windows Phone 7 update designed to help future updates. Within a day of that update's rollout, however, a small portion of users began complaining it stalled their smartphones. Microsoft employed some hefty damage control (and some engineering fixes) to deal with the issue, and seems extra-cautious about the next update proceeding as planned.

"I've decided to take some extra time to ensure the update process meets our standards, your standards, and the standards of our partners," Eric Hautala, Microsoft's general manager of Customer Experience Engineering, wrote in a March 10 posting on the Windows Phone Blog. "This short pause should in no way impact the timing of future updates, including the one announced recently at Mobile World Congress featuring multitasking, a Twitter feature, and a new HTML5-friendly version of Internet Explorer Mobile."

Speaking of smartphones, Microsoft decided on a rather unique legal argument in its attempts to deny Apple the trademark to the term "app store."

Having filed a legal claim to deny Apple the trademark, Microsoft is now arguing that Apple's counter-filing-which claims Microsoft's arguments and evidence failed-should be tossed out because the typeface is too small and page count too high.

"Apple's response brief is 31 pages, including the table of contents and table of authorities, and on information and brief, is printed in less than 11 point font," reads Microsoft's Motion to Strike, filed March 8 with the U.S. Patent and Trademark Office's Trial and Appeal Board. "Under the rules, Apple's brief cannot exceed 25 pages in its entirety, including the table of content and table of authorities, and must be printed in at least 11 point font."

Apple will almost certainly file a new brief, meaning this particular battle is far from over. Whatever the outcome, though, Microsoft can take heart in having beaten Apple in at least one area: Kinect, its hands-free controller for the Xbox 260, is now the world's fastest-selling consumer electronics device, according to Guinness World Records-beating out both the iPhone and iPad.