Microsoft in October entered the smartphone fray when it debuted the much-ballyhooed Windows Phone 7 operating system, designed to compete with Apple's iPhone and Google's Android. Like rival Apple, Microsoft partnered with AT&T in an exclusive agreement, and touted the OS's ease-of-use, speed, and user-friendly interface as differentiators. Hardware vendor partners include HTC, LG, Samsung, and Dell. Microsoft has not disclosed figures, but some reports show the software giant's foray is off to a disappointing start. U.K. retailer MobilesPlease told Electronista that only 3% of its sales are coming from WP7, and Android devices are out-selling WP7 devices 15 to 1. Symbian devices are also out-selling WP7 devices, though at a 3 to 1 ratio.
On November 8 -- the day it became commercially available -- 40,000 consumers purchased WP7 devices in the United States, according to TheStreet.com. That number has not been confirmed by Microsoft.
Microsoft did not completely stray from its roots, launching a new version of Office for both Mac and Windows users. But the company that made millions by developing software the old-fashioned way saw its Windows Azure cloud offering gain traction as clients such as eBay and partners like HP publicly came aboard. A year after it was inked, another partnership--this time with Yahoo--bore fruit, as the once dominant search engine site began using Microsoft's Bing to power its results.
However, Microsoft made some public missteps along the way. Critics were stunned when, less than two months after its heavily promoted debut, the Kin phone line was killed. And many in the industry were saddened to hear that Ray Ozzie, an industry veteran and the developer behind Lotus Notes, planned to retire after five years at Microsoft.
Steve Ballmer, who sent employees a public statement about Ozzie's retirement, hit the news himself when he said he would sell up to 75 million shares by year's end; in fact, he sold 49.3 million, earning more than $1 billion, to be used for diversification and year-end tax planning, according to a statement. Microsoft itself earned $62.48 billion for its financial 2010, ended June 30, compared with $58.44 in the prior year.
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Microsoft moved numbers around, quietly shifting revenues from its Xbox and Kinetic-touting Entertainment and Devices Division to the Windows group. An exclusive InformationWeek analysis of the software developers most recent quarterly SEC filing found Microsoft padded revenues in its Windows, Server & Tools, and Office units, partly by relocating money from other company units. A Microsoft spokesperson denied any misdoings but would provide few details. According to InformationWeek's analysis, the bookkeeping changes could have boosted Windows group sales by as much as $259 million.
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Ray Ozzie, a name almost as synonymous with Microsoft as that of Bill Gates, announced his retirement on Oct. 18, after spending five years at the company -- and a lifetime in the technology industry. Before joining Microsoft in 2005, Ozzie founded Groove Networks in a next-generation collaboration software in 1997, later acquired by Microsoft in 2005. Prior to Groove, Ozzie was a founder and president of Iris Associates, where he created and led the development of Lotus Notes. Before Iris, he contributed to the development of Lotus Symphony and Software Arts' TK!Solver and VisiCalc, and was involved in early distributed operating systems development at Data General Corp. Ozzie was inducted into the Computer Museum Industry Hall of Fame; has received the Institute for Electrical and Electronics Engineers Computer Society's W. Wallace McDowell Award; was honored as a World Economic Forum Technology Pioneer; received an SDForum Visionary Award, and in 2010 he was named as a fellow of the American Academy of Arts & Sciences.
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Gamers -- or, in some cases, their generous parents and grandparents -- hit retailers and online stores en masse, snapping up Microsoft's Kinect for Xbox 360 in the first few weeks of availability. Microsoft sold 1 million in 10 days and the developer said strong demand over the Black Friday weekend propelled sales to more than 2.5 million sensors in its first 25 days, halfway to Microsoft's stated goal of 5 million sensor sales by year-end, said Don Mattrick, president of the Interactive Entertainment Business at Microsoft.
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Two years after its 2008 debut, Windows Azure gained traction in the market. The cloud-based operating system, spearheaded within Microsoft by Ray Ozzie, first was made available to developers. In July 2010, Microsoft announced that eBay had become one of the first customers for Windows Azure. At that time, Microsoft also disclosed the limited production release of the Windows Azure platform appliance, a turnkey cloud platform for large service providers and enterprises to deploy in their own datacenters. eBay planned to incorporate the Windows Azure platform appliance into two of its datacenters, the online auction house said. At the same time, HP and Microsoft revealed a partnership for deploying private clouds. Under the agreement, both companies planned to work together on a complete hardware, software, services, and sourcing solution designed to speed-up clients' move to Windows Azure. Customers could opt to use HP Converge Infrastructure in-house or contract with HP data center hosting services.
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Microsoft played the hokey-pokey this year with Kin, a phone targeted at heavy social networking users. After a much-publicized unveiling by Robbie Bach, then-president of Microsoft's Entertainment and Devices division, the device began selling at Verizon stores in the U.S. in May, only to be discontinued 48 days later because of disappointing sales. Yet in November, Verizon brought back the Kin One and Kin Two. A recent check of Verizon.com found a Kin One, on sale for $119.99, or $19.99 with a two-year contract.
Slideshow: 7 Biggest Microsoft Flops Ever
Microsoft hoped this year enterprise and home office users alike were busy upgrading their application suites with its release of Office -- both Office 2010 for Windows and Mac Office 2011. In October, the software giant began shipping the latest iteration of its business-productivity solution for Mac users. Mac Office 2011, which is backward compatible with Mac Office 2008 and 2004, features collaboration tools that allow users to access files from almost anywhere and work with users around the world, according to Microsoft. The latest edition of its Windows Office Suite, also includes Office Web applications for remote access, enhanced photo-editing tools, data visualization capabilities, and improved Outlook management tools, among others.
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By the end of 2010, Microsoft CEO Steve Ballmer had planned to sell up to 75 million shares of Microsoft stock to help him "gain financial diversification" and aid in his tax planning before the close of the year.
"Even though this is a personal financial matter, I want to be clear about this to avoid any confusion," Ballmer said in a statement, using the same wording as when he last sold stock in 2003. "I am excited about our new products and the potential for our technology to change people's lives, and I remain fully committed to Microsoft and its success."
According to the SEC filings, Ballmer sold 49.3 million Microsoft shares at prices between $26 and $28 per share, earning about $1.3 billion. After that sale, his stock ownership level dropped to 359 million shares, valued at about $9.6 billion at the time.
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Game-players were delighted when developer Bungle Studios and publisher Microsoft in 2010 shipped Halo 3, the continuing saga in the much-vaunted Halo trilogy. It has sold more than 14.5 million games around the world, logging 650 million-plus hours of multi-player action on Microsoft's Xbox LIVE platform, according to Microsoft. Looking to further build upon its success in the gaming arena, in October Microsoft disclosed plans to launch an online PC games marketplace that will make it easier for gamers to download popular Microsoft titles from such franchises as Halo and Gears of War as well as games from other publishers.
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Under the terms of a 2009 agreement, Yahoo turned over online-search promotions to Microsoft's Bing. The partnership followed months of on and off negotiations; at one point Microsoft even offered to acquire Yahoo. Finally, however, the two companies agreed to a deal whereby Yahoo got the right to sell advertisements on some Microsoft sites, plus 88% of ad revenues made on its search engine sites within the first five years of the 10-year pact. In 2010, advertisers, searchers, and Web site publishers saw the results of the partnership, as the integration between the two search engines was completed. While both search engines appear separate, they show the same results as both sites use Bing to generate results.
"This agreement does not include display ads or other areas of our business. In these areas both companies will still compete," said Carol Bartz, Yahoo CEO, at the time of the partnership announcement. "Yahoo! will continue to offer search for Yahoo! properties and users. When people search with us, it will still be prominently Yahoo! branded, as it has always been. At the bottom of the results page it will state' "Powered by Bing.'"