This is puzzling news, given the popularity of such applications and seemingly overnight growth of a modern day cottage industry around this array of gadgets. Hardware has the ability to create excitement in the short term, but the constant stream of applications with novel and useful implications is what truly builds a loyal following.

Wired explains how this decision differs from the larger mobile tech landscape,  ”Apple’s App Store allows anyone to submit iPhone and iPod Touch apps, although Apple exerts stringent (and often capricious) control over which apps make it to the public. Google’s Android Market is completely open to any developers who wish to offer apps for it. Research in Motion, Verizon, Nokia and Palm have also all opened mobile app stores to compete with Apple’s.”

I can’t help but think that this is an acknowledgment on the part of Microsoft that they weren’t able to compete in the app space with the likes of Apple “so why bother” kind of attitude that is no way to build consumer confidence. I for one, am certainly not buying this particular stance, and as a result, probably not the Zune HD either.

Regardless, of the how the foundation moves forward, the potential benefits for Microsoft are numerous, given that many of the early projects will likely focus on the their product ecosystem, despite claims that the foundation will be platform agnostic. Ultimately, the possibility of delivering a better product to consumers was perhaps too good to pass up, in spite of the financial outlay. Think of it as money invested in R&D with greater leverage. Depending on the spin, this announcement can also go far in bolstering Microsoft’s standing in the eyes of the general public as well, the very same people that could be buying their software down the road.

Bill Hilf, general manager of Windows Server, explained the decision on his blog:

“The perspectives on OSS at Microsoft have evolved to the point where Microsoft’s open source strategy is no longer just locked in a single ‘lab’ on campus – now OSS is an important part of many product groups and strategies across the company. We have become increasingly clear on where we work with open source – development methodologies, projects, partners, products and communities – and where our products compete with commercial open source companies or platforms. Today, there are engineering and business leaders across the company, myself included, looking at how to drive interoperability for customers and as a lever for new growth.”

[image via schoschie]

The NY Times points to the current landscape, where Microsoft and Apple have recently upgraded their entries, Google has introduced Chrome and “browser-lite” offered by Mozilla has captured 23 percent market share. Add to this already crowded field, a new venture by start-up RockMelt – backed by Netscape founder Marc Andreessen – that while still in the early stages, is rumored to have implications for engaging with social media platforms, and the battle lines are being redrawn.

With the increasing mobility and connectedness offered by new technologies, the web and not the computer is increasingly becoming our access point to work and play, while the internet is simultaneously being seen less as a cohesive whole as it is deconstructed into dynamic pages and applications for performing specific tasks. Which is to say, that the browser is the gateway to controlling and shaping that user experience and there’s plenty of room for  innovation to keep pace with this evolution.

The biggest challenge remains distribution, but as we’ve seen time and again, develop a compelling enough product and your audience will find you, particularly in the fluid world of online technology.

[image via R.P. Piper]

As Fast Company reports, the industry will “most probably see Office productivity apps being included on cellphones made by Nokia, which is the world’s largest maker of cellphones, albeit not necessarily the world’s hottest-selling smartphone maker.” RIM currently holds that distinction.

Microsoft plans to implement its new Mobile Office software in new Nokia smartphones, a move reminiscent of the particulars within the fine print of the Yahoo! agreement. Under that contract, Microsoft’s new Bing search engine would power all Yahoo searches, in exchange for Yahoo! keeping 88% of the ad revenue generated on those searches.

This announcement sheds further light on Microsoft’s new strategy in the technology market. Rather than trying to compete head-to-head with the leader in each specific technology sector, the company is attempting to leverage its software within the framework of already established brands. Arguably a blueprint for survival, given Microsoft’s well publicized losses during the recession.

The partnership could also be viewed as a preemptive strike on Google’s expansion into new sectors. According to the Financial Times, “Google’s Android operating system for smartphones is gaining ground, and giving the US technology company the chance to put its web-based software on handsets.” This would loom large on Microsoft’s bottom line.

RIM’s success in the smartphone market has been “partly because the Canadian handset maker’s Blackberry devices have user-friendly e-mail.” But with Microsoft’s Mobile Office platform, Nokia phones – which now operate with Symbian operating systems – will be able to perform word processing and spreadsheet functions. This fact alone should make the combination an appealing option within corporate space.

Smartphones are the fastest growing section of the mobile phone market, and have proved to be resilient in the face of economic trouble. In fact, smartphones are “the one part of the mobile phone market that continues to grow in the recession. Mobile phone sales fell 6.1 per cent in the three months to June 30, to 286.1m units, according to figures released on Wednesday by Gartner, the research firm. But smartphone sales increased 27 per cent to 41m units.”

Only time will tell how Microsoft’s new partnering strategy works to combat Google’s rapid rise to the top of the technology heap, but it’s not unlikely that there will be more partnerships in the future. It will be interesting to see if these recent developments impact Google’s long term plans or if the juggernaut will simply stay on course.

[image via Tjeerd]

The New York Times reports that the split occurred under relatively friendly terms, and “Apple praised Mr. Schmidt for his work. But the company’s chief executive, Steven P. Jobs, said in a statement that Mr. Schmidt’s position would have been ’significantly diminished’ because he would have been forced to recuse himself from more of the meetings as Google and Apple began to compete head to head.”

This announcement serves to further complicate the race for top dog on the web, particularly given the power grab made by Microsoft and Yahoo! last week to regain ground in the search market. Google followed Schmidt’s announcement with news it would be starting a massive billboard advertising campaign in the major markets of Boston, Chicago, New York, and San Fransisco in order to combat fears that Microsoft’s new deal with Yahoo! would adversely affect the industry leader’s current dominance.

Even though conventional roadside billboards may seem anathema to the Google ethos given the almost esoteric nature of the format, it’s clear that the move will ultimately support the company’s bid to break into the operating system market long though of as a duopoly. According to Fast Company, the billboards, located next to high trafficked commuter routes, will “update every day for a month, and as the days go by it’ll reveal more and more about the concept of “going Google.”

And although Eric Schmidt downplayed the implications of his departure from the board of Apple, “clearly Google is confident enough in its software that it sees it as a real, working, reliable, solid and cheaper alternative to the business production solutions that MS has been peddling for decades,” it’s hard to ignore the obvious implications, namely, Google pitting its prospects against those of its former partner-in-crime.

Needless to say, with the current reordering at the top of the heap, it appears like the battle for web supremacy will continue to heat up, a fact that should lead to some interesting innovations as these companies drive each other and attempt to take hold of greater market share.

One reason for the fall in sales is the increased popularity of the Netbook. These small, portable laptops geared for internet use represent a major shift in marketplace. While Netbook sales have been a rare bright spot for Microsoft thus far, accounting for 11% of PC sales, the company makes far less money on the operating systems that are sold with these machines.

Another factor in the quarterly decline was an “upgrade guarantee that allows PC buyers to switch to Windows 7 when it goes on sale in October” essentially for free. And while this move may be seen as consumer-friendly, it won’t do much for Microsoft’s bottom line.

One key to Microsoft’s recovery, will have to be business sales as opposed to the individual consumer market. As the New York Times reports, “Microsoft makes more money from versions of Windows tied to business computers than it does on cheaper machines aimed at consumers. If businesses start buying again, Microsoft should benefit from higher overall sales and rising profits.”

And while Microsoft isn’t seeking a bailout of its own, it might have to rely on stimulus money, albeit indirectly, to help pull out of its current tailspin. Once lending frees up in the United States and the stimulus money aimed at upgrading schools with computer technology passes through the system, there is no doubt that Microsoft will benefit as a result.

Still, with the company’s lowest earnings in almost 23 years, Microsoft can’t rely on the fickle market alone for help, the company will need to look within for innovations that will ensure that it remains the industry’s trendsetter.