Microsoft brings phone software closer to Windows

1 of 7. Joe Belfiore, corporate vice president of Microsoft, introduces the Windows Phone 8 mobile operating system in San Francisco, California, June 20, 2012.

Credit: Reuters/Noah Berger

By Bill Rigby

SEATTLE | Wed Jun 20, 2012 5:48pm EDT

SEATTLE (Reuters) - Microsoft Corp's new phone software will be built on the same core as its new upcoming PC and tablet operating system, bringing the company one step closer to unifying its Windows franchise across a full range of screens that are revolutionizing computing.

The world's largest software company, which is running to keep up with Apple Inc's iPhone and Google Inc's Android devices, said the common core means customers will have a greater choice of phones and applications, and be able to switch between multiple machines more easily.

The move follows the launch of the Surface tablet on Monday, Microsoft's effort to join the fast-growing mobile computing market and to tackle Apple's iPad head on.

At an event in San Francisco on Wednesday, Microsoft officially announced its new phone software, called Windows Phone 8, and said phones running the software would hit the market this autumn.

The new phones - made by handset makers Nokia, Samsung Electronics, HTC Corp and Huawei on Qualcomm dual-core chips - will feature voice commands, Skype calling, near-field communication (NFC) for wireless transactions and built-in maps for GPS directions.

Microsoft's voice recognition feature goes beyond Apple's rival Siri service by allowing users to issue commands to apps, not just the phone's core operating system.

The new software will support NFC transactions - in which the user taps a reader to make a purchase - but Microsoft is leaving it to independent software makers to write the actual applications controlling the process, meaning it will not be a direct competitor to the Google Wallet service for Android phones.

Microsoft's new phones will have an updated, customizable start screen in Microsoft's new 'Metro' style, which centers on touchable 'tiles', or colorful squares, representing people, applications and services which update in real time, for example showing Facebook posts or new email.

The Metro style is also the interface for Microsoft's Windows 8 operating system - designed to run on both tablets and traditional PCs - which Microsoft is expected to launch around October.

The success of the phones partly depends on the marketing support they get from carriers. No. 1 U.S. mobile operator Verizon Wireless said in April it expects to have Windows Phone 8 devices in time for the holiday shopping season as it wants a strong competitor to Apple's iPhone and Google Inc's Android.

No. 2 U.S. mobile operator AT&T and No. 4 T-Mobile USA said they plan to carry Windows Phone 8 smartphones later this year. No. 3 U.S. operator Sprint declined to comment.

APP DEARTH

Microsoft's Windows phones have been well reviewed but have not caught on in the market, partly due to the fact that there are only 100,000 or so apps available, compared to 500,000 or so for both Apple and Android devices.

Microsoft is hoping that a common core between its PC and phone software will make it easier for developers to create applications for both, with minimal adjustments.

The company said current devices, which run on Windows Phone 7.5, will not be able to update to Windows Phone 8. Windows Phone 7.5 users will be offered an update that includes the new software's start screen but excludes other features. That could dampen sales of Windows Phone 7.5 devices for the next few months until the new crop of phones appears in stores.

The Redmond, Washington-based company has invested billions of dollars in phones - including a deal with Nokia to use its software - in an attempt to break into the market.

So far it has had little impact, capturing only 2 percent of the world's smartphone market last quarter, according to tech research firm Gartner. Google's Android leads the market with 56 percent, followed by Apple with 23 percent.

Microsoft shares closed up 23 cents at $30.93 on Nasdaq.

(Additional reporting By Sinead Carew in New York; Editing By Leslie Gevirtz, M.D. Golan and Richard Chang)

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Dutch court orders Apple to pay Samsung damages over patent

An employee of South Korean mobile carrier KT holds a Samsung Electronics' Galaxy Tab 10.1 tablet (R) and Apple Inc's iPad tablet as he poses for photos at a registration desk at KT's headquarters in Seoul August 10, 2011.

Credit: Reuters/Jo Yong-Hak

AMSTERDAM | Wed Jun 20, 2012 3:27pm EDT

AMSTERDAM (Reuters) - A Dutch court ordered Apple Inc to pay damages to Samsung Electronics Co Ltd over a patent violation in the Netherlands, the latest twist in the global legal battle waged by the two rival phone and computer makers.

Apple and Samsung have been suing each other in about a dozen countries for the last few years as they compete globally for consumers in the fast-growing markets for smart phones and tablet computers.

The U.S. company has accused Samsung of "slavishly" copying the iPhone and iPad tablet through products that run on Google's Android software. The Korean firm has counter-sued with claims accusing Apple of infringing its patents.

A court in The Hague ruled Apple had violated a Samsung patent used in some of Apple's phones and tablet computers to connect to the Internet, and said damages should be based on certain iPhone and iPad sales in the Netherlands.

The violation applies to iPhone 3G, 3GS, and 4 and iPad 1 and 2, the court said.

Damages should be based on Dutch sales figures since August 4, 2010, which the court said was the date when Apple could have known it was violating Samsung's patent.

A Samsung spokeswoman said she did not know whether the ruling had any international implications, nor did she know how much money Samsung would ask for.

An Apple spokesman had no immediate comment.

The Dutch court dismissed three other patent infringements claimed by Samsung.

Apple has a complex relationship with Samsung, a conglomerate that makes computer chips, Galaxy smartphones and televisions.

While Samsung's smartphones and tablet computers run on Android and compete with Apple's products, Samsung is also a key components supplier to Apple.

(Reporting by Gilbert Kreijger and Bart Meijer; Editing by David Holmes)

(The photo attached to this story earlier has been removed as it was not related to the Dutch court order)

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Apple fined in Australia for misleading iPad advertising

A man waiting to buy a new iPad tablet uses his laptop as he queues in front of an Apple store in Sydney March 16, 2012.

Credit: Reuters/Tim Wimborne

MELBOURNE | Wed Jun 20, 2012 10:20pm EDT

MELBOURNE (Reuters) - Apple Inc was fined A$2.25 million ($2.29 million) by an Australian court on Thursday for misleading advertising of its latest iPad.

The Australian Competition and Consumer Commission (ACCC) took legal action against Apple in March, after the computer and gadgets maker rolled out the first wave of new iPad tablets in the Australian market.

The competition watchdog accused Apple of misleading customers with the description of its new iPad, which said it was compatible with a 4G mobile data network when it was not.

The court determined Apple had implied "that an iPad with WiFi + 4G could connect directly to the Telstra LTE mobile data network in Australia, which it could not do," according to the verdict emailed to Reuters by the regulator.

Apple "engaged in conduct that was liable to mislead the public," it said.

A spokeswoman for Apple in Sydney could not be reached immediately for comment on Thursday. Apple has already promised to email all buyers of its new iPad in Australia to offer them a refund and agreed to post warnings that its new iPad "is not compatible with current Australian 4G LTE networks and WiMAX networks."

Telstra Corp's network operates on a different frequency to the 4G on Apple's new iPad.

Apple rolled out the first wave of new iPad tablets on March 16. ($1 = 0.9815 Australian dollars)

(Reporting by Miranda Maxwell; Editing by Muralikumar Anantharaman)

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Yahoo, Facebook seek more time for settlement talks

The loading screen of the Facebook application on a mobile phone is seen in this photo illustration taken in Lavigny May 16, 2012.

Credit: Reuters/Valentin Flauraud

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Analysis: With Siri and new alliances, Apple takes on Google search

An Apple logo is seen at the Apple Worldwide Developers Conference 2012 in San Francisco, California June 11, 2012.

Credit: Reuters/Stephen Lam

By Poornima Gupta

SAN FRANCISCO | Thu Jun 21, 2012 12:08am EDT

SAN FRANCISCO (Reuters) - When Apple Inc sends out its coveted invitations to major events, one CEO has always been making the guest list of late: Jeremy Stoppelman.

The co-founder and chief executive officer of consumer review website Yelp Inc has never taken the stage at these gatherings, but his company has become an important weapon in Apple's arsenal as it steps up its assault on ally-turned-rival Google Inc.

Yelp and a handful of other major consumer content sites, including movie reviewer Rotten Tomatoes and restaurant reservation service OpenTable, will be helping to power Apple's Siri, the voice-activated iPhone personal assistant, in the new mobile operating system iOS6.

The relationship between Apple and Yelp illustrates the power struggle over how people find what they are looking for on the Internet. Much more than just a clever feature, Siri is emerging as a key tool for what some in the industry call "casual search" - quickly finding routine information such as a restaurant location.

This can bypass Google and other traditional search engines. That serves the interests of Apple, which sees an opportunity to muscle in on its rival's core business and build related advertising revenue.

Siri is also a potential lifeline for Yelp and other content companies, which have found themselves competing with Google.

"Google is a direct competitor to Yelp, and I am sure Yelp is aware of that," said Larry Cornett, founder of product strategy firm Brilliant Forge and former head of consumer products at Yahoo Inc. Yelp, which depends a lot on Google for traffic, will probably be "ecstatic" about the direct traffic it will get through Apple's upcoming version of Siri.

Google still reigns supreme in search, loved by consumers for its relevant results and advertisers for its reach. Deep-pocketed rivals, particularly Microsoft Corp with its Bing search engine, have tried in vain for years to reduce Google's dominance.

Rather than compete with Google on keyword search - which would mean battling algorithms refined by the millions of searches performed every day - Apple is taking a different tack by focusing on a subset of the search universe that users are mostly likely to scour while they are out and about.

That includes restaurants, movies, sports, business listings, maps and locations - where quick, digestible bite-sized results are desired, rather than the more involved research that users perform with Google. The increasing use of mobile devices for accessing the Internet only plays into this trend.

Advertisers value these searches, which are closely linked to location, time and intent, said David Tennenhouse, venture capitalist with New Venture Partners and former CEO of A9.com, the search unit of Amazon.com Inc.

"You can think of this as cream-skimming," Tennenhouse said. "Can I skim off some of the most valuable searches? There is a huge range of value here."

The stakes are high, said Oren Etzioni, a search and artificial intelligence expert at the University of Washington's computer science department.

"Google is very difficult to dislodge on the desktop," he said, "but mobile search is a very different beast, and the jury is still out on the question of who the ultimate winner in mobile (search) is."

'TRUSTED PERSONAL ASSISTANT'

Apple and Google are increasingly at odds, largely due to the rivalry between the iPhone and Google's Android smartphone software. As the rivalry escalates, Apple is systematically dialing back its reliance on Google services - most recently by announcing it is going into mapping big-time.

Siri is still in a beta or "trial" version, and users have criticized failings such as misinterpreted words, odd results and incomplete data. But Apple is betting that the fast-evolving technology will improve enough over time to spearhead its foray into Google's domain.

Google is still available on the iPhone, and users can even ask Siri specifically to search it for answers. Apple's strategy, however, is to reduce Google's relevance on its devices as it doubles down on the investment in the voice-enabled software, experts said.

The company's goal is to build Siri into a "trusted personal assistant," Tennenhouse said.

"The disintermediation of Google by Apple is really a matter of Apple putting together a front end, which happens to be Siri for now, and linking it directly to the high-frequency searches," said Roger Kay, technology analyst with EndPoint Technologies. "And in doing so, bypass the general search mode and more importantly, bypass Google's advertising pages."

LOCAL IS KING

Marketing research firm eMarketer forecast 30 percent growth in the U.S. search advertising market to $19.5 billion this year from $15 billion in 2011. Google accounts for about three-quarters of that market.

The company has a lesser, but still substantial, hold on the mobile advertising market. That generated $1.45 billion last year, with Google controlling about half, while Apple had 6.4 percent, eMarketer said. It expects the total market to be worth $2.6 billion this year.

Apple devices running the company's iOS operating system are the biggest source of Google's mobile revenue, generating roughly 40 percent of the total, according to Piper Jaffray analyst Gene Munster.

Mobile search has long been focused on local information, such as finding which local stores have discounts or which French restaurant in the area is the best-rated. But no one has yet been able to develop the content fully.

Google signaled its seriousness about the sector when it bought Zagat last year and vowed to make the popular dining ratings authority a cornerstone of its local information offerings. In late 2009, Google was in talks to acquire Yelp for at least $500 million, according to news reports at the time, but no deal resulted.

Yelp is now one of the few websites that is deeply integrated into iOS, featured not only in Siri but also in business listings for Apple's new map service.

Yelp's Stoppelman said the mapping integration was key, as searches are often location-based. He also says the Yelp app on the iPhone can readily integrate user reviews into the search functionality.

"Google just doesn't have that data," he said. "Yelp has the most word of mouth."

But Apple's success in search hinges almost entirely on the success of Siri.

Voice-recognition technology is not new, and users have so far not taken to it in great numbers. Google added this capability in its flagship Web search engine and its Android phones far earlier than Apple, but it is unclear how many people use it.

Whether Siri will be the answer also remains to be seen, New Venture Partners' Tennenhouse said. "The test always is: If you were to take this away from people, will they feel impoverished?"

(Additional reporting by Sarah McBride; Editing by Jonathan Weber, Martin Howell and Lisa Von Ahn)

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Microsoft demurs at Motorola patent settlement offer

A variety of logos hover above the Microsoft booth on the opening day of the International Consumer Electronics Show (CES) in Las Vegas January 10, 2012.

Credit: Reuters/Rick Wilking

SEATTLE | Wed Jun 20, 2012 10:12pm EDT

SEATTLE (Reuters) - Microsoft Corp has brushed off an offer by Motorola, the phone maker bought by Google Inc, to settle patent disputes with Motorola that are threatening to halt imports of Android devices and Xbox game consoles into the United States.

The patents at issue relate to Microsoft technology called ActiveSync, which updates calendars automatically on some Android phones. Microsoft is demanding royalties from all companies using Google's Android system in their devices, and has settled with most major manufacturers except Motorola.

is demanding royalties on some of its own video and wireless technology used in Microsoft's Xbox game console and the Windows operating system.

"While we welcome any good faith settlement effort, it's hard to apply that label to a demand that Microsoft pay royalties to Google far in excess of market rates, that refuses to license all the Microsoft patents infringed by Motorola, and that is promptly leaked to the press," said Horacio Gutierrez, Microsoft's deputy general counsel, in an e-mailed statement.

According to Microsoft, Motorola has offered to pay Microsoft 33 cents for each Android phone using ActiveSync, and asked for a royalty of 2.25 percent on each Xbox and 50 cents per copy of Windows for using its patents.

Last month the International Trade Commission recommended an import ban on infringing Android devices and Xbox consoles unless the patent issues were settled.

Representatives of Motorola and Google did not immediately respond to requests for comment.

(Reporting By Bill Rigby; Editing by Eric Meijer)

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