Microsoft spent most of 2011 hard at work on the next iteration of its Windows operating system while also trying to convince us that Windows Phone is a viable alternative to iPhones and Android smartphones. And while reviewers agree that the mobile OS, particularly the Mango update, is a slick and user-friendly piece of software, getting consumers to agree has been an uphill battle.
Perhaps the release of Windows 8, with its Windows Phone-inspired interface, will help boost Redmond's mobile platform, but Windows 8 is not expected to formally launch until late 2012, two years after Windows Phone made its debut. Until then, Microsoft is looking to its partnership with Nokia to help heat things up.
Microsoft might want to bundle a Windows Phone with the Xbox 360; the gaming console continued to fly off shelves this year, selling nearly 1 million devices over the Black Friday weekend alone.
What else kept Steve Ballmer awake at night this year? We take a look back at the year in Microsoft.
Saved By ... Nokia?
About four months after Microsoft unveiled its Windows Phone 7 U.S. lineup, Nokia announced plans to pursue a long-term relationship with Microsoft and make Windows Phone 7 the foundation for its mobile phones. The news created quite the firestorm at the Mobile World Congress (MWC) in Barcelona, with Intel chief Paul Otellini and then-Google CEO Eric Schmidt both expressing disappointment with the deal.
Microsoft spent a reported $1 billion to land Nokia, but it's worth every penny, according to Ballmer. "Nokia's involvement ... will drive volume, will create new innovation and products, and will accelerate the adoption of the Windows Phone platform," he said in an MWC keynote.
The fruits of their combined labor were not revealed until October at Nokia World in London, where the companies showed off their European offerings. The first Nokia-branded Windows device for U.S. consumers—the Lumia 710—will actually be a budget phone for T-Mobile, which PCMag mobile analyst Sascha Segan found to be a disappointing choice.
"This isn't a fatal mistake for either of them, but it's a misstep, a missed chance to grab back some mindshare for two companies that have been on a downswing recently," Segan wrote.
At least the software is impressive. Microsoft officially launched the first major upgrade to its OS, dubbed Mango (see slideshow above), in late September with a slow rollout to Windows Phone users (after a somewhat botched incremental update earlier in the year). "It's easier to use than Android, and in many ways slicker than Apple's iOS," Segan wrote in his full review.
But, he continued, "Microsoft's partners need to deliver better hardware and sales experiences." Charlie Kindel, a 21-year veteran of Microsoft who was Windows Phone's chief developer evangelist for the first year of its life, seemed to agree. In a recent blog post, Kindel said Windows Phone has failed because Microsoft has alienated both phone makers and wireless carriers.
Back in June, PCMag's Sara Yin found that wireless retailers weren't exactly eager to be pushing Windows devices. Can a higher-end Windows Phone-based Nokia smartphone do the trick? Microsoft recently cleaned house; getting rid of Andy Lees as the platform's chief, so stay tuned for next month's Consumer Electronics Show (CES).
Continue Reading: Embracing a 'Reimagined' Windows 8>
Embracing a 'Reimagined' Windows 8
There were reports that Microsoft would unveil a public beta of Windows 8 at CES (in what will be Ballmer's last keynote), but that is apparently not happening until February. Instead, we got a developer preview (see slideshow below) this year, as well as plenty of sneak peeks at how this "reimagined" OS will look once it lands on our PCs next year.
The company kicked off the year by previewing a world in which Windows is capable of running on almost any System on a Chip (SoC), including those from Intel, AMD, and, more radically, ARM-based systems from Qualcomm, Nvidia, and Texas Instruments.
Later in the year, the company showed off a revamped, Windows Phone-inspired interface dubbed Metro and promised features like lightning fast boot times, an app store, fewer auto restarts, and easy app killing, among other things. Before Adobe announced that it would ditch Flash for the mobile Web, meanwhile, Microsoft made headlines by revealing that the Metro version of IE10 will not support plugins—meaning Adobe Flash. Plugin support will remain on the desktop version of the browser.
Windows 8 is about "building on the new technology foundation of Windows, and taking it in new and unexpected directions to reach new hardware, to reach the cloud, to create new developer opportunities," Ballmer said during a keynote presentation at Microsoft's BUILD conference in Anaheim, Calif. in September.
Could that hardware include tablets? HP's Meg Whitman said the company's tablet efforts will be focused on Windows 8 next year (sorry, webOS and TouchPad fans), so stay tuned.
Microsoft Loves Android (Royalties)
In late October, it was revealed that Microsoft will take in $444 million in licensing fees from Android manufacturers this year. While this is only 4 percent of Microsoft's projected 2011 revenue, a Goldman Sachs analyst speculated that Microsoft is aggressively pursuing such deals to help it expand its nascent Windows Phone operating system.
Microsoft holds patents relating to navigation and how websites display content; technology used on the Android platform. In March, the company filed suit against Barnes & Noble for patent infringement regarding the retailer's Android-based Nook e-readers. Google also accused the company of colluding with other tech giants to wage a hostile patent battle against Android, but Microsoft insisted that it offered to jointly purchase the patents and didn't deceive Google.
Earlier in the year, however, Microsoft formally joined the EU antitrust complaint against Google, accusing the search giant of restricting access to YouTube, content from book publishers, advertiser data, and more.
By October Microsoft announced an Android patent agreement with Taiwanese company Compal Electronics, which the software giant claimed gave it a lock on a majority of Android devices.
In other legal news, though, the Supreme Court in June rejected Microsoft's argument in its long-running patent battle against i4i, upholding a $290 million judgment against the software giant.
Skype, Xbox, and the End of Zune?
While Google and Facebook seemingly announced small acquisitions every other week, Microsoft stuck to the big ones, revealing in March that it would acquire Skype for $8.5 billion.
The Xbox also got an overhaul in December, and a tie-up with the cable industry. Verizon FiOS and Comcast customers will soon be able to control their TVs with voice and gestures thanks to Kinect. Microsoft also unveiled a Kinect SDK for PCs, which will allow developers to harness the power of Kinect for new technologies.
Microsoft finally gave up on standalone MP3 players with the demise of the Zune (we think) , showed off the latest Surface, released Office 365 to the public, and urged people to "just say no" to IE6.
What were some of your favorite moments from Microsoft this year? Can Windows Phone compete? Are you excited for Windows 8? Let us know in the comments.
For more, see PCMag's year in review for Apple, Google, Facebook, RIM, and HP.