Partnerships key to Microsoft's phone, entertainment strategy

Microsoft Corp. Chief Executive Steve Ballmer said Monday the software giant was partnering with a broad range of PC and phone makers as it scrambles to generate traction in the expanding consumer and mobile markets.

Microsoft is attempting to outflank both Apple Inc. and Google Inc. in the home entertainment market by turning its installed base of 66 million Xbox game consoles into home entertainment centers through partnerships with telecom giants Verizon Communications Inc. and Comcast Corp.

"Xbox represents the best of our DNA" by blending technologies and services, Ballmer said, singling out the device's hands-free controller for its ease of use."You just say it and Xbox does it," Ballmer said.

Ballmer made the remarks in a keynote speech at the Consumer Electronics Show, the annual gathering of the electronics industry held in Las Vegas.

The Redmond, Wash.-based software company is also trying to catch up in the mobile market, where it has fallen behind Apple's iPhone and Google's Android operating system.

Earlier Monday, Microsoft's smartphone partner, Nokia Corp., introduced a phone that features the Windows Phone 7 operating system and runs at the fastest network speeds available.

Other phone makers are joining Nokia to create a "diversified" selection of phones, he said. There are more than 50,000 mobile apps available for phone users, said Ballmer, a number growing by 300 daily.

Microsoft is also hoping to gain ground in tablet computing, where Apple's iPad is the dominant device. Microsoft is expected to launch a new operating system, Windows 8, that is better suited for low-power, touch-screen computing.

Ballmer took note that Samsung Electronics Co., has already begun developing a Windows 8 tablet to debut in the fall.

But Ballmer made clear that Windows 7, its current operating system, is still growing and will provide a simple upgrade path to Windows 8 when it appears later this year. With more than 1.3 billion Windows PCs in use worldwide, Ballmer said the PC is "the most popular smart device around." Windows 8 would build on that popularity by combining "the best of the PC and the best of the tablet."

Ballmer's speech will likely be his last at the CES Microsoft has already announced it will stop participating in the show, opting instead to introduce products at different venues spread throughout the year.

On Monday, Microsoft shares closed down 1.3% at $27.74, roughly where they traded a decade ago.