11:48 am: Joe Belfiore gives a quick résumé. Windows Media Center, Zune, etc.

11:49 am: Walt: Why so late?

Belfiore: We’ve certainly been doing phones for a long time. A lot changed in the industry with the iPhone. Belfiore says Windows Phone 7 tries to respond to what Apple has done with the iPhone and Google with Android.

11:50 am: Walt: What makes you think you are right up there when you don’t have a lot of things?

Belfiore: (Points to Andy Rubin’s comments that Android is really for tech enthusiasts.) Belfiore says he agrees and that Windows Phone is built more for everyday people, to do the key tasks average users do and do so in an elegant way. “There are certainly some functionality shortfalls, and we are going to work to address them,” he says.

Copy and paste coming in “early 2011,” he reiterates.

As for multitasking, he says some tasks are there, such as background fetch of email and Web pages. Music playing works (but only if you are using Zune).

Walt points out that is where iPhone was when it launched and it got away with it because it was so different from what was on the market.

11:53 am: Belfiore says that some of Windows Phone 7′s features are worth the tradeoffs. As an example, he cites a feature that takes a picture with one click even if the phone is locked.

“We’ve focused on valuable scenarios that are different,” he says. “Some set of users will choose the value of those scenarios.” Belfiore says that Microsoft still aspires to fill the gaps.

Walt: How many have you sold?

Belfiore: We’re not talking about numbers yet.

Walt: Other people do.

Belfiore: We’re four weeks in. At some point we’ll get to that. “It’s just too soon to talk about numbers.”

11:55 am: Talk shifts to Microsoft’s ad campaign that suggests Microsoft’s phone provides at-a-glance information so that people can go back to their “real” life.

“Being late to do this type of experience,” Belfiore says, allowed Microsoft to go back and see what was working and what wasn’t with existing software. “Can people accomplish the most common tasks more quickly?”

That, he says, is how the company was led to the dedicated camera button. Another good example, he says, is Live Tiles–icons that can update with notifications, photos or other data.

11:58 am: He’s talking more about the Live Tiles and the fact that you can have a tile for the people who are most important to you and then contact them in any way you want (text, photos, call, Facebook).

12:00 pm: Walt: How many apps do you have?

Belfiore: I think the marketplace now has between three and four thousand.

12:02 pm: Walt: (Google Android chief) Andy Rubin said that parts of Windows Phone 7 have been around a long time. Is it old or new?

Belfiore: It’s mostly new. It is true we have kernel code that has been around for a long time.

But that’s not a bad thing, he says. The code has been tested, the bugs have been fixed. It’s true on the desktop with Windows. It’s true of Linux as well.

It’s probably true of Android, since it is Linux-based, which is based on Unix.

But a lot is new, such as Silverlight and XNA, in which developers build their apps. “He implied we were encumbered by legacy…I don’t think that’s true.”

12:06 pm: Walt: Why not build your own phone?

Belfiore: Our view is that both Microsoft’s core capabilities and our ability to affect more people would be greater with third parties building diverse hardware.

But, Belfiore says, the company recognized the challenges that come when you don’t make both software and hardware. In the past, Windows Mobile was wide open. This time around, Belfiore says, the company aimed for “the right amount of specified variation in hardware and the right amount of specified sameness.”

12:08 pm: Over time we expect to increase the variation that you see. “We are trying to get the benefits of constraint,” such as better user interface and making things easy for developers while still giving choice to consumers.

12:09 pm: Walt: How long will it take you to again become one of the big players in terms of market share.

Belfiore: It will certainly take some time. He points out that current Windows Phone software runs on only about 10 phones, all high-end devices. Over time, they want to get to lower price points.

Walt: So, how long?

Belfiore: I don’t know how long it will take.

Walt: Months?

Belfiore: It will probably take longer than that.

Walt: A couple of years?

Belfiore: Yeah, maybe.

Walt: Who will be the leaders three years from now?

Belfiore: It’s certainly the case that there are a lot of people building good products. My personal feeling is things won’t change that dramatically that quickly.

I do assume we’ll be in it. The question has to start with whether you have a great product….I think we have that so far. We’ll see how this plays off. BlackBerry has done that in the past. Nokia has done that in the past. We’ll have to see about the future.

12:13 pm: Walt: What about tablets, an idea Microsoft has championed for a long time. But what is the strategy? Seems to be desktop Windows is not a variation of the Windows Phone.

Belfiore: Historically, Microsoft has tried to adapt Windows for other uses (e.g., Media Center, tablet).

So far we’ve continued down that path.

The work we have done on the phone has been focused on very small-screen devices.

Walt: Why not just scale up? Both Apple and Android are working from their phone OSs in doing their tablets.

Belfiore: We’re four weeks out of introducing this new thing. The state of the world today is Windows, is our broad operating system. Runs on same screen size as tablets.

12:15 pm: On to Q&A

Q: How can phone makers really differentiate beyond apps and things like a keyboard and a camera?

Belfiore says the company aims for elegant co-existence. Dictates certain screen sizes, three buttons, four-point capacitive multitouch. “We really want all users to get a great touch-typing experience.”

There’s no upper limit on what they can add in terms of hardware features. For example, a hardware maker could add near field xommunications or some other peripheral not already supported.

12:17 pm: Joshua Topolsky from Engadget asks about tablets again, says last answer a bit of a cop-out. “You can’t possibly be this blind” that Windows 7 isn’t going to work on tablets in the way you want it. Is that really the strategy?

Belfiore hints that the announced strategy focuses on Windows for tablets, but says the company will evaluate that going forward.

Topolsky: Courier?

Belfiore; I wouldn’t count on that.

Last question, from a mobile video calling app. As of today, no native access for developers that need things like native access to the camera.

Belfiore: Individual software makers don’t, but phone makers and operators do, so software makers could work with them. He reiterates the platform is new and the goal is to open things up.

Goal is that all of these creative things can be built. “We’re going to move as fast as possible.”

12:21 pm: Walt: One last question on carrier craplets. There’s a limited number of tiles on Windows Phone 7. On the two phones I saw, some of the space I saw was taken up by carriers.

Belfiore: I really like our approach. I think it is really well considered. When AT&T sells a phone it is AT&T selling the phone. Makes sense for them or hardware makers to be able to showcase their differentiation. Both phone makers and carriers can create tiles, but the user can choose to remove the tile or even uninstall the app.

The latest, from China Economic News, claims the device is being prepped for a February debut at a price somewhere between $799 and $999. Supply chain sources tell the publication the tablet will be built around a 9.6-inch Wintek capacitive touch panel and a mystery processor engineered by P.A. Semi, the boutique semiconductor design company Apple acquired in 2008. DynaPack International Technology will supply batteries, which are said to be “long lasting.”

Finally, the Apple (AAPL) device is said to support the high-speed downlink packet access 3G protocol. Interesting, since this likely means the tablet is destined for AT&T’s (T) network, not Verizon’s (VZ), as had been previously rumored, and lends credence to predictions that Apple will extend AT&T’s iPhone exclusivity deal rather than allow it to lapse.

The latest, from China Economic News, claims the device is being prepped for a February debut at a price somewhere between $799 and $999. Supply chain sources tell the publication the tablet will be built around a 9.6-inch Wintek capacitive touch panel and a mystery processor engineered by P.A. Semi, the boutique semiconductor design company Apple acquired in 2008. DynaPack International Technology will supply batteries, which are said to be “long lasting.”

Finally, the Apple (AAPL) device is said to support the high-speed downlink packet access 3G protocol. Interesting, since this likely means the tablet is destined for AT&T’s (T) network, not Verizon’s (VZ), as had been previously rumored, and lends credence to predictions that Apple will extend AT&T’s iPhone exclusivity deal rather than allow it to lapse.

At issue here are two Elan patents. The first–the company’s so called ’352 or “multi-finger” patent–describes a “multiple fingers contact sensing method for emulating mouse buttons and mouse operations on a touch sensor pad.” The second, or ’353 patent, describes a a “capacitive touchpad integrated with key and handwriting functions.”

“The ’352 patent is a fundamental patent to the detection of multiple fingers on a touchpad or touch-sensitive input device to enable the detection and use of a multi-finger gestures in various applications,” Elan claims in its suit. “Apple has been on notice of its infringement of the ’352 patent since early 2007 and has continued to utilize the ’352 patent invention without authorization. In addition, the Apple iPhone and iPod Touch also permit users to switch the capacitive touchscreen between keyboard and handwriting modes, and thus falls under the scope of the ’353 patent.”

Interesting claims. Especially since Elan issued a statement back in February dismissing the idea that there might be some overlap between its multi-finger patent and Apple’s 949 “multi-touch” patent. From that statement:

Some market experts have expressed that the issue of Apple’s multi-touch patent might adversely affect ELAN’s competitiveness in the multi-touch market in some way. ELAN … feels that the market has over estimated Apple’s 949 patent. The content of the 949 patent is quite broad and widespread as it might seem like an iPhone user’s manual. However, the final scope of claim granted is mainly based on an angle of initial movement of a finger contact with respect to the touch screen display to determined one or two dimensional command. Although the patent comprises of 20 items covering software, firmware, and memory storage, its scope is actually limited within the establishment of the one and two-dimensional commands mechanism. Simply speaking, it emphasizes more on one or two-dimensional commands finger gesture recognition rather than about multi-touch technology. Hence, to make things unmistakably clear, having a multi-touch feature can not be interpreted as an infringement of the 949 patent. 

As to the ongoing reports that Apple’s 949 patent will have an unfavorable blow to ELAN’s competitiveness, ELAN explains that there is actually no conflict between the multi-touch technologies used by ELAN and Apple. None of ELAN’s current customers are using or plan to adopt the patent claim in the future. Therefore, the approval of the 949 patent will have no adverse effect on ELAN’s expanding Multi-Finger™ market. As to the 949 patent’s market value, ELAN feels that the general consumers, as viewed by the major players in the handset industry, are not enthusiastic or feel the need of operating their mobile phones with the “one and two-dimensional” commands.

An odd thing to say two months before filing suit against the company with which you purportedly have no conflict, don’t you think? I wonder what changed…