According to sources close to the situation, Intel Capital and Advance Publications will lead a $30 million investment round in Kno, the high-profile student tablet start-up.

In addition to the funding from its venture capital arm, Intel itself will consult with Kno on its tablet design. Kno, which is getting out of the hardware business, will now focus on its software to manage the devices that are aimed at the college market.

Intel will not manufacture tablets either. Instead, its engineers will consult with Kno on power management, graphics, display, systems integration, which it does for a variety of its customers.

Along with Intel Capital and Advance, current investors will also participate in the round, said sources. But Intel Capital and Advance, the owner of the Condé Nast publishing empire, make up a big part of the funding.

Sources said Intel Capital’s investment is $20 million and Advance and others make up the rest of it.

BoomTown reported in February that the much-funded and high-profile Silicon Valley start-up–aimed at making tablet computers focused at students–was considering selling off the entire hardware part of the business.

Sources said Kno execs have recently decided that the quicker-than-expected uptake in tablet production by a multitude of powerful device makers had made its efforts to package a seamless offering less critical.

Instead, the company will now focus on its robust software and services to offer students on the Apple iPad, as well as upcoming tablets based on Google’s Android mobile operating system and others.

The move is a dramatic shift for the company, which had not shipped significant numbers of the touchscreen device as it has long touted.

In fact, Kno said in November that it would ship a $599 and $899 version of the tablet by the end of the year.

The lower price was for its single-screen device, while the clamshell double-screen version was more expensive.

And, although it has been reported no pre-orders were fulfilled, Kno did indeed ship several hundred of them, built by China’s Foxconn, before stopping doing so earlier this year.

Many have been dubious about Kno’s ambitious hardware efforts.

That’s because marketing a new and complex product like the Kno takes a lot of effort and cash, especially since it is an increasingly competitive market for mobile and portable computing products that includes Apple, Microsoft, Hewlett-Packard, Google, Amazon, Dell and many others.

Before this $30 million, Kno has raised another $46 million in funding to add to an earlier $10 million round.

Sources in February said that the Santa Clara, Calif.-based company considering going back out to raise even more.

Its current backers include prominent venture players like Andreessen Horowitz and First Round Capital, along with angel investors Mike Maples and Ron Conway.

Sources said the shift to deliver textbook and other student-related delivery system would be a better path for all that investment money, since Kno has established a wide range of partnerships with colleges and universities.

In addition, Kno co-founder Osman Rashid has a lot of experience in digital education market. He was also the co-founder of Chegg, the textbook rental business that is reportedly aiming for an IPO soon.

BusinessWeek was first to report that Intel Capital was making the investment in Kno, but the post did not mention Advance’s involvement or that Intel itself was licensing the hardware design business from Kno.

Nokia has already announced the key piece of its strategy–a shift to Windows Phone for future smartphones. Now the company is set to talk about the financial implications of that and go through the rest of its strategy, which includes a mix of Symbian and even a dash of MeeGo.

The investor event is scheduled to start shortly and due to run until about 2 pm London time. Mobilized will have live coverage, providing our battery holds out. I’ll try to mention only the high points, however. Mobilized loves numbers, but it is awfully early for a whole lot of financial speak, especially for the U.S. insomniacs tuning in.

12:02 pm: Still waiting for things to get going. But if you really want something to do, we have plenty of earlier coverage, including the press conference and the YouTube video of Microsoft CEO Steve Ballmer and Nokia CEO Stephen Elop, as well as a chat with Elop on how he made his big decision.

12:05 pm: Okay, things are getting going as Elop takes the stage (the same one as the earlier press conference.

12:06 pm: Elop is reviewing things. Lots of talk of both challenges and gems. If you read his memo, or anything else he’s said recently, you have heard this.

Battle of devices to war of ecosystems, etc. Mobilized has this part memorized.

12:09 pm: Smartphone strategy is just one piece.

Reviewing the three alternatives that Elop considered–MeeGo, Android or some partnership with Microsoft.

As for Google, Elop says it is the case there are some advantages for that approach.

“There’s something happening there. There’s no denying that.”

However, Elop says the company was worried it would be late and be just one of many, and was not sure how it could leverage assets like its Navteq location-based services.

“Our sense was differentiation could be a pretty big challenge,” Elop says. “The risk for commoditization would increase dramatically.”

Feels profit would have eventually moved to Google, with handsets becoming a commodity.

“It felt a little bit like giving up and not enough like fighting back,” Elop says.

12:12 pm: As for Microsoft, Elop says both companies are bringing something to the table.

As expected, Elop is characterizing this as more strategic than just taking a license to Windows Phone. Talking about Nokia services like mapping, local advertising and other things that Nokia can bring to the table.

“It’s far more interesting than a simple licensing deal,” Elop says. This was the only strategy that makes it a three horse race with Google and Apple.

Elop says he is convinced that Nokia will be able to differentiate within the Windows Phone ecosystem on a sustainable basis.

12:15 pm: There were some challenges and potential disadvantages, he acknowledges.

Top among these is the fact that Windows Phone 7 is new on the market.

“It’s early,” he says. “Will it succeed?”

12:17 pm: Also, there is the issue of being locked in or a lack of control. Elop does not disclose terms but says the company has flexibility and “substantial control” over the future of the ecosystem.

“This is not your mother’s OEM deal with Microsoft,” Elop says.

12:17 pm: Elop says the deal is at the “term sheet” stage, noting that the companies have yet to sign the “definitive agreement.”

12:18 pm: Already the engineers are working through, and Elop says this deal will allow Nokia to move far faster than it has in recent years.

12:18 pm: He’s also making the cost-saving argument, saying Nokia can focus its investment, which he acknowledges hasn’t been getting the return it should.

Elop earlier acknowledged that the company expects significant cost savings from the move as well as substantial workforce reductions.

“Bottom line: Products that are more competitive,” he says.

12:22 pm: Operators are excited by a third viable option, Elop says.

“A two-horse race is not a satisfactory [situation] for operators,” Elop says.

Elop says that Microsoft-Nokia will be operator-friendly, as compared with Google and Apple.

12:24 pm: Elop talking about differentiation–a key concern of analysts and investors.

Elop talks about Windows Phone as offering differentiation form Apple and Google, but also insisting that Nokia has the assets and business terms it needs to stand out from other Windows Phones. He focuses on camera technologies and “unique relationship.”

Stresses again that this is not a standard handset maker agreement. But he also says that just because Nokia can change lots of things within Windows Phone, doesn’t mean it should.

Nokia, he says, must “resist the temptation to customize just for the sake of customization.”

12:27 pm: Now talking about Symbian. For those that missed it, Elop reiterates this is a transition strategy, but adds that the company still expects to sell 150 million more Symbian devices before that transition is complete.

12:29 pm: Strategy is more than just smartphones. He wants the company to be a leading force in connecting the next billion people to the Internet via phones in emerging markets. “The market for feature phones is pushing down the price curve and that is an opportunity for Nokia.”

Nokia will do incremental work in that area–things like Nokia Money for people that don’t have a bank account or telephone. Another, Nokia Life Tools, helps connect, say, farmers to market information.

This area is still a target for innovation, he says, but it also faces competition from Chinese-made phones based on MediaTek chipsets.

Elop says that the company must also plan for the future so that it can be disruptive down the road. “As they say in Finland, it is time to shoot ahead of the duck,” he says.

That’s where MeeGo comes in–the mobile version of Linux that until recently was seen as Nokia’s future. Nokia said that team will ship a phone later this year and then see where the future is headed.

12:35 pm: Want to point out this New York Times article that said both Google and Microsoft were offering hundreds of millions of dollars in engineering and marketing support in order to woo Nokia.

12:36 pm: Elop now talking about cost cuts, including significant job reductions.

“We are not announcing how many and in what country,” Elop says, but adds that the company wants to move quickly on that front.

He says that he has made changes to the business to ensure speed, including leadership structure changes aimed at ensuring accountability. “If things go well today, I’ll be the CEO.”

Of note, the two of the three business unit leaders are women–Mary McDowell, who will lead lower-end phones, and Jo Harlow, who will head the smartphone business.

12:40 pm: Nokia looking for a new leader for its services and developer division. The acting head is Tero Ojanpera, but he will soon be looking for other opportunities within Nokia, Elop says.

Also of note, Louise Pentland, who is head of the legal and intellectual property unit, is being elevated to the top leadership team.

“We have one of the strongest patent portfolios out there” he says, adding that he would encourage all players to take a license to said patents. (hear that, Apple?)

New leader of North American sales unit to be named in coming days.

“We are creating a different industry,” Elop says in closing his introductory remarks.

12:44 pm: Elop Brings on CFO Timo Ihamuotila to go through the numbers.

12:46 pm: Ihamuotila acknowledged Nokia didn’t meet the targets it had set out to achieve at its last financial analyst day.

“Our execution did not cut it.” he says.

12:49 pm: Ah, Now on to the good stuff. CFO talking financial impact from Microsoft deal. Says should be good over the long term.

Slide shows royalty payments to Microsoft causing lower gross margins, but says sales and marketing support from Microsoft should lower operating expenses.

“We will receive substantial go-to market support from Microsoft,” he says, without giving numbers.

12:52 pm: Ihamuotila talking now about the company’s long-term targets for devices and services period “after the transition period.”

Device sales to grow faster than the market, with operating margins of 10 percent or more–but this is only after the transition period, which the company has said could last this year and next.

Significant uncertainties in this period.

Ihamuotila shows a slide showing Symbian sales slowly giving way to Windows Phone with lower-end mobile phones remaining about half of sales.

12:57 pm: Ihamuotila shows chart of how it expects to cut R&D with the company investing less in services, more in entry-level phones and far less on MeeGo, though still some. The investment in Symbian will be replaced by a far lower investment in Windows Phone R&D. Overall, R&D should be a fraction of what it was.

1:02 pm: Over long term, Ihamuotila says that the Microsoft deal should help significantly boost the company’s Navteq navigation business.

“We think this new strategy is the best way to maximize long-term value, both to our shareholders and to other stakeholders,” Ihamuotila says.

On to Q&A for financial analysts.

1:03 pm: Question on how Nokia will keep employees motivated, something else and when to expect the first Windows Phone.

“Thanks for the one question” Elop quips, before addressing them in turn.

Elop says that the key is on focused innovation so they see the fresh opportunities (at least for the ones who don’t get cut by the large workforce reductions also promised).

He also pointed to his sharply worded memo, which he said was designed to convey the message that “Here is the truth, we’re making decisions and we’re moving forward.”

Won’t give date on first Windows Phone, but says again that the move will allow a substantially faster pace than the company was on with Symbian.

1:07 pm: Elop is asked about some of the challenges with Microsoft and Nokia each responsible for different pieces of software and services, as opposed to Google and Apple, where things are more integrated.

“We wanted to drive operational simplicity,” Elop says, adding that the companies talked about other arrangements, though not a full-on acquisition. The companies, Elop says, decided not to go with the operational complexity of a joint venture.

1:10 pm: Elop says Nokia has opportunities to differentiate from other Windows Phone devices, but adds it is in Nokia’s interest for there to be other strong handset players supporting Windows Phone.

“We’ve got to make Windows Phone successful,” he says.

Nokia’s mapping technology, he says, will benefit rivals like Samsung and HTC. “We’re willing to make those trades,” Elop says.

1:11 pm: Elop is asked why he feels comfortable with a “bet the farm” strategy on Microsoft, a company he clearly knows well.

Elop points out that it was harder to see how Microsoft would rapidly be successful without someone like Nokia.

“But this is now different,” he says, adding that this is now an ecosystem that Microsoft and Nokia are jointly helping to build.

Mapping and local advertising were not part of the ecosystem before the Nokia-Microsoft partnership.

As for impact of the transition, it’s hard to say, Elop says. Symbian is strong in some places where Apple and Google are present today.

1:14 pm: Asked whether Nokia will remain profitable during the transition. “It’s hard to say financially, and I am not going to provide any further specific guidance.”

1:17 pm: Elop won’t say when the first Windows Phone will ship, but lots and lots by next year at various price points.

“We’ll be shipping in volume in 2012,” he says.

1:20 pm: Another two-parter! 1) Why will Symbian be supported if it is transitioning away? 2) Why does Nokia think it will be able to have double-digit operating margins using someone else’s platform?

Elop: They recognize Symbian is key to Nokia being able to transition, but he agrees that consumers will have to want the Symbian phones Nokia builds. CFO also notes that less than half of Symbian phones are sold through carriers.

As for question on margins, CFO says the company has opportunities for higher margins around services and advertising.

1:23 pm: Asked about how the company is confident Windows Phone can get to lower prices, Elop says that was a key consideration, down to which chipsets will be supported, etc.

Between the two companies there was a lot of work to get a high degree of confidence.

“That was a critical evaluation,” he says.

That said, Elop agrees there is a smartphone market below Windows Phone that Nokia will manage with an evolution of today’s Series 30 and Series 40 operating systems.

1:31 pm: Elop: Some of the hardware designs that would have run MeeGo or Symbian will be repurposed for Windows Phone. Some devices may come out with similar models for both Windows Phone and Symbian.

1:32 pm: Question again on who pays whom in Microsoft-Nokia. Is there a lump payment from Microsoft?

Elop doesn’t answer and instead refers to slide that shows opportunities on both sides. Saying value going both ways. As for Microsoft’s payments, “That is a significant part of the conversation,” Elop says.

1:35 pm: Two good questions: Can Windows Phone be put on any current devices? What happens to QT development layer that Nokia bought and had sought to unify developer approach?

Elop: It’s not as simple as plugging in and downloading on to current phones, though some technologies can be repurposed.

QT continues to be the development for Symbian and lone MeeGo device. Also could have a role on low-end devices.

However, Elop says, “We are not proposing a QT on Windows Phone” approach. Adding another development environment could fork the ecosystem, which is not good for Nokia or Windows Phone, he says. Development environment for Windows Phone will be Silverlight and XNA–Microsoft’s current tools.

1:38 pm: Asked about branding, he says in some cases you will see both Microsoft and Nokia brands. Examples could include Nokia Search powered by Bing or Bing maps powered by Nokia, though he says those are examples and not final choices.

1:39 pm: Asking about tablets, questioner points out that Nokia had an early lead in tablets, but Apple “stole the show.”

“We are not announcing today a specific tablet strategy,” he reiterates, saying that Microsoft creates opportunities.

Elop notes that there are rumors of Windows Phone and Windows that could power tablets.

“We could do that,” he says. “We might do that.”

Also an opportunity for Nokia to step back into the game using its own software.

1:41 pm: Elop wrapping up.

“We have set a new course for Nokia,” he says, adding that despite what has been written, Nokia is still an incredibly powerful company, though perhaps not in North America. “Today we are diving forward” he says. “We have a strong partner in Microsoft who is incented as are we in making this successful.”

Investor guy closes by reminding there were forward-looking statements. He’s still going as people leave the room.

COMPLETE COVERAGE:

• Nokia’s Stephen Elop Talks to Mobilized About the Big Microsoft Deal (Video)
• Massive Layoffs Expected at Nokia
• Nokia’s Microsoft Partnership: Does the New Strategy Add Up?
• Live From the Nokia-Microsoft Press Conference: It’s a Windows Phone World After All
• More From Nokia: Forecast Gets Cloudy, Plus Expected Executive Changes
• Nokia-Microsoft: What Steve Ballmer and Stephen Elop Have to Say in Their Joint Letter
• Nokia Confirms Microsoft Partnership With YouTube Video
• R&D Spending: Nokia Vs. Apple Shows Size Doesn’t Matter
• Not Seeing Much Return on That Massive R&D Spend, Are You, Nokia?
• Nokia: Big and Slow

Either way, this canonical categorizing of the multiplicity of slates and e-readers by CEA Chief Economist and Director of Research Shawn DuBravac is pretty stunning. There are more than 100 in all, and they run the gamut from Panasonic’s diminutive 4-inch VieraTablet to Kno’s dual-14-inch-screen device. DuBravac has helpfully broken them out according to OEM, screen size and operating system (note the proliferation of Android tablets). Notably absent: Any data on pricing and availability, which isn’t too suprising since only a portion of the tablets on this list will ever need it, particularly with the iPad 2, Research In Motion’s PlayBook and whatever webOS creations Hewlett-Packard’s Palm division has cooked up headed to market.

Chart and data courtesy Shawn Dubravac

As of last month, Windows 7 was running on 93 percent of new consumer PCs. More interestingly, it’s being sold by 100 percent of Microsoft’s OEM partners–quite a bit more than the 70 percent that picked up Windows Vista during a similar time period. Sort of a startling admission, isn’t it? Thirty percent of the company’s OEM partners turned up their noses at Vista.

In any event, analysts have been predicting that Microsoft will sell 300 million or so Windows 7 licenses by the end of this calendar year. Certainly looks possible.

Great fun to listen to for Apple watchers. But not that meaningful, really–mostly positioning and spin. There was at least one important nugget, though: Apple has a specific shopping list, with some very big-ticket items on it.

Jobs wouldn’t lay those out, of course. But when asked if he planned on spending any of Apple’s $51 billion (!) in cash via a dividend or stock buyback, he explained that he had something else in mind. From my notes, a combination of direct quotes and paraphrase:

“We strongly believe that one or more very strategic opportunities may come along that we’re in unique opportunity to take advantage of because of our cash,” and we want to keep our powder dry “because we feel that there are one or more” opportunities in the future.

M&A guys, start your engines!

The “what will Apple do with all its cash” speculation story is a time-honored tradition–I seem to remember writing one four or five years ago, when Apple had $6 billion or so lying around, and discussing whether it made sense for Jobs to buy a music company like Universal.

But I don’t remember Jobs every signaling his desire to go shopping quite as openly as this before (feel free to correct me in comments if I have this one wrong). Two caveats:

• Jobs is famous for saying one thing and doing…something else. So don’t get too riled up about this.
• Just because Jobs is talking about spending money on “opportunities” doesn’t mean he’s talking about buying a company. He could be talking about big, hairy capital expenditures, like the billion-dollar server farm Apple is finishing up in North Carolina.

Still. It’s hard not to read or hear that quote and not think that he’s thinking about some very big buys. Like what?

A lot of folks will assume that Jobs is talking about buying a big content producer. Music doesn’t make any sense, because there’s little value left in that business. But if Jobs wants to make headway in the TV business, perhaps it makes sense for him to snag a big broadcaster or programmer to give him the leverage he needs with the Comcasts, Viacoms and Time Warners of the world.

Or you could make the same argument for other content makers, like game studios. The biggest one, Electronic Arts, has a market cap of a mere $5.21 billion. Jobs could give ERTS shareholders a hefty premium and still have plenty of walking-around money.

Or perhaps it makes zero sense for Apple to be in the content business, because it’s done just fine not being in the content business to date.

So then what?

Feel free to throw your own guesses in, but I’ll kick off with my own: It’s a company that has yet to compete with or brush up against Apple in any significant way. And it’s one that Apple seems unlikely to be able to move aside, even if it wanted to. And it’s one that’s already competing directly with Google, which has to make Jobs like it even more.

And, if you believe this L.A. Times report, Jobs is already strolling around Palo Alto with its CEO: What do you think of Apple buying Facebook? Discuss….

Earlier

Apple investors who got their first look at the company’s earnings numbers don’t like them–AAPL is trading down seven percent after hours. Let’s see if Apple executives can soothe their concerns during the earnings call.

You can listen in for yourself via this link, or follow along in my liveblog below:

Live Blog

Apple or Apple’s IR company trying some very, very mellow string and piano stuff while we wait.

CFO Peter Oppenheimer kicks off. “Outstanding results” for September quarter. Highest quarterly revenue, earnings.

Mac products and services: 3.9 mm Macs. Record quarter. 27% y/y growth. Double market growth for Q.

IMac, Macbook, Macbook Pro all good. Asia/Pacific performing best.

IPods: 9.1 million.

ITunes revenue more than $1 billion.

IPhone. “Extremely pleased” with 14.4 million unit sales; basically doubled y/y.

$8.6 billion in sales value of iPhones alone.

Heaping praise on iPhone 4 (justified) and stressing iPhone’s move into corporate market, rattling off blue-chip customers.

IPad. “Thrilled” with momentum. “Great enthusiasm” from customers.

65% of Fortune 100 deploying or piloting iPad. Lists some of them.

125 million iOS device sales last month.

200,000 registered iOS developers.

“Very happy” with results of iAd so far.

On to Apple stores. More records here.

Expects to open 40-50 stores next year, 50% of them outside U.S.

IPhone sales mix “better than expected”–boosted overall margin.

$51 billion cash hoard. [Deep, longing sigh from everyone in media, tech business.]

For the year: 5x revenue and 10x earnings compared with five years ago.

“Very enthusiastic” about lineup, “extremely confident” in new product pipeline.

Rare appearance from Steve Jobs!

Had to drop by for first $20 billion quarter.

“We’ve now passed RIM, and I don’t see them catching up to us in the foreseeable future.”

They have to move into software/platform development, and I don’t think they can.

So what about Google?

Apple is activating 275,000 iOS devices per day on average over the past 30 days; peaked at 300k iOS devices some days. 300,000 apps in app store.

Unfortunately, there is no solid data on how many Android handsets sold each quarter.

Google loves to characterize Android as open, Apple as closed. “We find this a bit disingenuous.”

Windows is “open.” But Android is “very fragmented.” OEMs like Motorola install own stuff to make their phones stand out. We don’t do that.

Shout out to “Twitterdeck” ( I think he means Tweetdeck) and their challenges running 100 versions of Android client. “Compare this to iPhone, where there are two versions of the software…to test against.”

Meanwhile, at least four app stores on Android. “This is going to be a mess for both users and developers.”

Apple’s app store has 3x apps compared with Google marketplace.

“Even if Google were right, and the real issue was closed vs. open, it’s important to remember that open systems don’t always win.”

For instance: Microsoft’s [miserable] “PlaysForSure” strategy, RIP.

Google’s “open” argument is a “smokescreen.” Real issue is what’s best for customer–”fragmented vs. integrated.”

Integrated is a huge advantage for us, because it’s better for customers, and better for developers. “We are very committed to the integrated approach no matter how many times Google tries to characterize it as closed.”

Now! On to our tablet competitors:

First of all, only a few credible competitors.

Second, most of them are pushing 7.5″ screen. That means they are just at 45% size of our 10″ screen. “You heard that right….This size isn’t sufficient to create great tablet apps.”

Extolling features of iPad size vs. teeny tiny tablet competitors: They’re “tweeners”–too small to compete with iPad, too big to compete with smartphones.

IPad has 35,000 apps. New crop of tablets will have “near zero.”

Competitors having a hard time coming close to iPad pricing, even with their puny screens. We make our own everything, and this results in an “incredible product, at a great price.” Our competitors will “likely offer less, for more.” They’ll be “DOA. Dead on arrival.”

Questions and Answers

Supply constraints on iPad?

COO Tim Cook: We’ve got a handle on it. And note that we’re expanding distribution in the U.S. and internationally, with more countries to come.

Question about margins I didn’t quite catch.

Oppenheimer: Sold more iPhones than planned, and commodity prices came down, so that helped.

Q for Steve. Please talk about “iPad opportunity.” Size of business, etc., two years or more down the road?

Jobs: “The iPad is clearly going to affect notebook computers. The iPad proves it’s not a question of if, it’s a question of when.” Already seeing “tremendous” interest from education and “much to my surprise, from business.”

“The more time that passes, the more I am convinced that we’ve got a tiger by the tail here.” We’ve trained tens of millions of people on this OS via the iPhone. “I see it as really general purpose, and I see it as very big.”

Could it be the second biggest business after the iPhone?

“I try not to predict, I try to report.” We’re selling more iPads than Macs.

What about Flash? Any update?

“Flash memory? We love flash memory” [hohoho]

A question on iPhone demand, which I missed.

Q: Steve, “You are the tablet market.” Do you see tablet competitors cutting into your market in the same way you cut into RIM’s market? Won’t that fragment the market?

“I have a hard time imagining what those strategies…are.” Pricing won’t work. “Flash hasn’t presented any problem at all; as you know, most video on the Web is now presented in HTML5.” The iTunes store is dominant and “we’re not done” working on stuff for the future.

Q: Smartphones–”Do you see that as a zero-sum game?”

Jobs: As you know, most phones in the world aren’t smartphones. They’ll convert over time, so there will be room for multiple competitors, but “eventually it will turn into a zero-sum game, or close to that.”

Q: For Oppenheimer: Another margins question.

A: We do see a small sequential decline. Higher-than-expected mix of new iPods and new iPads. We’ve been very aggressive on pricing there, and that’s what’s pushing down margins.

Q: Steve, how’s your Apple TV “hobby” coming? And what’s up with streaming media?

Jobs: We don’t talk about unannounced products, but I’m happy to tell you what we know about Apple TV. We have moved to streaming. It’s all streaming. Everything is rented, and/or soon to be streamed from iPad or iPhone.

So far we’ve sold 250,000 new Apple TVs. “I’m thrilled with that.” And with Airplay set up, “it will give people another big reason to buy it.”

Another margin/guidance question. Seems to be the same one repeated each time, with the same answer.

Q for Steve: Key risks for company?

The goal is to make the best devices in the world. “It’s not to be the biggest. As you know, Nokia’s the biggest… but we don’t aspire to be like them.”

Android is the biggest competitor. Outshipped us in June quarter as we transitioned. We’re waiting to find out what happened in this quarter. “I don’t know how we’ll find out” though.

Our approach is to create products that “just work” and “their approach is very different from that.”

Questions for Steve and Tim: Aspirations for iPhone and iPad. In Mac, you didn’t aspire to high market share; in iPod, it was the opposite–you own that market. In the past, Tim you’ve described iPhone business as closer to the iPod model. Steve, you sort of said something different. Please resolve that difference: Biggest, or best?

Jobs: “Nokia makes $50 handsets. We don’t know how to make a great handset for $50.” We want to make “breakthrough, best products,” and “drive costs down” while making them better through “relentless improvement.”

We have a very low share in the phone market. Single digits. And a very high share in tablets. But we don’t think about it that way.

The reason we won’t make a seven-inch tablet isn’t because of price point, “it’s because we don’t think you can make a great tablet with a seven-inch screen.” And as a software company, we think of software first. Developers don’t want to build for all these different platforms and devices, and on this small screen. “It’s not about cost, it’s about value, when you factor in the software.”

Q: Okay, but if the market moves toward lower-functionality smartphones and “dramatically lower price points,” then you’ll cede share, right?

Jobs: “You’re looking at it wrong.” You’re looking at it as a hardware guy who doesn’t really know about software. You assume that software “can come alive on this product that you’re dreaming of. But it won’t” because developers want to build for better products, with faster processors and better screens.

Q: You have about $50 billion in cash. What are you going to do with that? Why not return it to shareholders?

Jobs: “We strongly believe that one or more very strategic opportunities may come along that we’re in unique opportunity to take advantage of because of our cash” and want to keep our powder dry “because we feel that there are one or more” opportunities in the future.

Missing next question about iPhone and iPad penetration into corporate market.

[Market not sold on Apple's story yet, btw: Stock still down 5.84%.]

Question for Oppenheimer. Guess what? It’s about gross margins. Any change in manufacturing, etc? Any color at all?

Oppenheimer: Don’t provide product-specific gross margins. Always trying to lower costs, though. “We were happy” with gross margins for quarter. Down slightly because of product mix, as I’ve said over and over.

Q: Talk about demand from carriers to pick up iPhone 4.

Cook: The pressure I’m feeling is about supply. That’s the problem. At the country level, we have 166 relationships in 89 countries. In many countries, we went to more than one carrier. Latest one of those is Germany.

IPhone 4 in 85 of 89 countries. Will be in all 89 by end of year.

What happens to margins and subsidy when you go nonexclusive?

We don’t give information out on specific markets, but you can see that our ASPs have stayed above $600.

For Steve: Why do you have advantage in price on iPad, as opposed to PC?

Jobs: We engineer so much of it ourselves. Everything from chip to battery to enclosures. We’ve learned so much. We’ve learned a lot, developed a lot of our own components, where competitors have to go through middlemen. “This is a product we’ve been training for for the last decade.”

Call is over. You can hear the whole thing on a podcast later this evening.

That’s what Harry First, the Charles L. Denison Professor of Law at New York University School of Law, told me when I asked him if Adobe’s (ADBE) rumored antitrust complaint against Apple had any legs.

Today, we have the answer to First’s question: No.

According to a comScore (SCOR) survey of 234 million American mobile subscribers age 13 and older, Apple controls just five percent of the mobile phone market in the United States–hardly enough to be considered a monopoly, let alone an abusive one. In fact, Apple (AAPL) doesn’t even rank among the top mobile OEMs, and with a five percent share, it is more than three percent away from Nokia (NOK), its nearest rival. (See tables below; click to enlarge.)

Now, in the smartphone market, the iPhone maker’s market share is more significant. As of February, Apple claimed a 25.4 percent share.

While that was enough to give the company second place in comScore’s smartphone OEM rankings, it pales in comparison with Research in Motion’s (RIMM) 42.1 percent share. It’s also well below the threshold for a monopolization claim, which would seem to suggest that the chances of a possible antitrust investigation against Apple are pretty slim indeed.

As Kenneth Glazer, a partner at K&L Gates and the former deputy director of the Bureau of Competition at the Federal Trade Commission, told The Wall Street Journal last week:

If…Apple has only a 25% share, they’re well below the threshold for a monopolization claim and also below the threshold for an attempted monopolization claim. You’ve got to be at least 40% to be within shouting distance of an attempted monopolization claim. I don’t see how they’re going to be able to prove a monopolization case against Apple if smart phones are the relevant market, unless you can carve out a narrower antitrust market in which Apple has a larger share.

Among mobile phone manufacturers, Samsung narrowly beat out Motorola (MOT) for the top spot with a fraction of a percent more than the 21.9 percent its rival claimed. LG Electronics ranked second with a 21.8 percent market share and Research in Motion (RIMM), and Nokia (NOK) ranked fourth and fifth with dueling 8.3 percent shares. (See tables below; click to enlarge.)

And where does Apple (AAPL) and its iPhone, which seems to have such broad mindshare these days, figure in the U.S. mobile OEM market? Andrew Lipsman, senior director of Industry Analysis at comScore (SCOR), tells me it ranks sixth with a five percent share. (Hear that Adobe?)

Clearly, Apple has some way to go before it cracks the Top 5, but the fact that the company has managed to claim so significant a share of the entire mobile phone market with a single smartphone that’s been available for less than three years is extraordinary.

Why?

After the vicious beating the market has given Palm (PALM) these past few months, the company’s stock–down a gruesome 75 percent since October–already well reflects its woes and the challenges it faces. And it’s still conceivable that the company may end up an acquisition target. So there’s that as well.

“We continue to view Palm as one of the share losers in the high-growth Smartphone segment,” Long wrote. “In our view, the company is too small to compete and the internally developed WebOS operating system is no longer a major differentiator. The end game for Palm is most likely to combine with a large OEM that wants to own its operating system and can leverage its brand and distribution platform.”

FURTHER READING:

• Good Luck Competing on the iPhone’s Home Turf, Palm
• Exercise in Futility? Palm Pre Plus, Pixi Plus Headed to AT&T
• Palm: Pssst. Wanna Buy 1.15 Million Smartphones?
• Palm Pileup: Weak Smartphone Sales and a Gruesome Q4 Forecast
• Could Be Worse, Could Be Raining: Palm’s AT&T Launch Delayed?
• Could WebOS Licensing Be Palm’s Salvation?
• Palm’s Salvation? Less Push, More Pull.
• And if Palm’s Project JumpStart Doesn’t Work Out, There’s Always “Project Defibrillator”
• Double Face-Palm: Analysts React to Palm’s Lowered Guidance
• Time to Start Looking for a Buyer, Palm?
• 2010: Year of the Palm? Maybe Not…
• Analyst: Palm May Be Acquired in the Next Two Years

Ugly times. But what a difference a year makes.

Microsoft (MSFT) just reported earnings for its second fiscal quarter, posting significant gains in sales and profits. Net income for the period rose to $6.66 billion, or 74 cents a share, from $4.17 billion, or 47 cents a share in the same period last year. Meanwhile, revenue rose 14 percent to $19.02 billion. Analysts had been expecting earnings of 59 cents a share, and $17.9 billion in revenue.

“Exceptional demand for Windows 7 led to the positive top-line growth for the company,” chief financial officer Peter Klein said in a statement. “Our continuing commitment to managing costs allowed us to drive earnings performance ahead of the revenue growth.”

The release below. Kara Swisher will be covering Microsoft’s earnings over at BoomTown later this afternoon.

Microsoft Reports Record Second-Quarter Results

REDMOND, Wash., Jan 28, 2010 — Microsoft Corp. today announced record revenue of $19.02 billion for the second quarter ended Dec. 31, 2009, a 14% increase from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $8.51 billion, $6.66 billion and $0.74 per share, which represented increases of 43%, 60% and 57%, respectively, when compared with the prior year period.

These financial results include the recognition of $1.71 billion of deferred revenue, an impact of $0.14 of diluted earnings per share, relating to the Windows 7 Upgrade Option Program and pre-sales of Windows 7 to OEMs and retailers before general availability. Adjusting for the deferred revenue recognition, second-quarter revenue totaled $17.31 billion, and diluted earnings per share totaled $0.60 per share.

“Exceptional demand for Windows 7 led to the positive top-line growth for the company,” said Peter Klein, chief financial officer at Microsoft. “Our continuing commitment to managing costs allowed us to drive earnings performance ahead of the revenue growth.”

Windows 7 and Windows Server 2008 R2 launched globally on October 22 as anticipated. Through the second quarter, Microsoft has sold over 60 million Windows 7 licenses making it the fastest selling operating system in history.

“This is a record quarter for Windows units,” said Kevin Turner, chief operating officer at Microsoft. “We are thrilled by the consumer reception to Windows 7 and by business enthusiasm to adopt Windows 7.”

Business Outlook

Management will discuss second-quarter results and the company’s business outlook on a conference call and webcast at 2:30 p.m. PST (5:30 p.m. EST) today.

In addition, Microsoft offers operating expense guidance of $26.2 billion to $26.5 billion, for the full year ending June 30, 2010.

Well, well, well, that financial imp at Microsoft–CFO Chris Liddell–pulled a fast one on Wall Street and turned in first-quarter earnings that blew away all estimates and even the whisper numbers.

While revenue and net income were down for the third consecutive quarter, they were not as bad as investors had expected.

Perhaps those Microsoft (MSFT) financial predictions were no good, but the results were a strong sign of recovery at the software giant.

BoomTown liveblogged the morning conference call with Liddell, which took place at 7:30 am PT–thanks for the Kiwi-laced wake-up call, Chris!

(You can see the financial slides of the Q1 performance here.)

7:34 am: “It might have been the bottom of the economic reset,” said Liddell in the opening. “I’m very happy.”

Still, Liddell, who has been a glum goose for many quarters now, could not quite do cartwheels, noting that the economy was “still challenging.”

He also still repeated his favorite term for the market, calling it: “The new normal.”

7:38 am: Other investor guy, whose name I always forget (and who is Bill Koefoed, by the way), got on and went through the numbers. He also sounded deeply relieved and noted that it looked pretty good out there.

Liddell returned and said Microsoft was “well-positioned” to exit the econalpyse stronger than competitors.

Not so bad, although he expected personal computer and hardware sales be weak still and was not promising anything.

The online and search and advertising partnership with Yahoo (YHOO) was also on track, said Liddell.

“In summary, I feel great about how we are executing,” said Liddell, who made sure to give credit to “cost discipline.”

It was nowhere near the strong performances of Google (GOOG) and Apple (AAPL) recently, but allowed Microsoft some much needed breathing room.

7:51 am: Question time!

The first was about when the launch of Windows 7 would start bringing home the bacon.

The next was about “channel inventory build,” which was like asking Liddell to be a soothsayer. “Net positive,” he opined.

The third question was about costs from the transition of the Yahoo deal and the contribution.

Costs will up front and there will be a contribution in the “hundreds of millions.”

Next: The future of cost cuts.

“I see that as the journey that never ends,” said Liddell.

Memo to PR head Frank Shaw: Cancel the truckload of caviar for a big honking party in celebration of these results. Stat!

7:58 am: I missed one question, since it was so boring, as was the answer.

Then a good one came about the deployment of Windows in corporate environments and elsewhere.

“All of the feedback we get so far is positive,” said Liddell, not that he is bragging or anything. “The sales in retail, we are expecting to be very good.”

Another cost question, this time about whether more investments are coming in the years ahead.

No ramping back, thank you very much!

The next question was about the impact of netbooks on the bottom line.

Not bad, but not huge, said Liddell.

What about display advertising online? In line with the weaker market, said Liddell, but it should improve.

8:09 am: PC demand? Liddell notes the “robustness” of the PC, which Microsoft has actually been pooh-poohing over many quarters.

Liddell said he saw better days ahead, perhaps because past ones had been weak, especially business PCs. “That can’t continue forever,” he noted.

A question about Europe. “Relatively weak,” said Liddell, while emerging markets were stronger.

“This calendar year is transition to next calendar year,” said Liddell.

A query about Windows 7 revenue recognition, which comes when Microsoft sells to OEMs.

8:14 am: More on OEMs, who are the big buyers of Microsoft’s operating system software.

Next up: Another question about outlook.

“Generally speaking, we are seeing good adoption of our products,” said Liddell, but the true rebound is coming next year.

The last question is about Windows Live.

It’ll get better, but next year, folks!

Translation, if you imagine Liddell channeling “Annie”: The sun’ll come out tomorrow. Bet your bottom dollar that tomorrow, there’ll be sun!

Enjoy this lovely video of the classic song:

Posting fiscal 2010 first-quarter financials before market opening this morning, Microsoft (MSFT) said it earned 40 cents a share on revenue of $12.92 billion.

And while net income per share was down 17 percent from a year earlier thanks to declining revenue in all but one of the company’s businesses, it still bested analysts’ estimates, which called for a profit of 32 cents a share.

And although sales fell for the third consecutive quarter, dropping 14 percent to $12.9 billion, they too topped forecasts of $12.4 billion.

The software giant attributed the performance to strong Windows and Xbox demand and to cost discipline.

Shares in the company spiked more than 10 percent in premarket stock trading.

(You can peruse slides of the financial results here and a liveblog of the conference call here.)

“We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows,” said Chris Liddell, CFO at Microsoft. “We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions.”

Here is the press release on the Q1 results (without performance tables, which you can see here):

Microsoft Reports First-Quarter Results

Windows and Xbox exceed expectations due to strong consumer demand; cost discipline drives earnings per share growth.

REDMOND, Wash.–Oct. 23, 2009–Microsoft Corp. today announced revenue of $12.92 billion for the first quarter ended Sept. 30, 2009, a 14% decline from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $4.48 billion, $3.57 billion and $0.40 per share, which represented declines of 25%, 18% and 17%, respectively, when compared with the prior year period.

These financial results reflect the deferral of $1.47 billion of revenue, an impact of $0.12 of diluted earnings per share, relating to the Windows 7 Upgrade Option program and sales of Windows 7 to OEMs and retailers before general availability. Adding back the deferred revenue, revenue totaled $14.39 billion, a 4% year-over-year decline, and EPS totaled $0.52 per share, an increase of 8% over the same period of the prior year.

“We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows,” said Chris Liddell, chief financial officer at Microsoft. “We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions.”

Windows 7 and Windows Server 2008 R2 launched globally on Oct. 22 as anticipated. Also during October, Microsoft released Microsoft Exchange Server 2010 to manufacturing and in July announced a strategic partnership with Yahoo! Inc. to provide search results for their global properties.

“The worldwide launches of Windows 7, Exchange Server 2010 and Windows Server 2008 R2 are exciting milestones for Microsoft, our partners and customers,” said Kevin Turner, chief operating officer at Microsoft. “We are pleased by the early positive response we are receiving for these products.”

Business Outlook

Microsoft is reducing operating expense guidance to $26.2 billion to $26.5 billion, for the full year ending June 30, 2010.

Management will discuss first-quarter results and the company’s business outlook on a conference call and webcast at 7:30 a.m. PDT (10:30 a.m. EDT) today.

That’s the argument put forth by Piper Jaffray analyst Chris Larsen in a research note to investors Monday. Larsen feels that the cost to Apple (AAPL) of developing a CDMA version of the iPhone for Verizon’s (VZ) network and the subsidies the company might lose by ending its exclusivity deal with AT&T (T) would be a small price to pay for the spike in iPhone sales they would create.

“Although the iPhone is a strong player in the smartphone market, expanding its multi-vendor strategy could allow it to dominate the industry, as it does with the iPod,” Larsen writes. “The U.S. market is the world’s largest smartphone market, but we believe there is a land grab in the U.S. for smartphone share.”

Expanding his argument, Larson adds, “Apple’s exclusivity with AT&T has left the door open for strong competition from competitors, such as Research In Motion’s Blackberries, Palm’s webOS smartphones and Google’s Android operating system on multiple smartphones from OEMs such as Motorola, HTC, Samsung, LG, and others. Making the iPhone available to the other 150+ million subscribers (~2/3s of subscribers) not on AT&T’s network could result in iPod like adoption.”

Keeping the iPhone exclusive–while it might enable Apple to do more innovative things, as COO Tim Cook noted yesterday during the company’s quarterly earnings call–would also give those rival devices and platforms more time to catch up. If Apple really hopes to keep its lead in the U.S. market, it must do away with exclusivity deals, the same way it’s doing away with them abroad.

That’s bad news for AT&T. Because, as I’ve noted here before, a move to nonexclusivity in the U.S. would brutalize the carrier’s subscriber base. Analysts have long said that a material number of AT&T iPhone users would flock to Verizon’s superior network given the chance.

Larsen agrees. “A move to non-exclusivity in the U.S. could have a material impact on the U.S. wireless carriers,” he writes. “AT&T could lose meaningful smartphone share, while we think all the other carriers would gain share. We believe Verizon would be the largest beneficiary of non-exclusivity and the development of a CDMA iPhone.”

Continuing, Larson explains, “With 35% of AT&T’s iPhone sales coming from new customers, we feel it is reasonable to assume the company’s total iPhone sales could decline by 30% or more and that Verizon could pick up the bulk of this lost share (why switch to AT&T for iPhone if you haven’t left by now and the device is now available through your carrier; Verizon’s network quality could be a reason to switch from AT&T).”

Which is interesting since Sewell has been quarterbacking Intel’s (INTC) fight against antitrust allegations at home and abroad since, well, since they were first brought against the company in Japan. And Korea. And the United States, and now the European Union as well.

So to hear he’s leaving today after 14 years with the company with no explanation of why or where he’s headed…

to hear there’s no one lined up to take his place (Suzan Miller, currently deputy general counsel, will become interim general counsel until a replacement is found)…

and to hear this at a time when the company is grappling with some of the most important legal issues it’s ever faced…

when the U.S. Federal Trade Commission and the European Commission are both probing Intel’s alleged antitrust violations in the microprocessor market…

when the company is just six months away from going to trial with rival chip maker AMD (AMD), which accuses Intel of using illegal inducements to dissuade OEMs from buying AMD processors and “knee-capping” those who did….

Well, it’s all a bit odd, isn’t it?

I mean Sewell’s Intel bio is already returning “Page Not Found” errors (see below; click image to enlarge).

What’s going on in Intel legal? Reached for comment, the company didn’t have much of an answer to the question other than to say that Sewell is leaving of his own accord and it’s sad to see him go. “All I can say is that Bruce has decided voluntarily to leave the company,” Intel spokesman Chuck Molloy told me. “We are not talking about his plans. He was not forced to leave and we were surprised by his decision.”

UPDATE: Sewell’s leaving Intel to become General Counsel at Apple.

“Microsoft has proposed a consumer ballot screen as a solution to the pending antitrust case,” the Commission said in a press release. “The proposal recognizes the principle that consumers should be given a free and effective choice of Web browser, and sets out a means–the ballot screen–by which Microsoft believes that can be achieved.”

Microsoft (MSFT), for its part, described the move as “a big step forward in addressing a decade of legal issues and would be good news for European consumers and our partners in the industry.”

Below, the EC’s statement in full.

PREVIOUSLY:

• Brussels Palace of Justice Apparently Has Only Single Courtroom
• Great Move, EC. Now We Have to Download IE Ourselves…
• If Windows Didn’t Ship With IE, How Would You Download Firefox?
• Microsoft’s Browser Move to Make Windows Even More Annoying
• European Commission Announces Microsoft Antitrust Fine Ultimate Edition™

MEMO/09/352

Brussels, 24th July 2009

Antitrust: Commission welcomes new Microsoft proposals on Microsoft Internet Explorer and Interoperability

The European Commission can confirm that Microsoft has proposed a consumer ballot screen as a solution to the pending antitrust case about the tying of Microsoft Internet Explorer web browser with Windows. This followed extensive discussions with the Commission which centred on a remedy outlined in the January 2009 Statement of Objections (see MEMO/09/15) whereby consumers would be shown a “ballot screen” from which they could–if they wished–easily install competing web browsers, set one of those browsers as a default, and disable Internet Explorer. Under the proposal, Windows 7 would include Internet Explorer, but the proposal recognises the principle that consumers should be given a free and effective choice of web browser, and sets out a means–the ballot screen–by which Microsoft believes that can be achieved. In addition OEMs would be able to install competing web browsers, set those as default and disable Internet Explorer should they so wish. The Commission welcomes this proposal, and will now investigate its practical effectiveness in terms of ensuring genuine consumer choice.

As the Commission indicated in June (see MEMO/09/272 ), the Commission was concerned that, should Microsoft’s conduct prove to have been abusive, Microsoft’s intention to separate Internet Explorer from Windows, without measures such as a ballot screen, would not necessarily have achieved greater consumer choice in practice and would not have been an effective remedy.

Microsoft has also made proposals in relation to disclosures of interoperability information that would improve the interoperability between third party products and Windows and Windows Server. Again, these proposals require further investigation before the Commission reaches any conclusion as to the next steps.

Microsoft’s proposals will be published in full on its website.

The Commission has no further comment at this stage.

According to new stats from NPD Group, Apple now claims 91 percent of the U.S. retail market for personal computers costing more than $1,000. Nine out of 10 dollars spent on such machines in June went to Cupertino.

Now, granted, Cupertino only sells three Macs priced below $1,000 (the 13-inch MacBook and both versions of the Mac Mini), and Apple’s (AAPL) rivals’ offerings typically price out in the $690 -to-$703 range. Still, that 91 percent metric is impressive.

As Joe Wilcox over at Betanews puts it, “A (higher pricing) doesn’t necessarily lead to B (greater sales). All major Windows OEMs sell PCs in the premium category, too. Apple’s charging more isn’t necessarily recipe for people paying more for Macs, or their capturing big revenue share.”

That said, as NPD analyst Stephen Baker points out, Windows product average selling prices have been falling pretty rapidly over time, especially at retail, so it was inevitable that Apple’s share of the high-end market would rise, since the company hasn’t really altered its pricing philosophy.

And by many accounts, Windows 7 is poised to do just that. Unlike Vista, it was completed on time. And unlike Vista, early reviews have been positive.

“Even in beta form, with some features incomplete or imperfect, Windows 7 is, in my view, much better than Vista, whose sluggishness, annoying nag screens, and incompatibilities have caused many users to shun it,” Walt Mossberg said of the OS back in January. “It’s also a serious competitor, in features and ease of use, for Apple’s current Leopard operating system.”

So Microsoft (MSFT) has good reason to be proud of this release-to-manufacturing, or RTM, milestone. There’s a lot riding on Windows. And the company seems to be very much on point as it brings the newest version to market.

“Today’s release is the result of hard work and collaboration with our partners in the industry to make Windows 7 a success,” wrote Microsoft’s Brandon LeBlanc in a post to the Windows 7 Team Blog. “We delivered Windows 7 with a predictable feature set on a predictable timetable that allowed OEMs [original equipment manufacturers] to focus on value and differentiation for their customers. We continue to be overwhelmed at the community’s response to Windows 7 and it has been an extremely rewarding experience to witness. We hope the enthusiasm will continue to grow even more as our partners build amazing experiences with their products and Windows 7.”

Ironically, this particular build of Windows 7–Build 7600.16385–which Microsoft designated as RTM, was leaked to the Internet nearly a week ago and has been available for download via BitTorrent ever since.

Mok writes in a research note that the downgrade reflects “early signs of weakness in the NAND flash memory sector that we believe will lead to lower prices.” He contends checks find that NAND product inventories have increased substantially, and that demand in both the retail and OEM channel has slowed since May. Heading into the second half, he writes, “we are concerned that production ramps”–Mok expects higher output from both Samsung and Toshiba–“will swing the NAND sector into oversupply.”

Read the rest of this post on the original site

“The current Microsoft announcement is too little, too late. Such a move would have been appropriate in 1997, but further action is needed to undo the effects of a decade of abuse,” said Thomas Vinje, spokesman for the anti-Microsoft lobby European Committee for Interoperable Systems. “Microsoft must give users real choice, and this should include not just buyers of new computers, but also existing users.” And just what is Vinje’s idea of “real choice”? Ballot screens offering a choice of at least five preloaded browsers for buyers of new PCS as well as Microsoft’s installed base of Windows users, via Windows and IE updates.

Mitchell Baker, Chair of the Mozilla Foundation, took a similarly dim view of Microsoft’s (MSFT) plans for European versions of Windows, questioning the company’s motives and wondering if it might not intend to somehow give PC makers an incentive to bundle IE back into Windows at the OEM level. “It’s impossible to evaluate what this means until Microsoft describes–completely and with specificity–all the incentives and disincentives applicable to Windows OEMs,” she wrote in a blog post. “Without this it’s impossible to tell if Microsoft is giving something with one hand and taking it away with the other. For example, if Windows marketing dollars are tied to IE or browser-based programs, then the ties to Windows are still distorting the browser market. One could think of many other examples. As a result, it’s also impossible to tell whether this does anything more than change the technical installation process of the OEMs.”

Baker did, however, concede that Microsoft’s solution will achieve one thing: annoying the hell out of Windows users abroad. “It will certainly make life more difficult for people upgrading to Windows 7,” she said.

“The current Microsoft announcement is too little, too late. Such a move would have been appropriate in 1997, but further action is needed to undo the effects of a decade of abuse,” said Thomas Vinje, spokesman for the anti-Microsoft lobby European Committee for Interoperable Systems. “Microsoft must give users real choice, and this should include not just buyers of new computers, but also existing users.” And just what is Vinje’s idea of “real choice”? Ballot screens offering a choice of at least five preloaded browsers for buyers of new PCS as well as Microsoft’s installed base of Windows users, via Windows and IE updates.

Mitchell Baker, Chair of the Mozilla Foundation, took a similarly dim view of Microsoft’s (MSFT) plans for European versions of Windows, questioning the company’s motives and wondering if it might not intend to somehow give PC makers an incentive to bundle IE back into Windows at the OEM level. “It’s impossible to evaluate what this means until Microsoft describes–completely and with specificity–all the incentives and disincentives applicable to Windows OEMs,” she wrote in a blog post. “Without this it’s impossible to tell if Microsoft is giving something with one hand and taking it away with the other. For example, if Windows marketing dollars are tied to IE or browser-based programs, then the ties to Windows are still distorting the browser market. One could think of many other examples. As a result, it’s also impossible to tell whether this does anything more than change the technical installation process of the OEMs.”

Baker did, however, concede that Microsoft’s solution will achieve one thing: annoying the hell out of Windows users abroad. “It will certainly make life more difficult for people upgrading to Windows 7,” she said.

It would appear that Intel’s loss is, for the most part, AMD’s gain. Intel’s (INTC) shipments declined 16 percent while those of its rival increased 13 percent. Great news for AMD (AMD), which has been having a rough time of it lately with more than two fiscal years of losses and little sign of an upturn.

And what of the broader chip market? IDC says it remains weak, but believes a bottom may be in sight. Overall, shipments were down, but their rate of decline appears to be slowing. During the first quarter, world-wide shipments fell 10.9 percent from the fourth quarter of 2008. That’s not nearly as bad as their 17 percent decline from the third quarter to fourth. So the good news here in that the bad news could have been worse. Says IDC: “The PC processor market is still in weak condition. While OEM demand picked up notably towards the end of the quarter and going into April, IDC is wary that the demand was due to OEMs replenishing their inventories rather than reflecting a return of solid end demand and return to market normalcy. IDC continues to expect modest sequential processor unit shipment decline in 2Q09.”

The weakening economy has begun to take a toll in the global market for televisions, which has ominous implications for consumer electronics retailers, flat panel manufacturers and TV chip producers.

In a note this morning, Longbow Research analyst Tayyib Shah says checks with both OEMs and panel vendors “indicate weak demand patterns in the overall TV market.” He says those TV makers who will meet Q2 guidance on units are doing so only through share gains. In the U.S. market, he writes, soft demand has triggered a decline in ASPs, “as consumers shift to cheaper, smaller models.”

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Sure is. Especially for an operating system that’s met with such a middling reception. That said, you’ve got to wonder if the 140 million copies to which Gates refers are deployed copies or licenses sold. Because if it’s the latter, the number would be decidedly less impressive. It wouldn’t really account for volume licenses sold to corporate customers, copies pre-installed on OEM computers, and copies downgraded to Windows XP. And Gates has made exactly this type of oblique statement before, the last time Microsoft announced Vista sales figures.

Sure is. Especially for an operating system that’s met with such a middling reception. That said, you’ve got to wonder if the 140 million copies to which Gates refers are deployed copies or licenses sold. Because if it’s the latter, the number would be decidedly less impressive. It wouldn’t really account for volume licenses sold to corporate customers, copies pre-installed on OEM computers, and copies downgraded to Windows XP. And Gates has made exactly this type of oblique statement before, the last time Microsoft announced Vista sales figures.