TechFlash: Seattle's Technology News

It's been a big month here at TechFlash HQ, the biggest on record in fact. July started with a bang -- or should we say with a spark -- when we learned of the Fisher Plaza data center fire in the early hours of July 3. It concluded with Microsoft joining forces with Yahoo, a significant move that CEO Steve Ballmer discussed in a TechFlash interview on Wednesday.

Thanks to everyone for reading and participating in the conversation. We've got some great stories and guest posts percolating for August, and we welcome your ideas too.

But without further ado, here are the most read stories for the month of July with a little bit of editorial commentary thrown in just for fun.  Enjoy Seafair weekend and try to stay cool.

The upcoming Windows 7 Family Pack will be priced at $149.99, and it will be available for purchase in stores upon the operating system's Oct. 22 launch, Microsoft said this morning.

The Family Pack, which will let PC users upgrade to Windows 7 Home Premium on up to three existing Windows Vista or XP computers, represents a discount of more than $200 from buying the Windows 7 Home Premium upgrades individually.

It's one of a series of steps Microsoft is taking to make the new operating system more affordable. The company is trying to pull off a successful Windows 7 launch, reviving its flagship product, in the middle of the turbulent economy.

Windows Marketplace for Mobile

Apple has boosted its iPhone through a thriving ecosystem of third-party software applications. Microsoft, which used a similar strategy to help make Windows the dominant PC operating system, is now playing catch-up on phones and preparing to launch its own mobile software store.

The long-term outcome will help determine Microsoft’s fate in the booming global market for smartphones, which analysts expect to nearly double by 2012, exceeding 300 million units.

One litmus test will be whether Microsoft can win back one of its own.

Robbie Bach, president of Microsoft's Entertainment & Devices Division, discussed the future of the company's mobile-phone initiatives during one part of his presentation Thursday at Microsoft's annual meeting with financial analysts in Redmond. As noted by Mary Jo Foley, he didn't go into detail on long-term plans for Windows Mobile 7 or the long-rumored "Pink" project.

But he did provide a broad outline of the company's strategy as it tries to regain traction in the mobile phone business. Will it actually work? Read on for an extended excerpt from Bach's remarks, from the official transcript.

Microsoft's total employment in sales, marketing, support, service and administrative roles ended up essentially flat in its recently completed fiscal year as the company cut back on hiring and cut jobs in the face of the tough economy.

The only categories showing an increase in the company's 10-K report, filed earlier today, were product research and development, which rose from 35,000 to 36,000 positions; and manufacturing and distribution, which rose from 4,000 to 5,000 people.

As Microsoft's new Bing search engine goes head to head with Google, it can count at least one major customer in its camp: Washington state. The state just announced it's going with home-grown Bing over Google to power the search feature on its official website.

The Washington State Department of Information Services spent a couple years looking at search engines and considered Google, Yahoo and others. Did the state choose Bing because Microsoft is based here?

"Of course we like that it's a local provider," said state DIS spokeswoman Joanne Todd, "but the bottom line was to get the best search engine we can get, and Bing was the best solution."

Speaking with financial analysts in Redmond this morning, Microsoft CEO Steve Ballmer offered his take on the current competitive landscape for Windows, discussing the operating system's position against Apple, Linux and Google's Chrome and Android operating systems. Here's an audio excerpt, and click through for written excerpts.

Microsoft CEO Steve Ballmer this morning expressed surprise at the negative reaction to how Yahoo came out in the Internet search and advertising partnership that the companies announced yesterday. Speaking at Microsoft's Financial Analyst Meeting in Redmond, Ballmer showed a slide characterizing the deal as good for both companies,

While Microsoft gets the larger market share to improve Bing's search relevance and advertising volume, Yahoo still gets 88 percent of the revenue from ads on Yahoo search, without the R&D and operating expenses that it would normally encounter. That frees up Yahoo to concentrate on its online media business, Ballmer said.

As expected, Microsoft significantly slowed its pace of acquisitions in its recently completed fiscal year, according to new data released by the company this morning as part of its annual Form 10-K fiing with the Securities and Exchange Commission.

The company spent $925 million in cash to buy nine companies during the year, according to the filing. Only one of those, the purchase of video-game company BigPark Inc., was significant enough to warrant a notation on the company's official list of corporate acquisitions. The company is also believed to have acquired Israeli startup 3DV Systems, but that deal was never formally announced.

Given the timing, Yahoo will no doubt be Topic No. 1 on Thursday as Wall Street analysts descend on Microsoft's Redmond campus for the company's annual Financial Analyst Meeting, better known as "FAM" -- an all-day marathon of presentations from Steve Ballmer and other top executives. But even without the Yahoo deal, there would be no shortage of stuff to discuss, and fun to be had.

Ballmer and Bartz. (Yahoo photo, via Flickr)

TechFlash today interviewed Microsoft CEO Steve Ballmer and Yahoo CEO Carol Bartz about a wide range of topics related to their newly announced partnership -- including competition from Google, future acquisitions and what the arrangement may mean to employees of the companies. We also asked whether Ballmer plans to adopt Bartz's famous use of profanities.

As you can tell from the audio of the interview below, the two executives seem to have a good-natured, chummy relationship with each other. Click through to read an edited transcript of the interview.

It's not as big as Microsoft's previous attempt to buy Yahoo for nearly $45 billion, but the 10-year search and advertising partnership announced by the companies this morning is generating plenty of interest on blogs and in the mainstream media. Here are some of the most interesting stories, posts and tweets we've encountered.

Did Microsoft get the better of this deal? The Redmond company's shares are up slightly while Yahoo's shares are down significantly in initial trading following their announcement of a long-awaited search and advertising partnership this morning. Here's a sampling of what financial analysts are saying in notes to their clients this morning.

More than 18 months after Microsoft made an ill-fated acquisition bid for Yahoo, the companies this morning announced an agreement to join forces against Google in the Internet search and advertising business. The deal, which requires regulatory approval, would be completed early next year. Our coverage so far:

Latest: What people are saying about Microsoft's Yahoo partnership
Audio: Steve Inskeep of NPR's Morning Edition talks with TechFlash's Todd Bishop about the Microsoft-Yahoo deal. Listen to the segment.

Analysts, investors react to Microsoft's Yahoo partnership
Microsoft and Yahoo strike deal: How it will work, what it means
Ballmer's email on Yahoo assures Microsoft workers about jobs
What the Yahoo deal could mean in Microsoft's battle vs. Google

Check back for more throughout the day.

In an email to Microsoft employees this morning, CEO Steve Ballmer explained the company's planned search advertising partnership with Yahoo and sought to reassure workers whose current jobs could be cut as a result of Yahoo taking over premium search advertising sales for both companies.

"Given the huge opportunities in search and online advertising, we plan to redeploy most if not all affected employees into new high-priority functions," Ballmer wrote in the message. Read on for the full text.