If Microsoft is ever going to have its Alec Baldwin moment, it will happen because of a home-brew game called "Wordament."

Baldwin was famously thrown off a plane in December because he wouldn't stop playing an addictive word game on his iPhone.

The actor was playing "Words With Friends," Zynga's Facebook version of Scrabble played by more than 8 million people a day.

So far the closest thing on the Windows Phone platform is "Wordament," an extracurricular project of two Microsoft employees that became a surprise hit after its debut last year.

The free, ad-supported app is a twist on the word-hunt board game "Boggle." You compete with players around the world in two-minute matches and work your way up leader boards.

It's still a pipsqueak in the broader world of mobile games, with hundreds of thousands of downloads since it appeared on Windows Phone in April 2011 and on Windows 8 last month. It has tens of thousands of unique visitors a day, with up to about 650 playing together at once.

But as one of the highest-rated, exclusive games on those platforms, it's positioned to lift off. It may even draw people to Microsoft's fledgling mobile devices, at least if they're "Boggle" fans.

The game was created as a side project by John Thornton, 37, and Jason Cahill, 38, who worked on the Windows Live photo team and had offices next to each other. They built the game after Microsoft began a "moonlighting" program in 2010, encouraging employees to build Windows Phone apps in their free time.

Thornton (left) began tinkering with word games and made a New Year's resolution in January 2011 to build an app a month. One was a prototype puzzle game he showed to Cahill and asked if he wanted to help. The answer was no, initially.

Cahill (right) and his wife were "Boggle" fans who played against each other wirelessly on Nintendo DS handhelds. The more he thought about the possibilities of a computer-generated game board connected via Internet services, the more excited he became about the project.

"I went home after telling him this whole lecture on how the way you get ahead at work is by doing work and not by doing moonlighting ... and ground all weekend,"Cahill said. "I came in Monday with a basic implementation of a service and a set of puzzles and I was like, 'OK, can I help on this half' ?"

This still cracks up Thornton.

"He must have coded the whole weekend after telling me no," he said. "It was kind of funny."

Thornton said the game's popularity sank in for him a few months later, at the Kirkland Fourth of July parade. Looking over the shoulders of a row of people in front of him, he noticed they were all playing the game.

Later that month, the Xbox Live group asked them to distribute "Wordament" through the game service. The Xbox group then hired them, where they're now the principals of a new studio expanding "Wordament" and developing new titles.

I heard about "Wordament" last year from a friend and fellow "Boggle" fan at Microsoft and was planning to write about the game after the Windows 8 preview version (left) was released in February. But I waited, partly because the game froze on a Samsung Windows 8 tablet I've been using. I wondered if the newsroom installed some kind of filter, because I'd spent so much time testing "Wordament" on the tablet.

Finally I got in touch with Cahill last week, and he explained that the Windows 8 version is a prototype and they're preparing a fix for the "suspend/resume" issue I encountered. Meanwhile, the trick to unfreezing it is the "downward swipe" gesture that closes and exits Metro-style apps.

The game can be played with a mouse but it works best with touch-screens, on which you mark words by sliding your finger across the letters. Speed and responsiveness are critical, so the game's a good way to sample the performance of a phone or tablet.

"Wordament" seems to be a game that Xbox Live could use to expand on platforms such as Apple's iPhone and iPad.

I wonder if "Wordament" will end up preloaded, alongside "Solitaire," on Windows Phones or Windows 8 tablets when they appear later this year.

The original goal with "Solitaire" on Windows was to teach people to use a computer mouse, so perhaps "Wordament" will help familiarize people with the new Windows 8 touch gestures.

That would propel the game into the "Words With Friends" league.

It could also offset productivity gains promised by the new software, though, and potentially cause problems for Alec Baldwin types.

Microsoft is resurrecting one of its oldest franchises, "Flight Simulator," with an entirely new game called "Microsoft Flight" that's debuting on Feb. 29.

But instead of a new installment of the hyper-realistic, encyclopedic simulator that mostly appealed to flight enthusiasts, Microsoft built a smaller, more accessible game that's going to be offered online for free.

Planes can be flown simply by moving a mouse around, though enthusiasts can also use more realistic and complex controls.

It's also a new business direction for Microsoft's PC game business, which is using "Flight" to experiment with free online games monetized through microtransactions. About 80 percent of U.S. gamers now play such titles, mostly through Facebook, where players spend an average of $29 per month, according to Parks Associates research.

To start, the game will let people fly around Hawaii - the Big Island - in planes including a Boeing Stearman similar to one displayed at the Museum of Flight. For $20 players can get seven additional islands, new missions and an additional plane.

Microsoft will periodically offer new territories, planes and activities. The company may also extend the franchise to other devices beyond the PC. Executive Producer Joshua Howard hopes the game will draw more than 20 million players eventually.

Howard (left) leads a studio with about 50 employees, a third of whom are veterans of the ACES Studio behind "Flight Simulator" that Microsoft wound down in 2009.

Here are edited excerpts of an interview this week with Howard:

Q: Gaming on Windows has seemed to languish, maybe because so much energy was around Xbox. How much is this release a sign that the Windows game group is back, especially with Windows 8 coming up soon?

A: Some folks on my team will say Games on Windows isn't what it used to be. You're forgetting it is certainly the biggest platform for gaming anywhere, ever. I feel like the PC has been the most successful platform when it comes to gaming because gaming as a whole has become mainstream - 75 million people playing Facebook games of one form or another, that's all on a PC. It didn't happen on a console, it didn't happen on a closed mobile platform.

As Microsoft - to have built that system and allowed that to happen - we don't get to take credit for everything people do on a PC but that didn't happen because we ignored PC gaming. So I think PC gaming is alive and well in fantastic ways in fantastic ways. It's still where the heart of innovation is happening.

Q: I didn't mean PC gaming as much as PC game development within Microsoft. Perhaps the company felt it no longer needed to seed the market so much?

A: It's doing very well so that's right, maybe that's part of what it came down to.

Q: Is Flight intended to seed online services and bring people into Microsoft's online realm?

A: I like to think this is both about reimagining a franchise that we know has always been successful. I also think it's part of Microsoft the studio saying 'I want to develop this new muscle.' Maybe because we have so much of the organization focused on the console-side of the business which is more rigid when it comes to business models, you get to ask the PC side to be a little more experimental, a little more exploratory. I relish that opportunity and the team has really jumped on that. We couldn't be doing half the things we do here on a console - this is not a console game that just happens to sit on a PC. This is really a PC game and we're proud of that.

Q: Is your studio just building this title?

A: I imagine this is a group of people who will continue to bring flying experiences out over time. This is where we are right now.

Q: One you've developed new muscles, you want to keep using them ...?

A: There are a lot of really cool, exciting platforms on the horizon. I'd love to think that someday you'll be hearing from me about how we're going to bring Flight to those exciting opportunities.

Q: On tablets and other devices with Windows?

A: It could be broader than that even. As a division we no longer organize around your PC games and your console games. We're a team that's about the thrill and experience of flight.

Q: But it makes sense that your games could be on the new PC form factors running Windows ... like tablets, maybe TVs - the "three screens and a cloud"?

A: Yeah. I believe in crawl, walk, run. We're rebooting a franchise, and that was really hard. We wanted to this well. We took the time and energy to do that. Now this becomes a platform to keep going.

Q: Is it running on Azure and will it be used to showcase the platform's ability to run a massively multiplayer online game?

A: The services could be on Azure but they're not today. It turns out they didn't need what Azure provides as far as scale goes. It's less MMO in that sense. While do have what we think of as interesting and enjoyable multiplayer, it's still not that massive. (Up to 16 players can play together in an online session.)

Q: So the focus is on the PC experience mostly?

A: Yes. The way we talk about it is between the client, and the web site and the community that combines them, that's what Flight means. It's this combination of those three elements working together.

Q: It sounds like a hybrid PC game.

A: Exactly. In many respects we are like an MMO business would be run, we just don't happen to be an MMO. We're taking what is traditionally a game studio and transitioning it into an online business.

Q: Why did Microsoft take so long to resume development of MMO PC games?

A: I think the reality internally is we've continued to incubate and play and continue to try things. You just don't always bring those to market or out until you believe you've got something you can be successful with. I was excited to see that instead of trying innovate in these genres that are already well-understood, Microsoft went off and tried Kinect. I think Microsoft just put their energies elsewhere and it paid off.

Q: Will you sell the game on discs at retail?

A: Sometime maybe in the future but right now we're all in online. Retail is not something we're talking about right now.

Q: Will you get it preloaded with PC hardware?

A: Possibly.

Q: Will it be part of the game suite included with Windows 8?

A: Probably not. We deal with those separately - that's an operating-system business, we're a game publisher.

Q: Will you be able to control the game with gestures, if you attach a Kinect sensor?

A: We're not talking about Kinect support at this time but who knows.

Q: It seems like the tradeoff you made - building richer, smaller locales to explore in the game - is the loss of the full, open world that could be explored in "Flight Simulator"?

A: The bet we've made is that to the non-hardcore simmer, flying the whole world isn't as interesting when there's nothing really interesting to see or do. I do get that for some segment of the audience that was one of the values - I can fly anywhere, into any airport, 25,000-odd airports was crazy.

But I think as you try to broaden and you want to bring in not the next million or two but the next 20 million or 30 million people, you say I will err on the side of more interesting area that's dense than the same amount of content spread all over the globe. There's a lot to do in Hawaii, and Hawaii is gorgeous.

Q: It seems inevitable that you'll have a mobile version someday?

A: We may do other stuff in the future but today we're just talking about the PC version of flight. I think Flight has legs. This is a franchise that's going to keep living for a lot of years. We're going to do that by exploiting all the opportunities that are coming at us, whether that's mobile, new operating systems, new hardware. There's a lot of stuff out there and I think Flight is going to be part of that at some point.

Q: I thought the ACES studio was fully shuttered back in 2009?

A: The reality was inside the company there were already efforts underway to bring that core expertise back together with a new mandate of how they could move forward.

Q: Will Flight make more money than Microsoft's "Gears of War"?

A: I think in the long-run, this franchise will definitely make more money than "Gears." I think Gears is a great. Flight is one of those evergreen franchises in entertainment - this will live another 30 years.

Reuters added to the growing pile of rumors about upcoming Apple hardware with a report today on a cheaper version of the iPhone 4 that could launch "within weeks."

The report said Asian suppliers have begun manufacturing a model with reduced memory - 8 gigabytes instead of the current entry-level 16 gigs.

It's unclear how much the cheaper iPhone would cost and where it will be distributed, though it may be headed for emerging markets.

The report, citing "two people with knowledge of the matter," said Apple will also launch an upgraded version of the iPhone 4 around the end of September. It's been dubbed the iPhone 5, though it's basically the same chassis as the iPhone 4 but with a larger display, better antenna and 8 megapixel camera, the report said. That would bring its specs closer to carriers' flagship Android and Windows Phone 7 devices.

Other sources have been reporting that Apple's testing an LTE version of the iPhone but it apparently won't go on sale until sometime in 2012. That's to be expected since the two largest wireless companies are now operating LTE networks and Apple's a major phone manufacturer. What would be surprising is if Apple weren't yet testing LTE technology.

There's also a very thinly sourced report out of Japan about Apple releasing new Macs by the end of the year. There's speculation that it's a refresh of the MacBook line.

It also seems likely that Apple will eventually offer touchscreen PCs that can take better advantage of touch apps developed for the iPhone and iPad.

My guess is that Apple will time the phone launches to take the wind out of Microsoft's Windows Phone 7.5 "Mango" launch and the debut of the first Nokia Windows phones, which may surface by October.

Similarly, it could time the unveiling of new Macs to steal thunder from Windows 8 and the new generation of Windows PCs running Microsoft's new operating system. The full unveiling of Windows 8 is expected at a developer conference beginning Sept. 13.

Both Windows 8 and "Mango" phones will be highlighted at the Microsoft conference, which is a major event for the company's new mobile platforms. So you can expect the flow of disclosures about exciting new things from Apple and Android will increase in the coming weeks.

If you're not among the crowd waiting for the next iPhone, Research in Motion today announced the first three BlackBerry smartphones based on its new BlackBerry 7 operating system.

Simultaneously, Qualcomm announced new branding for its Snapdragon mobile hardware, which could make it easier for people to choose between the flood of new smartphones and tablet devices coming to market. Its new branding will also likely help people shopping for Windows 8 devices next year.

Qualcomm's S1 category will have single-core processors with speeds up to 1 gigahertz, according to a writeup at EE Times.

The S2 will also be single-core, up to 1.4 GHZ and support 720p video and stereoscopic 3D displays.

The S3, used in the HTC Evo 3D and HP TouchPad, will go up to 1.5 GHz and have dual-core options.

The upcoming S4 line will be dual or quad-core, run at up to 2.5 GHz and support LTE networks.

I'll bet the S4 will be used in upper-end Windows 8 tablet PCs when they appear next year. Qualcomm has been a key partner for Microsoft on both Windows Phone 7 and the development of full versions of Windows that will run on mobile hardware.

The EE Times report said 20 companies are developing Snapdragon-based tablets, among 375 current and future devices using the hardware.

RIM reportedly used Snapdragon for its new BB7 devices, but it's not using the new branding or even calling out the chip manufacturer in its release today. That may be because the devices were delayed when RIM made a late switch to Qualcomm's platform.

Still to come -- next year perhaps -- are phones based on RIM's QNX operating system, which is used in its PlayBook tablet.

The new phones announced today all have touchscreens and two have hard keypads. They include the Bold 9900 -- at 10.5 millimeters, the thinnest BlackBerry yet -- plus two Torch models. The Torch 9810 has a slideout keypad and 3.2-inch screen, and the Torch 9850 has a 3.7-inch touchscreen (and a little curve like the HTC MyTouch phones ...).

RIM claims that the phones' browsing is up to 40 percent faster than BlackBerry 6 phones and 100 percent faster than BlackBerry 5 models, because of their faster hardware, new OS and improved WebKit browser engine.

They're supposed to be available from wireless companies later this month.

The first Nokia Windows Phone -- the shining hope of Microsoft's future in mobile devices -- was revealed in this video by Nokia Chief Executive Stephen Elop.

Elop asked the room full of employees not to take any pictures or video of the "super confidential" device but someone did anyway. I found this via Liveside.net.

In the video, Elop talks about how the advances seen in Nokia's new N9, which was unveiled Tuesday, will be extended to the Windows devices. No wonder Nokia didn't deny this speculation when the N9 was revealed earlier this week.

"There's a whole collection of innovation in the N9 that's going to live on," he said, before revealing a phone code-named "Sea Ray," Nokia's first Windows phone.

The phone looks great, which may be the reason that details of Apple's upcoming new iPhone were released early, in Wednesday's Bloomberg story.

Sea Ray has roughly the same physical design as the N9 and sports an 8 megapixel camera with a Carl Zeiss lens. It appears about a minute and a half into the video.

I wonder if the code name is a reference to a Sea Ray boat, the kind that Microsoft executives may use to visit each other's homes along the eastern shore of Lake Washington.

Here's a larger picture of a Sea Ray:

Nokia introduced a gorgeous new touchscreen phone that hints at the kind of hardware that could come with Windows Phone software later this year.

The N9 unveiled at a conference in Singapore is running the Meego software that Nokia is phasing out in favor of Windows, but the real sizzle is its industrial design and specs. It has a 3.9-inch curved AMOLED touchscreen behind Gorilla glass, with a 1 gigahertz A8 processor, 1 gigabyte of RAM and 16 or 64 gigabytes of storage.

It has no physical buttons at all on the face, so you unlock the device by tapping on the screen.

Nokia has also given the device an 8 megapixel Carl Zeiss wide-angle lens that takes 720p video, plus a second camera for video calls. Its HSDPA radio is capable of up to 14.4 Mbps downloads.

Nokia's going to release a mix of Windows Phone models by the end of the year, and it seems a good guess there will be an upper-end version based on this chassis.

(UPDATE: Nokia scheduled a big event for Oct. 26 in London and some are speculating that's when the Windows Phones will debut.)

Meanwhile Nokia will begin selling the Meego-powered N9 "later this year" in black, cyan and magenta. Nokia said availability and pricing will be "announced closer to the sales start." (I wonder if it will appear before or after the iPhone 5, which is rumored to be coming in September.)

The phone also has turn-by-turn navigation for walking and driving and a built-in "Drive" app for automotive use. Microsoft plans to use Nokia's navigation technology as part of their partnership so perhaps this is another preview of what's coming to Windows phones.

A Nokia spokeswoman declined to say whether the N9 hardware will be used with Windows Phone software, saying via email that "we have not provided further information on our first Windows Phone devices at this time."

It also has NFC capability, for wirelessly making credit transactions, which will probably be a standard feature on smartphones pretty soon.

Here's Nokia's demo video:

LOS ANGELES _ Microsoft will partner with regional cable companies to bring live TV onto the Xbox, a new feature that it announced Monday at E3.

That means the TV services will be provided through cable and satellite companies, and Xbox owners will need to subscribe to their services to get the live TV onto their game console.

That's according to Mike Delman, vice president of global marketing for Microsoft's interactive entertainment business group.

During an interview in Microsoft's elaborate, two-story booth at the show, Delman also talked about Skype on the Xbox, Kinect's new capabilities and how Xbox Live is going to become an entertainment service for Windows 8 PCs.

Here's an edited transcript of our conversation.

Q: Do you feel you've got as much at E3 as the other guys?

Definitely. We don't have an announcement like a new console but the combination of the games for the hardcore, starting to answer the question about the Kinect for the core, and having a lot more Kinect for broader audiences and the live television has played real well.

Q: Some of your announcements were just a tease, like live TV coming this fall to Xbox. Did you hold back details because partnerships aren't done yet?

We have partnerships in certain places. It's kind of ironic we have a lot of international partnerships before we got some of our U.S. partnerships done. The reason we talked about it is doing the platform work - doing voice, doing Bing search, getting the UI to be a modern UI, is really the hard work. Layering in the content isn't as hard, so it's a natural sequence.

Q: The interface seems designed to plug in another tile when you get a new content partner.

Yes, bringing in the live content - a lot of people are just layering in tonnage, they're not putting interactivity and discoverability in it. Getting the interactivity and discoverability built, so the content can sit on top of it - getting the platform work done is the hard part.

Q: Will live TV be universal, or will it be regional TV services provided by whoever your cable provider is?

It will be tied to either a satellite broadcast company or a cable company. So in international markets, you'll just have one provider. In the U.S., it will be bifurcated by region, by market. You'll be a Comcast guy (in Seattle), for example.

Q: So you'll have to be a Comcast subscriber, similar to the way you need a subscription to get the ESPN content on the Xbox now?

Yes.

Q: Will the Bing search be full Web search or just for entertainment?

It will be full search on what you have on Xbox Live. So anything that's available on Xbox Live if you're a gold subscriber it will search all of that, it won't go out and search the Web.

Q: Why not add Web search as well?

Listen, when we've got tens of millions of pieces of content just on our service, being able to search that - music for example, we've got 11 million music titles now - just mastering that in a bunch of different languages is a big priority. People at this point have other ways to get out to the Web.

Q: It seems like you could point the search at Bing's entertainment channel.

It's just not in the plans.

Q: Because you are using Bing, can you also serve ads against the results?

That's not part of the plan but it can be done. A lot of it will probably be serving ads within the content more than within search.

Q: It seems to be mostly about utility, making search easier than pecking out letters on the screen.

People will be doing stuff with their voice in probably a quarter the time it takes to go through the menu with the controller.

Q: With hardcore games, Kinect is still doing auxiliary things mostly, rather than controlling the main action. When are we going to see that?

People need time to build a core, triple a title from the ground up with Kinect. People are starting to build core games from the ground up. The core doesn't want the controller to come out of their hand, necessarily. ..In a way I think voice (with a controller in hand) will be as powerful or more powerful to the core than will gestures, and the gestures won't be the sweeping gestures you have in the broader Kinect. I think they'll be more pointed gestures like a head-fake or a head-butt. ... People are being very smart about doing something that will enhance the core experience rather than totally change it.

Q: So will "Halo 4" be a Kinect game?

I'm sure we'll have some Kinect in it but we're not that far along.

Q: We've seen voice and gesture controls but not much use of Kinect's scanning capability.

The scanning actually wasn't fully enabled until the "Fun Lab" stuff unveiled (Monday).

Q: I also wondered if scanning or the finger tracking you've shown here would need new hardware with better sensors.

No, you can actually do that stuff now. Some of the things that will be interesting in the next generation of sensor will maybe a more high-definition RGB camera so the video conferencing is better than it is now. Skype, if it comes to fruition - you can see a lot of possibilities.

Q: I was surprised we didn't hear about Skype in your E3 press conference, but I guess the deal hasn't closed yet ...

I'm probably out of bounds talking about it.

Q: Maybe you'll announce Skype on Xbox at CES in January?

Whenever it clears, there's a lot of possibility with that.

Q: Because there's a new Nintendo console that runs hardcore games coming, will people hold off buying an Xbox or adding Kinect to their console?

I don't know what the reaction's going to be relative to their own platform. All I know is we're in the fifth to sixth year of our platform and platforms have never grown in the fifth or sixth year at what we're seeing. Other platforms is not what we're focused on, we're focused on how do we make Kinect, how do we make Live as compelling as possible. In a way a lot of what's going to happen is the box doesn't become the focus going forward, it's what is the sensor, what is the handheld, what is the phone companion, what is the service companion and what are the experiences.

Q: Speaking of phone, I was surprised we didn't hear about connections between Xbox and Windows Phone here at E3.

Live has been successful on the Windows Phone, Live will be built into the PC; it will be the service where you get your entertainment. We were talking about it - you will not just see consoles and handhelds at this show next year, this show's going to morph into other devices.

Q: Will Xbox offer games on certified phones, similar to what Sony's PlayStation is doing with Android phones?

We think there's a lot of potential on the Windows phones. With the Nokia relationship, we're going to have a lot more distribution of phones and Live will be the primary entertainment service. I think that's going to be a good play for us. If we have that and the PCs to leverage, that will be a big Live base. It's our job to make 'buy a movie in one place and play it everywhere, buy a game in one place and play it everywhere.' Making things portable through the devices will be a big focus of ours.

Q: Will Microsoft's Zune service continue building up its video and music stores, or will you be working more with partners running content stores?

We're very committed to offering music and video and TV shows on our own service through Zune.

Q: I don't think I heard the "Z" word in the keynote. Are you phasing out the Zune brand?

In general I think what you're going to see is us talking about 'music' and 'video.' I think what we're coming to the realization about is putting brands on top of brands on top of brands is not as, you know - if you want to look for music, just knowing it's under a category (music) is a good thing.

Q: Speaking of branding, Xbox brands are all over Qwest Field. Are you going to go the next step and name the whole stadium, taking that over from CenturyLink?

Not that I know of. I'm a little worried we might own the whole city of Seattle if we keep doing sponsorships with everybody.

Q: How will your services and content be part of Windows 8?

There will be a lot of similarities in design and service philosophy. Whether it's us or Apple or anybody else, people want to be able to navigate through multiple devices in a certain ecosystem very seamlessly so we're committed to that.

Q: Will Xbox Live be your cloud media service that works with your Windows PC as well as your phone and Xbox?

Xbox Live will the pervasive media service across devices.

Q: Right now it's a little confusing - you've got Xbox Live, SkyDrive storage and other online places for media.

We have a ton of assets. Unifying the assets will be good for us and good for consumers.

Research giant IDC expects Microsoft's phone software to leap ahead by 2015, assuming its hookup with Nokia goes smoothly.

The firm is predicting that Windows Phone will overtake Apple's iPhone by then, claiming the second largest market share behind Google's Android.

It's part of the company's quarterly Worldwide Quarterly Mobile Phone Tracker report, which is forecasting 55 percent growth overall in the market this year, driven by people upgrading to more advanced phones.

IDC expects 472 million smartphones to ship this year, up from about 305 million last year. It expects nearly a billion phones -- 985 million -- to be sold in 2015.

"The smartphone floodgates are open wide," Kevin Restivo, senior research analyst, said in the release. "Mobile phone users around the world are turning in their 'talk-and-text' devices for smartphones as these devices allow users to perform daily tasks like shopping and banking from anywhere. The growth trend is particularly pronounced in emerging markets where adoption is still in its early days."

Android will grow to 40 percent of the market in the second half of this year, IDC predicts. Apple's iOS "will remain a force in the mobile phone market" through 2015 but its growth is "expected to grow at a more modest pace through the latter half of the forecast as the smartphone market matures and diversifies."

The BlackBerry OS will remain in the top four but see market share decline, despite the overall increase in smartphone sales.

Microsoft's Windows Phone platform "will benefit from Nokia's support, scope and breadth within markets where Nokia has historicaly had a strong presence," the firm said in its release. But until Nokia Windows phones appear in large volumes next year, the platform will capture only a small portion of the market.

We've known since February that Verizon's first Windows Phone would likely be the HTC Trophy, a 1 gigahertz slab with a 3.8-inch touchscreen.

Today, the company's made it official and said the device will go on sale online May 26 and in stores June 2 for $150, after a $50 mail-in rebate and with a new two-year contract. Buyers will need a Verizon Wireless voice plan, starting at $40 per month, and a data plan starting at $30 per month.

This is despite Verizon brass pooh-poohing Microsoft's new phone platform, saying it's not as important as Apple, Android and RIM.

Microsoft, Verizon and HTC are putting more emphasis on the device's connections to Xbox Live. Buyers before July 15 get a free Xbox 360 game -- either "Halo Reach," "Kinect Sports" or "Lode Runner."

Specs include:

-- 1 GHz Snapdragon processor
-- WVGA 3.8-inch touchscreen
-- Surround sound through SRS WOW HD
-- 5-megapixel camera with autofocus and LED flash
-- 720p HD video capture
-- 16 GB on-board storage
-- Wi-Fi connectivity: 802.11 b/g/n

Microsoft buying Skype is like Seattle buying Italian streetcars.

On the surface, it seems like an outrageously expensive indulgence.

But if you can ignore the insane amount of money being thrown around and focus only on how it will help a few businesses, it makes some sense.

Microsoft already has powerful and widely used software for making phone and video calls and communicating over the Internet. Its messaging systems are among its crown jewels and used by far more people than Skype.

Similarly, Seattle is served by a vast and reliable bus system and is building up a light rail network.

But it still decided to spend $60 million - not counting priceless right-of-way - on streetcars that duplicate several bus routes. Sound Transit's going to spend another $132 million more more streetcar service.

Some people think the streetcars are neat, and they add flair and freshness to the mix of infrastructure in Seattle. But they'll never carry as many passengers as Metro and they'll probably never pay for themselves.

The trolley is largely an amenity, increasing the appeal of commercial property mostly owned by Paul Allen.

City leaders who took flak for this quasi subsidy may now feel vindicated by Allen's success redeveloping South Lake Union. The area along the trolley route has transformed into a vibrant, active neighorborhood anchored by Amazon.com's new headquarters.

You can't say the area blossomed because of the trolley but it helped.

With Skype, Microsoft now has a groovier, Web-native service that complements its established, industrial-strength communication systems.

Skype and particularly its video calling capabilities will be a focal point for the bundle of online services Microsoft will offer to consumers and businesses. Having one killer app in the bundle is enough to get people to enter Microsoft's online realm, or at least prevent them from logging into a competing suite of online services.

My guess is that Skype and video messaging will also be a cornerstone of Windows 8 or whatever the next version of Microsoft's flagship operating system is called. It's designed to work well on portable devices running the tiny processors used in smartphones, where video calling is coming to be expected as a standard feature.

Apple and Google have already developed video calling services for mobile devices and PCs but they don't yet have the critical mass of Skype. Microsoft has struggled to build a critical mass in search and now it has a head start as the next phase of online messaging is developed on fast, new 4G wireless networks.

Meanwhile Microsoft's going to use Skype to boost the appeal and reach of its Xbox, phone, Web mail and communication software products.

In its release, Microsoft noted that Skype has acquired the intellectual property powering its network. Perhaps that's a signal that Microsoft will assert its ownership of the patents, which could limit what competitors can do in the space or require them to send royalties to Redmond.

Skeptics expect Microsoft to fumble Skype somehow. To avoid this, Microsoft took the unusual step of creating an entirely new, autonomous group for Skype, giving the relatively small business organizational stature comparable to that of the massive Xbox, Office and Windows groups. Skype Chief Executive Tony Bates will be president of the Microsoft Skype Division, reporting to Steve Ballmer.

Microsoft actually has done pretty well with its messaging acquisitions. Key elements of Outlook were acquired, and it's now the most widely used email system in the world and an essential tool for most business PC users.

Microsoft also spent crazy money buying Hotmail in 1997 for around $400 million, when it was competing with AOL and Yahoo and was building out its suite of dotcom-era online services.

Microsoft's anxiety about falling behind Apple and Google no doubt led the company to overpay for Skype. But if the team in Redmond can avoid crashing their new trolley and it helps deliver a few big hits, the cost won't matter in the long run.

Android devices are now the most preferred choice among people shopping for a smartphone, according to a Nielsen survey released today.

Google's phone platform is the preference of 31 percent of U.S. consumers shopping for a smartphone. Or at least it was when the surveys were done between January and March.

Apple's iOS was the preference of 30 percent of those surveyed. Another 11 percent are interested in RIM BlackBerry devices and 20 percent are unsure of what to choose next.

That's changed from surveys last summer, when Apple was the clear choice, Nielsen said in a blog posting today. Surveys done from July to September found 33 percent of smartphone buyers wanted an iPhone and 26 percent and 13 percent wanted a BlackBerry.

Poor Microsoft. Just 6 percent of buyers are interested in Windows smartphones. Their interest has actually fallen since the Windows Phone 7 launch last October, before which 7 percent were intrigued by the platform.

A few charts from Nielsen's release:

Hooking up with Nokia will help Microsoft overtake Apple's iPhone and Research In Motion's BlackBerry within a few years, according to a new report from research firm IDC.

The combination should boost Windows phones to second place among smartphone platforms worldwide by 2015, IDC said in its latest Mobile Phone Tracker report.

For now, the big story is Google's Android software. IDC expects Android will become the most-used smartphone platform this year, after zooming up to second place in 2010.

"For the vendors who made Android the cornerstone of their smartphone strategies, 2010 was the coming-out party," Ramon Llamas, senior research analyst, said in the release. "This year will see a coronation party as these same vendors broaden and deepen their portfolios to reach more customers, particularly first-time smartphone users."

Overall sales of smartphones will continue growing but not at the same pace as 2010, it predicted. Smartphone sales are expected to grow 49.2 percent this year - to 450 million units - as consumers and business users continue upgrading their devices, it predicts.

Llamas said the Nokia deal will reverse Microsoft's phone slide.

"Up until the launch of Windows Phone 7 last year, Microsoft has steadily lost market share while other operating systems have brought forth new and appealing experiences," he said in the release. "The new alliance brings together Nokia's hardware capabilities and Windows Phone's differentiated platform. We expect the first devices to launch in 2012. By 2015, IDC expects Windows Phone to be number 2 operating system worldwide behind Android."

The chart from the release:

No wonder Nokia agreed to use Windows Phone software.

Microsoft will pay Nokia more than $1 billion to promote and develop Windows phones, according to a new report by Bloomberg's Dina Bass.

The story, based on two unnamed sources "with knowledge of the terms," offers new details about the huge deal announced Feb. 11.

It said the contract between the tech giants struggling in the smartphone market will last more than five years and has yet to be finalized.

Despite the huge payout, Microsoft will still make money from royalty payments made by Nokia, the story says. The Redmond company will also give Microsoft the right to use Nokia's huge patent portfolio.

Google's Android operating system topped the U.S. smartphone market in January for the first time, with 31.2 percent of the market, according to a new comScore report.

The firm said Android's market share grew 7.7 percent from October through January, while Research In Motion fell 5.4 percent and Apple was nearly flat at 0.1 percent growth. Microsoft's share fell 1.7 percent.

Among handset makers, Samsung led the U.S. market with 24.9 percent of the market in January. The market leadership didn't change much; Samsung was followed by LG, Motorola, RIM and Apple.

The report's based on a survey of more than 30,000 U.S. mobile subscribers.

Here are the charts from the news release:

This is going to be a big week for gadget news.

Apple is headlining it with the iPad 2 that it's unveiling Wednesday in San Francisco. The early line on the device is that it's slimmer, more powerful and has a camera.

A new leak at 9to5mac.com says there will be a white version of the iPad, based on a white bezel that surfaced in China.

Also appearing today is an image of an HTC Trophy smartphone running Windows Phone 7 on Verizon Wireless.

Verizon hasn't yet said when it will carry WP7 devices, and its executives have talked down Microsoft's mobile effort, but the phones were still expected to arrive soon.

Engadget's report on the Verizon WP7 Trophy also says it has copy-and-paste capability.

If that's not enough, more hints that Apple may offer lower-cost iPhone options were floated in a Bernstein Research report that was picked up by Forbes blogger Eric Savitz. It quoted Apple CFO Tim Cook saying the company is planning "clever things" to serve the lower-end, prepaid cellphone market.

This may be the most exciting Windows Phone 7 development announced today by Microsoft at Mobile World Congress -- a demo of WP7 phones connected to an Xbox Kinect game.

I wasn't there for Steve Ballmer's keynote but everything else -- Twitter, cut-and-paste, IE9, Office in the cloud -- was previously announced or unsurprising. Or maybe it all just seems anticlimactic after the Nokia partnership announced Friday.

Microsoft's isn't yet bringing Kinect motion sensing to the phone. Instead, it's taking player input from the phone and adding it to a Kinect game, turning the phone into an auxiliary controller.

When I asked the company when this sort of thing may come to market, a spokesman provided the following statement:

"The technology shown in the video is real and is an example of the types of experiences we'll be bringing to market. We remain committed to building a network that connects you to your friends and entertainment in innovative ways. This is just one example of what's possible as we explore new ways to interact with our technology. At this time, we aren't discussing specific experiences we'll be offering or a product timeline, but we look forward to sharing more in the future."

Images of Nokia concept phones running Windows Phone 7 were posted this afternoon by AOL blog Engadget, and they look pretty credible.

They also look a little bit like the Samsung Focus Windows Phone 7, at least from the back, with the subtle taper on the back.

I wonder if this was a deliberate leak to build enthusiasm among gadget fans who weren't captivated by this morning's business-heavy announcement by Microsoft and Nokia.

Here's a screengrab of the page:

The top executive at HTC's U.S. headquarters said he's not too worried about Nokia hooking up with Microsoft and the deal validates HTC's approach to the smartphone business.

After getting an early boost from Microsoft, HTC has emerged as a leading producer of advanced phones, claiming higher-end market share that Nokia's hoping to win back with Windows-based devices.

Mighty Nokia is actually following the same path HTC took to its success, said Jason Mackenzie, (left) Bellevue-based president of HTC for North America and Latin America.

Mackenzie said Nokia's partnering with Microsoft is "a validation of what we're doing."

"Nokia's following a similar lead to what HTC's been doing, in not investing in our own platform, taking solid platforms and filling the gap to deliver a solid experience to the end user," he said.

As for the competition HTC will face from Nokia phones running Windows, it's "one more competitor," he said.

"I feel confident in what we're doing," he said. "We've got a fresh brand that's resonating with consumers."

HTC emerged in the late 1990s as the first manufacturer of Microsoft Pocket PC devices and early Microsoft smartphones that appeared starting in 2002.

In recent years the company invested heavily in software and hardware design studios in Seattle and San Francisco to differentiate its phones. It developed a polished software interface that it layers over the underlying operating system.

HTC continues to make phones based on Windows -- including five Windows Phone 7 models so far =- but it's now selling more phones based on Google's Android software. It released the first Android phone in 2008.

Mackenzie said HTC will continue to produce Windows Phone 7 devices, despite the Nokia announcement. It won't be announcing any new Windows models next week at the Mobile World Congress in Barcelona but several will be announced later in the year.

"Obviously Windows Phone 7 is a platform we've invested tremendously on" and "we'll continue to support that," he said.

Asked if the Nokia deal will improve the momentum of Windows Phone 7, Mackenzie said: "It broadens the ecosystem, which is good for everyone. We'll see."

LAS VEGAS -- Here's a demonstration of how content can be streamed from a Windows Phone to the new set-top boxes based on Windows Media Center running on an embedded version of Windows.

The devices take advantage of a "play to" capability built into Windows and based on DLNA media networking standards.

Mark Pendergrast, senior program manager, is showing the technology here at CES.

SAN FRANCISCO -- It's a challenging day for Joe Belfiore, Microsoft's Windows Phone design and management vice president

Belfiore came to give an update on Microsoft's grand entry into mobile devices to Walt Mossberg, at the Dive Into Mobile conference. Mossberg pressed for an update on Windows Phone 7 sales, saying the lack of sales info makes people wonder if it's not doing well.

Belfiore said Microsoft has been focused on launching the platform and some devices are just now coming to market.

"It's just too soon to talk about numbers," he said.

Mossberg and audience members also pressed Belfiore to explain what Microsoft will do to compete with Apple's iPad and other slate-like computers.

"Stay tuned," Belfiore said.

Meanwhile, elsewhere in San Francisco, Google's captivating the tech press with big news about its Chrome operating system.

Google showed a test-bed laptop that Google employees are using to test the software. It also said Acer and Samsung will begin selling laptops running the software in mid- 2011, according to Engadget's liveblog from the event.

Chrome isn't really launching today -- it's still to come, but Google's progress in the operating system business is sucking air out of the room at Dive Into Mobile.

Google's news is aimed mostly at developers that the company hopes will develop applications for the browser-like operating system. It's also jumping out ahead of the tablet and PC announcements coming at January's Consumer Electronics Show.

Meanwhile, Mossberg kept pressing Belfiore on Microsoft's belated phone software and how long it may take the company to catch up to the leading smartphone platforms.

Belfiore wouldn't give a timeframe but said it could take a few years. (Belfiore is at right and Mossberg at left in this photo by Asa Mathat of All Things Digital.)

A few more bits from Belfiore's on-stage interview:

When Mossberg noted how far behind Microsoft's phone platform has fallen behind the iPhone and Android platforms, Belfiore said Microsoft has "tried to take advantage of what we've seen them do in the market."

"Admittedly we've been doing this for a long time, but now we think we have a product that's right up there with those guys," he said.

Mossberg asked "what makes you think it's right up there" when the Windows Phone 7 software doesn't yet have the multitasking and copy-paste features of the iPhone.

Belfiore said WP7 does some multitasking -- loading e-mail in the background, for instance -- and an update that adds copying and pasting is now being tested. He defended Microsoft's decision to focus first on capabilities that are more widely used, such as texting, browsing, email and multimedia.

"What we've tried to build is a software experience that can appeal to a very broad range of users who have needs that may not be as extreme as those tech enthusiasts," he said.

Belfiore wouldn't say when WP7 will get its first major update but said that the update is currently running on his personal phone.

Here's a video of the interview:

It's funny timing with today's Verizon LTE announcement, but Dell today is finally launching the Venue Pro, its first Windows Phone 7 device.

The BlackBerryish device has a hard-button keyboard that hides behind a 4.1-inch AMOLED touchscreen that slides up vertically.

The groaner release quote from Michael Tatelman, general manager of Dell consumer sales and marketing:

"No matter how you slide it, the Dell Venue Pro with Windows Phone 7 brings a fresh new approach of doing more with less."

I've talked to a few people who were holding out for the Venue Pro, which looks like the most enterprise focused WP7 device yet. It runs on T-Mobile's network and is being sold directly by Dell and through Microsoft stores.

An 8 gigabyte version costs $100 with a new, two-year contract and data plan. A 16 gig model is $150. Upgrading to the phone will cost existing Tmo customers $200 or $250. It's also available without a contract for $450 or $500.

The phones have a 5 megapixel camera that records 720p video, a 1 gigahertz Qualcomm Snapdragon processor, WiFi (b and g), Bluetooth and radios capable of network downloads up to 7.2 megabits per second.

Dell lists the dimensions as 2.5 by 4.8 by 0.6 inches and the weight as 6.8 ounces.

Microsoft's Kinect is connecting at the cash register. The company today said that it sold 1 million of the $150 controllers for the Xbox in its first 10 days on the market.

This follows news from England that the arrival of Kinect and "Call of Duty: Black Ops" last week combined to give game sellers in the United Kingdom their highest grossing week of all time.

With Black Friday and the real holiday selling season still to come, Microsoft is now suggesting it may beat its goal. Earlier this month it upped the forecast from 3 million to 5 million by year's end. Now it's talking about selling more than 5 million.

In today's announcement, Don Mattrick, president of the Interactive Entertainment Business, said the company is going to "keep pace with high demand and deliver against our plan to sell more than 5 million Kinect sensors worldwide by the end of this year."

Kinect went on sale in the U.S. on Nov. 4 and in Europe Nov. 10. It launches in Asia next week. Microsoft expects the system to be available through 60,000 retailers in 38 countries by the holidays. (Here's my Kinect review.)

Now it's time for Microsoft to tell us how many Windows Phone 7 devices were sold in its launch week.

Here's Sunday's "Up Front" show with Robert Mak on King 5, which has some guy talking about Windows Phone 7, near the end of the show (when it shows about 5:20 remaining).

If you think Microsoft is withering away because it can't figure out how to make a decent phone, you should spend a little time with one of the new Windows Phone 7 devices.

They won't lure iPhone fans over to the dark side or revive Microsoft's stagnant stock price.

But the Windows Phone 7 platform is a strikingly nice system with a refreshingly different design that shows the team in Redmond still has enough vision and talent to be a serious contender.

The software is elegant, fast and battery efficient. A set of Web services connect to the phone and extend its usefulness, but some still have kinks to be worked out.

Windows Phone 7 devices go on sale in some European markets Thursday and in the U.S. on Nov. 8. AT&T and T-Mobile USA will carry five models made by HTC, LG, Samsung and Dell in the U.S., each priced at $200 after rebates (T-Mobile's HD7 has a $50 rebate to get to $200, AT&T's devices are $200 on the shelf). More phones and service from Verizon and Sprint are expected next year.

Microsoft is late to the game, after stumbling with its previous phone systems, and may not catch up to phones based on software from Google and Apple. But Windows Phone 7 gives Microsoft a strong chance.

Remember, it's still early days for smartphones. Despite all the buzz around the iPhone, Android and the market's dramatic growth, most people are still using basic phones. Only 19 percent of the phones sold in the second quarter were smartphones, according to research firm Gartner.

That means most of the world is up for grabs. So winning over gadget enthusiasts who are already on their second or third smartphone wasn't as important to Microsoft as making a phone that's accessible and appealing to everyone else.

That's why Microsoft's phone ads make fun of annoying smartphone users who are always staring into their tiny screens.

It also helps explain the design of Windows Phone 7, which is built around large square "tile" buttons that fill the primary screen. Microsoft calls them hubs, and uses them to organize what you'll do on the phone. Tap one to make a call, another to check your e-mail or send a text message. Some are dynamic, with Outlook listing the number of new e-mails, for instance.

The home screen shows seven tiles at once, but you can move them around and change the selection by pressing and holding the top of a tile for a few seconds, then sliding it around the screen.

You can slide the tiles away by brushing a finger sideways across the screen. Then you'll get a vertical list of icons for applications and services loaded on the phone.

By Microsoft's design specifications, all Windows 7 Phones must have three physical keys below the screen - for "home," "back" and "search." Also required is a dedicated camera shutter button on the case that wakes the phone, if needed, to take a picture.
Cameras also must have at least 5 megapixel resolution. An AT&T Samsung Focus that I tested took nice pictures (sample below, of the 520 bridge) and its 720p camcorder would easily replace a Flip camera. They all have a nice on-screen keyboard, good phone capabilities and gesture controls like "pinch" and "swipe."

This is subjective, but I think having a back button is a big advantage for Windows and Android phones. Apple uses a single home button, plus on-screen buttons that may appear in applications. Apple and Microsoft have been going different ways here since the dawn of the PC, with one- and two-button mice, but I think new smartphone users used to PC controls will like having a physical back button.

My preference for the back button was highlighted when it acted fritzy and stopped working on the Samsung Focus. It came back after I temporarily removed the battery. Otherwise I loved the Samsung's ultra-bright screen and slim case (it's 9.9 millimeters thick, compared with the iPhone's 9.3 millimeters). At first a Microsoft spokesman said it was the first time he'd heard of such a problem. But a contact at a wireless phone company told me I wasn't the only one to see a hardware issue on early devices.

A Microsoft manager, Greg Sullivan, later told me that the phone was a "pre-production" model and the company has seen a "very low single digit percent" of devices with issues.
An AT&T spokesperson didn't have an answer before deadline.

I didn't have button problems on the HTC phones I tried. They were thicker and heavier but had more multimedia features, including fancy speakers and, on one, a machined kickstand for propping it up to watch videos.

One thing that works well - almost too well - is the integration of Facebook. When you log in to the social network, it populates a "people" tile with your Facebook friends and pulls their info into your contact list. Tapping the "people" tile calls up a unified stream of their updates and photos. Their photos also stream into the "pictures" tile.

The phones come with a mobile version of Office, including Word, Excel and the OneNote note-taking application. They can also run PowerPoint, but you can't create a presentation from scratch on the phone and have to import one from e-mail or by connecting to a corporate SharePoint collaboration server.

There are places on all smartphones where the software maker's business objectives butt into the experience. The Office suite does this by pushing SharePoint and OneNote.

Another trick of the Windows Phone is automatic synchronization with "cloud" services, such as Microsoft's SkyDrive online storage service.

If you're signed in to the service, you can have the phone automatically send slightly compressed versions of photos to SkyDrive, where you can share or download them. Microsoft gives everyone 25 gigabytes of free space on SkyDrive but only 5 gigs can be used for phone storage.

Another service tied to the phone is Xbox Live, the online network developed for the Xbox console. There's an Xbox Live tile on the phone that connects you to a game store and Xbox Live profile. Microsoft is still working on the phone features, so I can't say for sure how they'll work. I was able to buy one game over the phone network, but another required me to connect via Wi-Fi or a PC cable.

Most phone shoppers will care more about search and mapping capabilities. Bing shines on the phone, with maps that zoom into aerial photos of your location and provide driving and walking directions. Bing search will be good enough for most users, and its daily home-page image looks great on the phone. But I wish the on-phone search tool wasn't so minimalist. I couldn't search just apps in the marketplace, for instance, so my search for a particular app returned a long list of songs with similar names.

Bing lacks a few killer features of Google's map service on Android devices, including free turn-by-turn navigation that audibly tells you where to drive. AT&T and T-Mobile are making up for this by loading TeleNav's similar service, but it has a recurring fee.

AT&T is also loading a mobile version of its U-verse cable TV service - basically cable TV on the phone. A few shows are free but you'll have to pay $8 per month for a fuller selection. T-Mobile is also offering a pay TV service based on the MobiTV, and preloading a Netflix application that streams movies and TV shows to the device.

To load music and other videos, you connect to Zune software on a PC or an application Microsoft developed for Macs. The phones have a Zune tile that calls up their music, videos and FM radio. It's a very nice media player.

Applications are offered through the Zune marketplace, similar to the way iPhone apps come through iTunes. There are a lot of apps and more coming, but not as many as Apple and Google have now. If there are particular apps you must have, be sure they work on the phone you're buying.

A bigger concern is the raw state of the PC software you use to manage the phones. On the Zune console, apps you purchase won't appear in the console's "apps collection." Zune also wouldn't let me load some of my own music onto the phone because it couldn't find copyright protection information. I paid for the music, except for an album distributed free with no copy protections, by an artist who was working for Microsoft at the time. Grrr.

Microsoft's Live.com offers to let you manage your phone on the Live.com portal. But the "manage" button is a dead-end to basically nowhere. It makes you wonder if the Live team lost a turf battle with Zune over who would run the phone console.

Updates are in the works. Microsoft's promised improvements and new features such as cut-and-paste in the first half of 2011. We'll have to see what's in that service pack but Microsoft has already turned the corner with Windows Phone 7.

AT&T may be the carrier on stage with Steve Ballmer at Microsoft's Windows Phone 7 launch, but T-Mobile's got a bigger WP7 phone.

T-Mobile today is unveiling the HD7, a Windows Phone 7-based touchscreen phone with a 4.3-inch diagonal screen.

T-Mobile is calling it "the largest screen available on a Windows Phone in the U.S."

The HD7 also has a 1 Gigahertz processor, 802.11n WiFi, GPS navigation, 16 gigabytes of internal memory, FM radio and an HD camcorder. It comes with pre-installed media services, including Netflix and the new T-Mobile TV. The latter provides live and on-demand TV content from ABC News, Fox Sports, PBS Kids and other channels.

It weighs 5.71 ounces and comes with a "kickstand" for propping it up to watch video.

Also premiering on the HD7 is T-Mobile's new "Family Room" application for families to connect and coordinate activities. It includes a virtual chalkboard where family members can share notes, a shared calendar and automatic notifications when family members post something.

Pricing and the exact ship date isn't available yet but T-Mobile said the HD7 will be available by mid-November and the price will be comparable to its other high-end smartphones.

You could say the HD7 is the WP7 triple-play phone for Seattle. It's made by HTC, which has its U.S. offices in Bellevue across Interstate 90 from T-Mobile USA, and not far from Microsoft's headquarters (and offices along I-90).

T-Mobile's also going to be the carrier for Dell's new Windows Phone 7 device, the Venue Pro, that will be sold thorugh Dell.com and some retailers. It has a slide-out keypad, a 4.1-inch screen, 5 megapixel camera and 1 Gigahertz processor.

A few pics of the Dell:

You don't usually look to Intermec for blingy smartphones, but the Everett company's going a new direction with the CS40 handheld it's launching today.

The Windows Mobile 6.5-based device is a high-performance industrial barcode scanner that happens to look a lot like one of the newer BlackBerry smartphones. It also has a 3 megapixel camera and "3.75G" voice and data communications.

But the biggest difference is the heavy-duty construction, which makes the CS40 sort of like an armor plated BMW.

Intermec's calling it the "first rugged mobile computer with the size and styling of a smartphone." It claims the device is sealed against dust and liquid intrusion and can withstand multiple four-foot drops onto concrete on all corners and sides.

That blend of durability and design is Intermec's pitch to business customers who might be considering less-rugged consumer devices with scanning apps.

Intermec's release says the CS40 "enables an all-encompassing business process transformation for mobile workforces in pre-sales, merchandising, field service, long haul and truck load transportation."

For a list price of $1,795 in the U.S.

Maybe they should also make a lower-priced one without a scanner, for people who tend to drop their pricey smartphones a lot ...

Microsoft chose the huge Gamescom conference in Cologne, Germany, to unveil the first batch of Xbox Live games that will be available for Windows Phone 7 devices when they go on sale this holiday season.

The company also confirmed that it's building up a mobile games studio in Redmond dedicated to the Windows Phone platform.

As Microsoft takes on the iPhone and Android juggernauts this holiday season, a key weapon is going to be its Xbox business, including games, relationships with developers, game-building tools and the Xbox Live network.

Meanwhile, Apple has been pushing hard to raise the profile of games on the iPhone and iPad, and Google has been investing in mobile game companies as it grows its Android platform.

Leaders of Microsoft's new mobile studio wouldn't say whether the company is going to start buying or backing mobile game developers. But they did say Microsoft is developing new games internally to showcase the technical capabilities of the Windows Phone platform.

The overall effort is similar to the buildup of Microsoft Game Studios prior to the Xbox console debut, according to Matt Booty, the former chief executive of Midway Games, who was hired in March to start building a mobile studio.

An Xbox Live tile has been shown on the home screen of Windows Phone 7 devices since Microsoft rolled out the platform in February, but until now the company hasn't detailed specific games. Word of the special mobile studio just surfaced last week in job postings.

Today, it's announcing more than 50 games that will be available for the phone at launch. They include a few mobile counterparts of console games such as "Assasins Creed" and "Guitar Hero 5," plus some familiar titles such as "Bejeweled" and "Frogger." The company wouldn't say yet how much the games will cost or whether any will be preloaded on the phones.

There will be two categories of games for Windows Phone. One includes games that connect with Xbox Live, using the online service's achievement system and networking features. Those games will go through extra review by Microsoft, which will publish them.

Games without Xbox Live will also be available through the Windows Phone app marketplace.

During a demo in Seattle last week, a standout was a "Crackdown 2: Project Sunburst" from Microsoft Game Studios.

It's a simple tower defense game in which you use cannons mounted on a building to repel attackers.

The twist is that you can set the cannons up on any building captured by Bing's satellite imagery. You can pretend to be defending the Space Needle, the White House, Qwest Field or even your house, so you'll be blasting attackers marching up your street.

At left is a screenshot showing the game overlaid on the conference center in Cologne.

A player's Xbox Live avatar gets special treatment on the phone. The animated, cartoonish character waves and peeks out through the Xbox Live tile on the phone's display, like a sprite inside the device.

Tapping on the tile, an avatar can be enlarged to fill the screen and poked and manipulated with the touchscreen. It can also activate applications. Instead of launching a flashlight application, for instance, you can choose a flashlight from a list of gadgets available to the avatar, which then picks up the light and shines it outward.

Microsoft's new mobile studio will create some original games. But much of its effort will be working with game developers inside and outside of Microsoft, to get their titles onto the Windows Phone platform.

Booty wouldn't say how big the mobile studio will become, but he said Microsoft is making a major commitment to the group and "we've got huge resources."

Still being worked out is the path game developers might take with a game developed for Windows Phone and then extended to upcoming Windows tablets. On slates or tablets, Windows is the primary platform and it has extensive resources for developers, Booty said.

"We want the developer to have a number of avenues to expose their content," he said.

Here's the list of Xbox Live games available at launch: