Microsoft Unveils Phone Software With Rival to Apple’s Siri

Photographer: David Paul Morris/Bloomberg

Joe Belfiore, vice president and manager for the Windows Phone Program Management at Microsoft Corp., at the Microsoft Developers Build Conference in San Francisco on April 2, 2014. Close

Joe Belfiore, vice president and manager for the Windows Phone Program Management at... Read More

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Photographer: David Paul Morris/Bloomberg

Joe Belfiore, vice president and manager for the Windows Phone Program Management at Microsoft Corp., at the Microsoft Developers Build Conference in San Francisco on April 2, 2014.

Microsoft Corp. renewed its push to catch up with Apple Inc. and Google Inc. in mobile devices, unveiling updated Windows Phone software with voice-search features and offering it for free for small phones and tablets.

Microsoft, which previously required a licensing fee for Windows, will offer it without charge for handsets and tablets with screens of less than nine inches, Microsoft operating systems chief Terry Myerson said at the company’s Build conference for developers in San Francisco today. Microsoft also showed off a voice-controlled digital assistant called Cortana that is similar to Apple’s Siri, which is part of a new Windows Phone 8.1 software for mobile gadgets.

Chief Executive Officer Satya Nadella, who was appointed to lead the world’s largest software maker in February, is working to remake Microsoft for an era where smartphones and tablets have become central. To do so, he must strike a balance between offering Microsoft’s software for competing platforms while still keeping the company’s Windows operating system as a core focus. Today’s event was designed to re-emphasize the importance of Windows to the Redmond, Washington-based company and to spur adoption of the software.

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“Reinvigorating the Windows franchise continues to be a key ingredient in Microsoft’s recipe for success as it looks to offset headwinds from the secular challenges in the PC market,” Daniel Ives, an analyst at FBR Capital Markets & Co., wrote in a note.

Delicate Balance

Nadella’s tricky balancing act was underscored by two Microsoft events last week and this week. The CEO last week debuted Microsoft Office software for Apple’s iPads and said he’ll “hold nothing back” to get the company’s programs across all devices, in a clear departure from the software maker’s longtime focus on Windows.

In contrast, this week’s Build conference puts Windows front-and-center by giving developers tools and tactics to boost Microsoft’s single-digit share in phones and tablets, as well as providing money-making opportunities in a contracting personal-computer market.

“We’re going to innovate with a challenger mindset,” Nadella said at the event.

In making Windows free for smaller phones and tablets, Microsoft is working to narrow the gap with Google, which distributes its Android mobile operating system to hardware manufacturers at no cost. Android has become the most widely used software in smartphones and tablets.

Start Menu

Myerson also said the company is restoring the Windows start menu, which will be made available to users as an update. The company yanked the feature from Windows 8, triggering customer complaints. Microsoft also showed Office applications for Windows that are redesigned for use with touch controls, one week after showing similar apps for Office for the iPad.

Microsoft Vice President Joe Belfiore said the new Windows Phone 8.1 will have an action center, which is a pull-down menu that gives people access to basic functions regardless of whether programs are already open. The software, which will start rolling out in the next few months on existing phones and on new devices later this month and in early May, also lets users customize their phone’s lock screen and offers new choices for tweaking the start screen.

Cortana Speaks

Cortana, which “fully replaces the search function on Windows Phone,” according to Belfiore, is named for the artificial-intelligence character in Microsoft’s best-selling Halo Xbox video-game series.

Developers outside Microsoft can write their own apps for Cortana, Belfiore said. With users’ permission, Cortana can learn about consumers from their searches, keep track of people they interact with and set up an “inner circle” of the most important people and who can contact users during the times of day they set as “quiet hours.”

Belfiore demonstrated how he allowed Cortana to scan his e-mail, causing the program to ask him whether to track an Alaska Airlines flight mentioned in an e-mail itinerary. The program can be used to start a Skype call, add a TV show to the user’s Hulu queue or check a friend’s Facebook posts.

“She’s great at helping me get things done, whether its by talking or typing,” Belfiore said.

Windows Share

Nokia Oyj’s handset division, which is being acquired by Microsoft in a deal set to close this month, will begin selling new phones using Windows Phone 8.1, said former Nokia CEO Stephen Elop. The 930 is a high-end device that will debut in June and feature wireless charging, while two cheaper phones designed for emerging markets will become available in May, said Elop, who will become Microsoft’s executive vice president of the devices group when the transaction with Nokia is completed.

Windows stands to be the fastest-growing smartphone operating system over the next four years with 30 percent annual growth, according to a Feb. 26 report by researcher IDC. Even at that rate, Windows Phone would only make up 7 percent of the total market in 2018, compared with Google’s Android software at 76 percent Apple’s iOS at 14 percent.

In tablets, Windows had 3.4 percent share in 2013, IDC said. For Microsoft’s Surface tablet, the share was 1 percent.

Global computer shipments fell a record 10 percent last year and are forecast to continue to decline this year as tablets and smartphones lure consumers away from traditional desktop and notebook designs, according to IDC. Tablet sales volume -- dominated by Apple and Google, whose operating systems account for 95 percent of that market -- will rise an average 16 percent annually through to 2017.

One possible boon to Windows developers: Microsoft is working on obtaining tools, via acquisition or development, to make it easier for application developers to target multiple operating systems without having to rewrite software. The company is considering an acquisition or investment in Xamarin Inc., or other companies that enable mobile apps to run on different devices, people with knowledge of the matter said last month. Microsoft may also build those capabilities itself, one of the people said.

To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Ben Livesey

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