Microsoft is gearing up to take on rival Apple in the smartphone market.

The Wall Street Journal reported Monday that Microsoft is getting ready to launch an online marketplace akin to Apple’s App Store. Microsoft is also readying a more sophisticated version of its mobile operating system called Windows Mobile 6.5, the Journal reported.

Smartphones are sophisticated mobile phones that offer users access to the Web and e-mail, as well as, provide phone calling and all kinds of other messaging options. This category of device is the hottest thing going in the mobile market and is seen as the biggest growth engine for mobile devices over the next few years.

Microsoft, which only makes the operating software for these devices, holds third place in terms of worldwide market share, according to research firm IDC. Symbian, which powers Nokia’s smartphones, is by far the leader, followed by Research In Motion with its BlackBerry devices. Even though Apple seems to be the most talked about smartphone on the market these days, it’s only in fifth place in terms of overall market share for 2008, IDC said.

But Apple is quickly gobbling up market share and has become a serious threat to Microsoft and every other company competing in the smartphone market. With the release of the iPhone 3G last summer, Apple has tripled its market share from 3 percent in 2007 to 9 percent in 2008, according to IDC. Meanwhile, Microsoft only grew from 11 percent market share in 2007 to 12.3 percent in 2008.

Microsoft is facing several challenges as it tries to catch Apple’s growth rate. For one, the company’s business model is based primarily on licensing software to hardware vendors. While this business model worked fine just a couple of years ago, it’s difficult to justify now given that device makers can get free software from Symbian, Google Android, and Linux.

The second problem that Microsoft faces is that the company has been almost exclusively focused on business customers. Over the past year, smartphone users have gravitated toward more consumer applications. In addition, to their work e-mail, they want multimedia functionality and social-networking applications on their phones.

“Microsoft is in a really tough spot,” said Ryan Reith, an analyst with IDC. “It has to change its value proposition. And a big part of that is refreshing its user interface and making the device more consumer-friendly.”

Reith believes this is why it’s critical for Microsoft to develop an application marketplace that can compete with Apple’s App Store. The App Store went live last summer and offers thousands of applications for the iPhone and iPod Touch music player. The store has been very successful with users downloading thousands of free and fee-based applications.

Microsoft already has a developer community creating applications for Windows Mobile devices. But the problem is that many of these applications have been geared toward business users. And there is not a single destination that makes it easy for users to discover and download different applications.

“Clearly smartphones are not just for business users anymore,” Reith said. “Microsoft needs to work with the developer community to get more consumer applications out there.”

Microsoft’s executives have gotten the message that consumer functionality is hot. And Andy Lees, head of Microsoft’s mobile business unit, told the Journal that the company is about to put more emphasis on multimedia and other consumer functions like music and photos.

Microsoft is expected to unveil its new offerings next week at the Mobile World Congress trade show in Barcelona, Spain. Chief Executive Steve Ballmer will be delivering a keynote speech there on February 16. I will be there next week covering the news from the show, as will my CNET Reviews colleagues Bonnie Cha and Kent German.

But even with these enhancements, Microsoft has a tough road ahead of it. Competition in the smartphone market is increasing. And several competitors, including Android and RIM, are launching their own version of an application store.

Read Further…

Microsoft readies smartphone assault on Apple | Wireless – CNET News.

Official-looking pictures and pricing of Amazon’s Kindle 2 e-book reader have been leaked on the Internet. The information surfaced on a forum late last night and reveals a thinner Kindle but without the speculated price increase. Amazon is expected to officially announce the Kindle 2 during a press conference on Monday.

Improvements in the Kindle 2 design bring a thinner footprint, a metal back plate, and stereo speakers. As I mentioned last October, when the first Kindle 2 pictures surfaced, the design cues bring back memories of the first Apple iPods. As usual, the information is purely speculative but the forum reads that Kindle 2 will be available on February 24 for $359.

Kindle 2 features rounded corners, a black and white screen (apparently the same size as the original Kindle), a 3.5mm headphone jack with a sliding sleep button at the top and a unified QWERTY keyboard under the screen. Smaller navigation buttons are placed on both the left and right sides of Kindle 2. A joystick now replaces the original Kindle scroll wheel.

Amazon’s new Kindle will use the same EV-DO wireless technology for over-the-air downloads as the original. Storage-wise, Kindle 2 is said to come with a 2GB on-board memory. Form the leaked pictures, no SD card slot can be seen but my guess is that there will be a way to expand Kindle’s memory – maybe a microSD slot.

Leak: Amazon Kindle 2 Pictures and Pricing – PC World.

More from Facebook’s Schroepfer:

The future of an open and social web will be measured not by protocols, but by how much we collectively improve the standards and technologies that enable us and others to give people more powerful ways to share and connect.

There’s even an OpenID design summit being planned for next week, to be hosted (where else?) at Facebook’s offices in Palo Alto, California.

Facebook Throws its Weight Behind OpenID | Epicenter from Wired.com.

Skype 4.0 (download) became available for free on Tuesday to Windows users. The free desktop VoIP communicator is a worthy final version that brings some key enhancements with video and audio bandwidth, though it leaves behind some of the extra adornments of version 3.8, the last stable build.

Those who have been following the triple release of betas since the summer won’t see more than a few changes. If 4.0 is new to you, however, the developments are more notable.

Skype concentrates on video size, quality, and performance in this version. From version 3.8 to version 4.0, every design change has been made to draw video and IM to the forefront, and for the most part it works. The video window has expanded and calls are easier to start. The classic two-pane interface has consolidated into one, though you can still split them apart if you prefer.

Skype’s beautifully staged marketing shot shows Skype 4.0′s new videotopia.

(Credit: Skype)

As the culmination of the beta series, Skype 4.0 gets a pumped-up video and a completely new audio engine. Compared with other codecs out there, the new audio engine, named Silk, is touted to give Skype superwide-band audio (which operates like broadband), but uses half the bandwidth. Fewer bandwidth demands gives Skypers with dial-up connections (like a lot of people in India and Brazil) a bigger boost, keeping calls from being dropped or mangled beyond recognition.

I’ll attest to the great call quality during my interview with Skype’s London-based product manager. It was clear and the vocal timbre sounded true. Keep in mind that I dialed in from a newish, memory-loaded Asus computer with full broadband support and a set of top-tier headphones. Quality will still depend on your Internet connection and hardware configuration. Using headphones that support ultra-wideband audio will help.

The video stream was similarly good. Though far from the perfection of TV, I noticed fewer jumps and blips and sound syncing that was very close to real-time. Problems that have beset Skype’s video calls in the past–a frozen or choppy image and packetized audio–were largely absent during test calls. According to Skype, that’s thanks to a new back-end addition that sticks a finger in the air of network conditions. As available bandwidth drops, the bandwidth manager tries to salvage audio first.

What my demo call looked like on a Vista set-up.

In choppy conditions, it helps steady the video, too, by lowering the rate of frames per second and by compressing images more heavily. Your friend on the other end may become blocky and the image delayed, but faces should also break up less than in previous versions.

Other new features include abuse reporting if you receive an invite from an unauthorized Skyper, and a light stub installer that pulls down the rest of the application.

Skype, it seems, has also been pulled into a toolbar partnership. Now when you install it, you’ll see that an optional toolbar that comes bundled with Skype 4.0. The free Browser Highlighter includes the ‘Compare on eBay’ tool for Firefox and Internet Explorer. Considering that eBay owns Skype, it’s not a surprising addition, but one I’ll nonetheless pass on every time.

What’s missing

There are two skins in version 4.0, the default light gray and blue combo called Skype ‘Chrome,’ and the classic hue. Skype hinted at more skin support in later versions coming out this year. There aren’t plans at the moment to support third-party skins, but customization, I’ve been assured, will get more attention.

Along these lines are absent customizations that had not been making beta testers happy. If you’ve been holding your breath for greater IM treatment in this release, or birthday reminders, you might breathe again until the next launch.

Those of you shouting about the cessation of public chats will be glad to know that Skype 4.0 for Windows will support those you already have, but it will keep you from adding new ones. Skype representatives told us they’re still playing around with ideas of how to become more Web-oriented. It could as easily look like a reshaped version of chats as it could go in a different direction.

That brings us to Skypecasts, another source of some users’ lamentations. Skypecasts was pulled last September because it just couldn’t grab the hoped-for attention. A similar(-ish) feature will probably be rolled into whatever public chats becomes in future releases.

For now, Skype has retreated to its bread-and-butter position of providing good, clean voice, video, and text chatting. If worldwide Windows users notice consistently improved audio and video quality, that’s not a bad place to be.

dwonload skype.