The numbers out today from IDC, in regards to European smartphone sales appear to contain good news: Windows Phone grew by more than double in the last year, with shipment of its handsets up some 156 percent. That’s no small figure.

However, there is a softness to the number; the great Nokia roll out has not managed to explode Windows Phone sales numbers. That may appear counter-intuitive, but bear with me. We return to the famous quote from Microsoft’s Steve Ballmer, from July of last year: “[in regards to Windows Phone] we’ve gone from very small to very small.”

Yep. Here’s the kicker: Windows Phone, even with that growth, only barely managed to crack 4% market penetration in Europe. Sure, that’s progress, but only on a certain scale.

One important Windows Phone selling point is the money that’s behind it; Microsoft wouldn’t let Windows Phone fade, right, and therefore it will eventually hit scale, and thus become a real player. Endless studies have been published touting the future of Windows Phone, that it will control some large percentage of the market in the coming years.

And yet, the platform appears to be treading water. Nokia’s arrival, that supposedly momentous event, couldn’t even get Windows Phone to the 5% mark. And it’s not as if there is another Nokia-level event in the works. Looking ahead, all that appears on the horizon are the occasional software updates and, of course, new crops of phones before the holiday season.

So you have to ask, how is Windows Phone going to manage to find enough sales velocity to hit double-digit market share? That’s my rule of thumb for the platform, crack 10%, and it will have finally ‘made it.’

People are noticing the slow growth. I don’t see much of a solution to boost the platform, other than something as vague as ‘quality.’ Your move, Microsoft.

Buck up Windows Phone fans, BBC’s iPlayer is coming after all, and shortly. In fact, according to the Inquirer, it will land on Microsoft’s smartphone platfrom in a matter of weeks.

A Nokia staffer, again via the Inquirer, provided the following quote to place the release of iPlayer in context: “BBC Iplayer is expected to arrive on Windows Phone within the next few weeks, a sign that the Windows Phone Marketplace is attracting more developers.”

Windows Phone could use the good news. Recently, RunKeeper very publicly dumped the platform, citing poor usership rates. From our previous coverage:

RunKeeper, an app that helps you keep track of your workouts, and injects a social element into running, is pushing the eject button and leaving the Windows Phone platform, along with Symbian.

[The move] well highlight[s] the issues that Microsoft’s mobile project is currently enduring. According to RunKeeper, Symbian and Windows Phone combined made up a dismal 1.5% of its userbase.

Thus, the positive comment from Nokia, albeit a nicely biased one, and the news that the BBC is still taking Windows Phone seriously, comes at a good moment. I almost want to call out ‘damage control,’ but don’t have any direct evidence with which to do so.

While iPlayer is coming soon, the same report in the Inquirer included one last factoid, the news that Sky Go won’t be on the platform for several more months.

Good morning hoi polloi, I do trust that your week has been a good one. If not, skip this post, hit the beach, and call me in a fortnight. For the rest of us, it’s time to dig into the last 7 days of Microsoft.

Unlike last week, this specific edition of This Week at Microsoft will be a return to old form. No fat, no overhype, just a good ol’ fashioned roundup. Now, ensure that you are following TNW Microsoft on both Twitter, and Facebook, and let’s get into the news.

Kinect

Kinect for Windows, a product with nearly limitless potential, and zero current practicality, made a step forward this week with the release of its SDK, version 1.5. Included in it were a slew of upgrades that are sure to make developers happy, as they make their life easier.

If you buy a Kinect sensor for Windows, it does, wait for it, nothing. You have to code your own experience, which is a drag. However, with the new tools that Microsoft has released, developers should spend more time working on apps for the dang thing, so that we can all get one. Here’s what’s new in the 1.5 release:

Most critically, Kinect for Windows 1.5 has a new tool called Kinect Studio, which allows developers to “record and play back Kinect data.” Microsoft claims that this will “dramatically [shorten] and [simplify] the development lifecycle” or Kinect applications.

Also included is an SDK to track faces, new sets of code examples, and SDK ‘documentation improvements.’ Microsoft claims, in its post announcing the new version of the code, that it has made improvements to skeletal tracking, which will not support seated users.

Oh, and the Kinect for Windows sensor is available in a number of new countries.

Bing

Bing surprised the world this week by noodling up to Nokia, and employing their mapping technology. In Bing Maps, traffic data and geocoding information are now supplied by Nokia. This is true for the web version of Bing, the generic mobile version, and the mapping technology that exists in Windows Phone.

Aside from meaning that Bing just got a big chunk better, you can officially start the ‘Microsoft to buy Nokia’ rumor engines again.

Office

Office is coming for both iOS and Android. Read that again: Microsoft is building a version of Office that will work across every Apple device, and every Android device. This is massive.

This on top of the version of Office that Microsoft is building for Windows on Arm (WoA), Office in the cloud, and Office 15, and you wonder if anyone on the Office team even sleeps.

Windows 8

And finally, Windows 8 is not set to sell 500 million units in 2013. Microsoft vigorusly fought that rumor, calling the quote in question a simple misunderstanding. As we noted: “What went wrong? Well, an American businessman speaking at a Korean event, as reported by a French press group, in English, was perhaps a recipe for confusion.”

Yeah.

There’s been some excellent commentary on the subject of technological innovation in the past few days, and where and how it occurs. As you might expect, Silicon Valley has been the discussion’s in-room elephant. Views of its present, past, and future prominence are as diverse the people who populate it.

The difference of opinions is not cosmetic. In this post, we’re going to check in with Steve Blank, Mark Suster, and Fred Wilson, all who have written on this topic recently, and then come to a synthesis as to which, some, or all of the three are correct.

Is the Valley a pipe dream for entrepreneurs? Will the future make it as obsolete as an old American Motors’ plant? Let’s find out.

Where We Are

Mr. Blank gave a rather blunt interview to The Atlantic that is well worth reading in its entirety. If you have the minute, do so. What follows is my condensed and edited distillation of Blank’s argument.

Silicon Valley is screwed as we know it.

If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years, at best, whereas social media will go big in two years, what do you think I’m going to pick? If you’re a VC firm, you’re tossing out your life science division. All of that stuff is hard and the returns take forever.

VCs are only [...] interested in chasing the billions on their smart phones. The golden age of Silicon Valley is over and we’re dancing on its grave. I feel bittersweet.

What Blank is saying is that as returns for investors have shortened for one technology niche (social/apps/mobile/etc), and remained long for others (science/engineering based projects), where the dollars are heading is tilted. And as the investment direction changes, Silicon Valley shifts what it builds. Hence Blank’s point that the locale is over from the perspective of what it used to be, and that the age of Facebook and its ilk is upon us.

That may sound odd, given that what the corporate (mass) media and most laypeople think of as Silicon Valley is just that at the moment: social software. However, that’s just the current instant. Let’s talk to Fred.

Fred Wilson, the thinking man’s venture capitalist, all around nice guy, and a person whose respect has been earned, wrote a fascinating article the other day under the title “The Darwinian Evolution of Startup Hubs.” We’ll get to its larger gist in a moment, but it’s time right now to chase a pedigree. Here’s how Fred views the Valley’s life, since its ‘inception:’

In my mental model of Silicon Valley, the first “tree” was Fairchild Semiconductor (founded in 1957) which begat Intel (founded 1968) which begat Apple (1976) and Oracle (1977), which begat Sun (1982), Silicon Graphics (1981), and Cisco (1984) which begat Siebel (1993) and Netscape (1994), which begat Yahoo! (1995) and eBay (1995), which begat Google (1998) and PayPal (1998), which begat YouTube (2005), Facebook (2004), and LinkedIn (2003) which begat Twitter (2006) and Zynga (2007), which begat Square (2010), Dropbox (2008), and many more.

Critical in that list is what Blank would probably call the tipping point. Observe the shift that happens between Cisco, and Netscape. There isn’t another hardware play until Square, which only half counts. Of course, Facebook and Google are huge builders of servers, but that’s not their product; it’s how they deliver it.

Blank seems to have a point, at least according to our current progression: technology in the Valley has moved from building things to shipping code that went from enterprise-focused (Siebel), to consumer-oriented, such as Facebook. And thus we reach Blank’s conclusion: the old Valley is dead, and Facebook rocks.

Looking at Wilson’s pedigree, Blank’s point about profitability cycles, from an investor standpoint, is also likely true. I’ll leave that for you to untangle, as I don’t want to bog this post down in math [I would love to run the figures - email me if you want me to - if there is enough demand, I’ll do a second post].

Now, the question becomes ‘so what?’ So what that Facebook’s IPO is a fucking flagstaff in the middle of the corpse of what the Valley used to be?

So What?

As it turns out, some folks couldn’t be more pleased about the change. This might underscore Blank’s contention, but the low cost of building a social/app/mobile product means that more little companies can be launched, creating the potential for more total successes. Even more, returns are now faster, making LPs, VC partners, and entrepreneurs happy.

Enter Mark Suster, and his 7 points as to why “It’s Morning in Venture Capital.” Again, read this whole post, please. I’m merely extracting part of its juice for my use here, and more than I feel comfortable quoting without asking you firmly to pass the original a pageview or two. Mark, take it away:

Looking ahead at the next decade I am excited by what I believe will be viewed as one of the best and most rational investment periods for venture capital due to seven discrete factors:

1. The number of startups being created has increased by an order of magnitude
2. The number of venture capital funds has shrunk by two-thirds
3. There are 20x more consumers online
4. We’re online all the time and at high speed
5. Mobility really changes everything
6. Everybody is now payment ready
7. We’re all socially linked

Of course, Mark Suster is based in LA. Does that change the efficacy of his points in regards to what the Valley is going to build? No. The reason why he has decided to live in the worst city in the United States is beyond comprehension, but his points as to why VCs may be excited about the next ten years are unaffected.

Note, however, how he describes the market: online, payment ready, and at high speeds. In short, Suster is looking at the market through the lens that Blank outlined as something other than what the Valley used to be.

Another pre-rebuttal: haven’t I merely selected a venture capitalist that works in the social/mobile/app space, and held him up as a symbol of the whole VC market? Isn’t that a bit, well, bullshit? Sure, but read his points again, and compare them with Blank’s argument. The dollars will flow, as Blank states, to where the opportunity is fastest, and perhaps, biggest, which is what Suster outlines. The two combined paint a pretty simple picture.

Now, all of this is most dangerous if we lose, entirely, the old tech. The life sciences. The next Cisco. Biotech. That sort of thing. Is there a point of no return? I wouldn’t think so, but over time expertises shift, and if we promote and feed venture capitalists of only one flavor in the Valley, it will take some time to undo.

But where did all that physical tech come from? We have to return to Fred Wilson for an answer:

The transistor was invented in the late 1940s and by 1958 we had commercial startups working on the technology. So if this revolution is anything like the last, the next big thing will be invented any day now and within a decade or two we will be on to the next technology revolution.

That’s where Fairchild started from, eventually begetting Square, in a way. Is it right to say, then, that we are merely moving forward, that each progression is the next progression? Semiconductor tech replaced (roll with that assertion, please) something before it, right? So isn’t the bumping of other science technology from the VC roles, taking those funds and applying them to social, just simple evolution?

The Other Tech

Yes, it is. The problem with that, in a pure sense, is that we still use all that old stuff, in better forms. The companies that came after have hoovered up the cash, but we still need innovation at the thicker branches of that tech tree that the new stuff has grown from.

But that doesn’t mean that such work has to take place in the Valley itself, incidentally. As is obvious in market dynamics, especially when contemplating the rules of market demand and investor supply and entrepreneur ability under a globalized economic model, it will come back, just somewhere else. By that I mean, we still need someone to invest in that ‘other’ stuff, and that eventually, someone will. As we have noted, however, if we hyperfocus on the Valley, we’ll be a damn proverbial one trick pony.

That means ceding huge slices of potential innovation and profits to other locales, and likely, other countries.

Science is not dead in the United States. As Blank notes in that interview that we have now pilfered far more than is polite:

I teach science and engineering. I see my students trying to commercialize really hard stuff. Thank God we have small business research grants from the federal government, otherwise the Chinese would just grab them.

In short, the US government continues to pump money into certain technology firms. It doesn’t always work (see: Solyndra), but sometimes it does (SpaceX, Tesla).

Woah, I hear you having that complaint out loud, so I’ll tend to it now. How can we kvetch about the Valley, when SpaceX and Tesla are born from PayPal seed money and are Silicon Valley companies? An excellent point. My response: It’s impossible to draw big trends from individuals. Musk is an anomaly on a scale that we haven’t seen since Jobs and Gates, period. What he is doing is almost beyond comprehension. His double life between a space company and a car company makes Jack’s Twitter and Square dance look like a regular job (in my humble opinion, of course, much love, Jack).

But the market is Darwinian, and thus someone else will invest dollars in hard tech. If we depend on the US government to make those investments, alone, in the States, we are asking to lose that race.

What All This Means

Still, it’s not all bad. If the rest of the world wants to make the longer, harder bets, and we can make all the fast, simpler ones, don’t we win in the end? That comes down to a question of foundations. Do the companies that are currently the darlings of the Valley build foundations? It’s an open question.

Instagram, instead of building a long-term company that could have trained oodles of top talent for the future, will likely remain a smaller affair, later folded into the giant that ate it out of fear. Fred speaks on the phenomena:

If you drill down a bit deeper, you see that the founders, investors and early employees generate a tremendous amount of wealth from these big successes. The later employees don’t make as much wealth but they do learn a ton and make enough money that they don’t need to work for someone else and so they strike out on their own and are often funded by the folks who made the big money in the prior startup. That’s how the seed drops from the tree and starts a new tree growing. This continues on and on and on.

But what happens when you don’t have that long maturation process, with the top dogs essentially curating the crop of people that they are going to invest in? I’m not sure, but I don’t think that it would lead to an improvement of how things have worked. At the same time, calling down what is changing the present as lackluster simply because it doesn’t mirror the past is a fool’s errand. You can make up your own mind here.

Still, the idea of ‘from whence’ is important. As Fred Wilson demonstrated, it’s how we go to where we are today. This is no idle question. It could be an existential one.

Therefore the future, as you might have expected, is a bit unclear. But the idea that technology and the Valley is constricting to a single niche, or corporate variety, I think is troubling. If we all chase the same goose, most of us lose, and only one animal is encaged. All bits and bytes and pieces of motherboard in a single basket is hardly a good diversification strategy.

Then again, the Darwinian model has given us the fastest technological change ever witnessed by man. There’s something to that.

What we need is for someone to write a book that traces technology from Manhattan Project, to today. That would likely provide us with the context that we need to properly decide if we are making wise choices for the future.

Fred hits this perfectly:

But of course, all of this is conjecture. History doesn’t repeat itself. But it does rhyme. That comes from Samuel Clemens (aka Mark Twain). One of my favorite people ever.

Mine too, Fred.

Did you catch that story the other day, that Microsoft CEO Steve Ballmer stated that Microsoft was going to have a Windows 8 install base of 500 million, or so, by the end of 2013? That Microsoft was going to sell so many new machines and software licences was big news.

After all, at those sales levels, Windows 8 would be a world smashing success.

Now Microsoft is calling foul, stating that the man was misquoted. Instead, Microsoft now says, its CEO was merely discussing potential upgrade figures from Windows 7′s numbers. What does that mean, you ask? Well, it’s somewhat simple. Microsoft is pushing people towards a past statement with the following quote (via ComputerWorld):

The numbers Steve Ballmer gave at the Seoul event are a restatement of what we said at the Windows 8 Store event in December, when we were talking about existing Windows users and analyst projections of PC sales for 2012 that could be upgraded to Windows 8 when the time comes.

Happily, our friends over at NeoWin managed to dredge up the proper post (which you can find here), that contains the following quip:

We’ve just passed the 500 million licenses sold mark for Windows 7, which represents half a billion PCs that could be upgraded to Windows 8 on the day it ships. That represents the single biggest platform opportunity available to developers.

Did the media world blow the story out of proportion? Of course. However, here’s the original bit from the AFP:

Ballmer estimated up to 500 million users will have Windows 8 next year, promising the “best economic opportunity” for device makers and app developers who adopt the new system.

Publications well keyed into the world of Microsoft, such as RedmondMag interpreted that in the following way:

Steve Ballmer, Microsoft’s CEO, predicted on Tuesday that 500 million users will have Windows 8 devices by the end of next year, according to a press account.

So, that was the narrative. Of course, everyone was wondering out loud how Windows 8 was going to beat the pants (in terms of sales velocity) off the very popular Windows 7. But the quote was, frankly, not that mis-juiced. Thus, a  false media wave was generated.

What went wrong? Well, an American businessman speaking at a Korean event, as reported by a French press group, in English, was perhaps a recipe for confusion.

In a move that is certain to raise eyebrows and acquisition rumors (again), Bing today announced that Nokia will power the Traffic feature of its Maps product. Also, Nokia geocoding information will be integrated to improve routing results. Mapping is no small piece of Bing, as it is integrated into its web product, and into Windows Phone platform as a core feature.

Today’s upgrades will also be live on m.Bing.com, so that all mobile handsets can access them. The features will roll out over the next few days.

The Nokia-powered results will be present in some 24 countries (listed in a moment). The Nokia deal will lead to better traffic results, Microsoft claims, as smaller streets will be covered as well as major freeways. I can anecdotally report that Bing Traffic results were more than passable before, so an improvement is gravy, albeit welcome gravy.

This upgrade comes on the heels of the news that Bing is launching a full redesign of its product, and gathering new traction through Yahoo’s Axis browser. This appears to be the Month of Bing. According to the Microsoft blog post on the news, the inclusion of Nokia geocoding information is “another important milestone in our partnership to build the world’s best mapping platform using Nokia and Microsoft’s assets.”

The following countries are effected [Formatting: TNW]: Austria, Belgium, Brazil, Canada, Denmark (traffic only), Finland, France, Germany, Greece, India, Indonesia, Ireland, Italy, Luxembourg, Mexico, Netherlands, Norway, Poland, Portugal, Russia, Saudi Arabia, South Africa, Spain, Sweden, Switzerland, UAE, United Kingdom, and the US.

Here’s a shot of improved traffic information, in  Seattle (Microsoft image):

On the whole this is another incremental Bing improvement that will help the search engine continue its war with Google for consumer mind and market share.

The higher-quality the ad, the better its impact? Maybe not, in today’s saturated market.

In April, the Plenty of Fish Ad Blog put out a post that quickly made waves among the technorati and advertising-focused, as its conclusions were antithetical to the common sense surrounding how to garner the attention of the public. You see, Plenty of Fish put together a slick, normal Facebook ad, and they made a utterly terrible one in Paint. Here’s the two ads:

Now, the numbers. The top ad had a 0.049% click through rate as tested over 15,000 impressions, not a shocking figure. However, the bottom ad had a click through rate of 0.137% over the same number of impressions. That’s a 2.8:1 ratio, which is massive.

Of course, one study is hardly gospel, but the results were intersting enough that it piqued the curiosity of many. It wasn’t hard to guess that someone was going to try the same gimic, right? Today, this SpotHero ad popped up in my Facebook feed (via Jon Pasky):

I love it. Frankly, you know that the above ad would snag your eyes much more rapidly than something more produced. The best part has to be the artifacts around the logo, which are proof that this ad was designed to be as bad, and thus as good, as possible.

However, I have no eye for such things, and so I showed the above ads to TNW’s design guru, Harrison Weber, for his perspective:

“Oh, this is absolutely terrible, but equally brilliant. I’m sure, once it catches on, this low-fi ad technique wont work again for a few years, but I love it. It’s like giving the middle finger to tradition. In advertising, sometimes you just have to do whatever you can to stand out. MS Paint nostalgia always helps”

Terrible, it’s the new good.

The fine folks over at NeoWin managed to secure a slide detailing the specifications for Dells’ forthcoming Windows 8 tablet. Of course, Dell may issue several other models, but this appears to be, at a minimum, one of them.

The tablet is an Intel-based device, with a 10.1″ screen. Internal hard drive space will be provided by an SSD that will hold up to 128 gigabytes. The machine will pack 2 gigabytes of RAM. The rest of the specs are below, on the slide itself:

The tablet should be more than hardy enough to run Windows 8. Aesthetically it looks to be a total bore. As NeoWin correctly points out, the device appears to be quite similar to the Dell Latitude ST.

Critically missing from all of this: pricing. The device above could sell quite well, provided that it has a competitive price point. However, since the Latitude ST costs several hundred dollars more than the base iPad, we are not exactly confident that Dell is going to hit the right dollar level with this device.

TNW has written extensively on the coming Windows 8 tablet lineup, fretting about two things: poor design, and high prices. Now, low prices can cancel design sins, for the mass market, to an extent. But good design will have a harder time beating the effects of high prices, as the iPad is a quality and price benchmark. We’ll say it again: no matter how good Windows 8 is, if the hardware built and sold to run is sub-par, Windows 8 itself will struggle.

Sound off in the comments: how much would you pay for the above Windows 8 tablet?

Google, in a bid to boost its presence in the payments market, has launched Beba in Kenya, a pre-paid card enabled with Near Field Communication (NFC) to allow people to pay their bus fare without using cash.

Yes, Google is doing this. Actually, according to Beba’s Terms of Service agreement, the company in question is Google Ireland Limited, interestingly enough.

According to TechMtaa, the move was expected, and is rolling out first in Nairobi. The card, which can be loaded with up the local equivalent of $115, is likely attractive to customers, as it may help them dodge rising rates, or bus drivers that don’t provide exact or proper change; TechMtaa reports that “route charges are pre-loaded on to the [user's card],” which means that certain lower rates (off-peak) may not be counted, but at least the price will be consistent.

The Beba website will track and display a user’s account balance, paid rides, and payments into the system. According to the Beba website, there are no fees associated with using a Beba card.

It is difficult to discern what Google’s longer-term plan is, in building and launching Beba; is this a defensive play against a rival, or a move to merely grow its market share in payments anywhere it can? Google Wallet has hardly been a smashing success in Google’s home market, after all.

TechMtaa notes Safaricom, a company that provides payments, and other cellular services as a competitor. Perhaps Google is looking to edge into their turf, presuming that it is profitable. Whatever the case, through its Beba brand, Kenya just picked a new Google system.

This is certainly not Google’s first foray into Kenya. For a bit on the scandal that led to the ouster of its former Country Lead, head here.

Lie no more, my friends, as new technology can tell if that grin on your face is more grimace than pure delight. Even more, the patterns that the algorithm has uncovered can be applied by individuals, meaning that anyone with a bit of training will be able to check to see if your smiles are sincere, or not.

And that’s why this tech is awesome, and scary. Integrate it into your store’s security cameras, and you can tell which people really think that their significant other looks good in that cardigan or tie. Or apply it to court, to make witnesses sweat more than they are. Taking it a step further, if we can gauge smiles, how long until other emotions and their physical signals are decoded?

Alright, enough of that sort of talk. MIT is talking about using the technology for a good cause: helping autistic children better interact with other kids. Peep the clip, just don’t smile: