Despite a bad economy, Microsoft managed to sell 28 million Xbox 360 consoles worldwide in 2008, expanding the Xbox’s lead over its nearest competitor Sony’s PlayStation 3. Despite financial problems by some publishers, the video game industry overall has charged ahead against the recession. Market researcher NPD found video games sales rose 10% and totaled $2.91 billion in November.

Microsoft stated that global sales of the Xbox, which was launched about a year prior to the PS3, outperformed the PS3 by over 8 million units by the end of 2008. Online consumer spending on Xbox Live online service increased 84% compared to last year and members of the Xbox Live community rose to over 17 million by the end of 2008. Consumers have spent over $1 billion on Microsoft’s Xbox Live online service since its launch for the 360 in 2005, according the company.

Critical to its success, Microsoft cut the U.S. price of its entry-level console in September to $199, which is $50 below Nintendo’s Wii console.

Microsoft appears to be considering a different angle in regards to future software sales and pricing models. At least that’s what a new patent recently submitted by the computer giant would indicate. Their newly applied-for patent would essentially have them charging users for software on a new pay-per-use system.

For example, instead of doling out a large amount of cash to say, tinker with Photoshop or the suite of Microsoft Office applications, users could try out the products on a per-use basis. Now, normal, full purchases of software would still need to be available, unless Microsoft has lost their sanity as well as a solid business model.

A lot of folks seem to be doubting whether the new system indicated in the patent will ever see the light of day, but it is something interesting to ponder. I can certainly see the cost-benefit to it, especially for those looking to try out a new software. Perhaps some will even stop downloading software they can’t afford from torrent sites, as paying a per-use fee may be easier.

Also, it’s speculated that if the new system is implemented, there could be a very inexpensive range of PCs launched, which would include only a very small amount of full-version software.

In a recent step to increase web search traffic, Microsoft has approached an old competitor, Sun Microsystems for help.

Based on a deal to be announced on Monday, Sun will actively promote a Microsoft toolbar as users download Sun’s Java software. The toolbar will have a field for Live Search queries and access to MSN content.

In the past, Sun and Microsoft have been staunch rivals. The 2 companies have fought during long antitrust battles, such as a $2 billion in patent and antitrust settlement that Sun won against Microsoft in 2004.

The financial details of the deal haven’t been disclosed as of yet. Sun has posted a $1.7 billion loss in the third quarter of 2008.

Sun has signed a similar deal with Google in the past but that deal is ending.

Microsoft has also recently signed a deal with Hewlett Packard to make the search engine by Microsoft the default on all computers shipped to the US and Canada starting in January. The browser toolbar will also be included on those computers.

According to Norton, 35% of all online search is done from the either the address bar, built-in search fields and toolbars.

Microsoft is planning for the next Windows Live update to offer a social networking features to its various applications such as Hotmail and Messenger.

This move will help Microsoft against competitors such as Facebook and MySpace. The company has hundreds of millions of users of its popular applications but is behind when it comes to social networking sites.

The new version of Live will combine contact lists from Messenger, Hotmail and the blog network Spaces. Users will be able to set up a ‘network’ of people from that list and then allow the information exchange  of their online activity.

For example, within the Windows Live home page, users can have their Twitter messages show up, as well as Flickr photos, Yelp reviews and Wordpress blog entries. When users add new information, such as a photo, this information will be shared with their network of friends, who can then leave a comment. People can also invite friends to join online groups.

Microsoft will be offering its Xbox customers an early holiday treat starting November 19th. The Xbox 360 owners will have the opportunity to upgrade their dashboard with a conversion called the New Xbox Experience(NXE). This upgrade is what the company calls  “ultimate social-entertainment experience” with “something for everyone.”

NXE offers many new features for Xbox users, such as creation of avatars and the ability to select from 10,000 movies and TV shows streamed from Netflix. Some movies will be available in high definition.

The avatars may take up to 10 minutes to create depending on how many features are added and once created they can be used throught any Xbox 360 games.

Microsoft said that the download size should be large, but didn’t specify the size. Since having a hard drive is recommended, the company is willing to sell a compatible device for less than $100.

Microsoft will use its NXE Developer Diary to release screenshot of the NXE’s interface. What is known already is that users will be able to see every game they have played previously on Xbox 360, for those who like reminiscing.

Also, themes will take over more than just the dashboard background with NXE. Each graphic will additionally be related to the theme and will change if the option is selected.

Once NXE launches, consumers will be able to go to a game store to view game screenshots, watch trailers, and read the back-of-the-box descriptions.

Microsoft’s Beijing research center is expected by the company to produce major leading innovative software. The company is one of many that are seeing their Chinese operations as having great potential with the huge talent pool of scientists and engineers.

Microsoft said that its Chinese office had already produced 260 innovations that were implemented in products available worldwide. The center is the company’s largest outside of the US, employing 350 researchers and has been awarded 1000 patents in China and beyond.

The center is expected to take a lead role in the development of business-focused products for developing countries and potentially health care-related applications. Currently, the Chinese center is known for its role in the development of an electronic tablet that can recognize handwriting. It also worked on speech recognition and advanced video game graphics.

In Beijing, originally Microsoft was relying on Western-trained Chinese researchers but the country’s own universities are now producing highly adept workers. Microsoft has invested in China, despite the country’s negative record in software piracy. The company isn’t concerned to a large extent about theft during research since its software is made up of many small elements.

For the longer term future, Microsoft intend to place a global emphasis on such developments as ‘natural user interface’ which would allow users to control computers with speech or gestures, as opposed to keyboard or mouse.

Due to the growth of emails, instant messaging, and cell phones, multiple surveys have described that work productivity has been negatively affected. It may appear ironic but some of the corporations responsible for the above technologies are now trying to find the solution.

The big technology companies such as Microsoft, Intel, Google, and IBM have created a non-profit group, the Overload Research Group, to examine the problem and come up with cultural and technological solutions to help workers.

Based on many employers, comprehensive solutions are needed for the reduction digital interruptions. For instance, RescueTime, a company which researches computer habits, discovered that a typical IT worker who sits at the computer all day, checks his email 50 times, uses instant messaging 77 times, and visits 40 websites. The study of 40,000 people used a tracking software installed on their computers.

The research company Basex estimated the business cost to be more than $650 billion annually in productivity lost due to unneeded interruptions. Much of the cost originates from the time it requires people to focus again.

There are basic software tools currently being developed to reduce distractions. Google recently developed “E-Mail Addict” which allows a workers to cut themselves off of their email for 15 minutes. However, users can cheat simply by hitting the escape button.

Intel initiated 2 studies last year with 300 engineers and other employees from a microchip design group to examine this problem. The first study looked at employees who were encouraged not to use digital as well as in-person contact for 4 hours on Tuesday mornings. Laminated cards that said ‘quiet time’ were posted in the workplace to remind the workers of this. After a few weeks, employees found the conditions too strict, but it did have an impact. Almost 75% of participants supported extending this approach for the all employees.

In the second study, named “zero e-mail Fridays,” employees were encouraged to use face-to-face but not digital communication for that day. 30% of employees favored this approach, and 60% recommended that it would be used throughout the company.

The ad sharing deal that has been discussed between Google and Yahoo could be ending. The talks between the 2 companies and the US Department of Justice have stalled, according to the Wall Street Journal.

The proposed deal, first raised in June, had faced criticism from the advertising industry, which feared Google having too much control over the Internet ad market.
Google controls as much as 60% of the market and Yahoo 20%. Microsoft is at about 10%.

The deal would permit Yahoo to display ads from Google and then take a portion of the revenue. Notably, the deal would offer Yahoo an insight into which of the searches brings in more money.

Contrary to the newspaper’s report, the 2 companies are insisting that the talks are going on.

The deal is especially important for Yahoo since it recently laid off about 1500 employees, which comprise 10% of its workforce. This news came on top of the profit report of a 64% drop in the third quarter.

If the stall in the talks is true, Yahoo and Microsoft might renew their buyout negotiations that were stopped a few months ago.

Microsoft managed to irritate Chinese computer users with its new antipiracy move. The antipiracy application is called Genuine Advantage.

This application creates an inconvenience for users by causing the desktop background to turn black every hour.

It’s interesting to note that Microsoft managed to be successful in China by actually encouraging piracy of its products. Bill Gates himself said recently that Microsoft competes better against Linux in China because of permissiveness to piracy. This way, the market share is increased, until one day the company forces people to buy its products.

The irony here is that the Chinese people are facing daily government monitoring and censorship of their online activity, but a less invasive tactic by a company is openly disliked.

Overall, it’s clear that Microsoft is trying to have it both ways, expand its market while ignoring piracy and also cracking down on piracy. The best solution for Mircorosft is probably to charge reasonable prices for its products and work on other business models that can make it additional revenues.

What is it? Search Perks is Microsoft’s latest stab at a paid search program, and features a toolbar that rewards users with “tickets” for every search performed. When the program ends in April, users will be able to redeem their accumulated tickets for prizes. Of course, users will need to continue with the program in its entirety in order to redeem their tickets.

The toolbar does not collect personal or sensitive information, but simply keeps track of the number of searches performed. Each user is awarded 500 tickets at sign up, and can earn up to 25 tickets a day, depending on how many searches they perform.

It’s not as easy to abuse as first meets the eye, as Microsoft is limiting the amount of eligible searches to 250,000. The most valuable prize available appears to be a Microsoft Xbox controller, so don’t sign up expecting to receive a big screen plasma television in the mail.

The rules? You must be located in the US and sign up by January 1st to enjoy the perks. Also, you’ll need IE 6 or higher to use their toolbar.