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The upcoming 64-bit version of Microsoft Windows, which Microsoftologists have taken to calling Windows 8 because Redmond has yet to announce an official name, has been appearing here and there and getting some press in the process. Microsoft has made a few statements, demonstrated early version of the OS, and some alpha code has even escaped into the wild. And the image that’s emerging is of Windows 8 as Microsoft’s take on the mobile transition, with the new OS running on everything from smart phones to server clusters. It also may represent Microsoft CEO Steve Ballmer’s last chance to preserve his company’s digital dominance.

Ballmer confirmed back in January that the next major version of Windows would have a version for power-sipping ARM processors, which are mainly installed in smart phones and tablet computers. He reinforced this idea more recently by explicitly saying Windows 8 would run on all the hardware platforms Microsoft currently supports right down to phones, calling the next version of Windows Microsoft’s “riskiest yet. ”

Ballmer is correct: Windows 8 is make-or-break for Microsoft.

PC sales in the developed world are declining while smart phone and tablet computer sales — particularly from Apple — have been exploding. Embracing mobile then is much more for Microsoft than a strategy for success: it is becoming a strategy for survival. The risk lies in Microsoft’s need to retain desktops while simultaneously leaping the mobile divide, which they have never before tried to do with a single product.

The alpha versions of Windows 8 that people are now trading over the Internet dates all the way back to last fall and may well be the version shown by Ballmer at CES in January. It was shipped to hardware manufacturers to test on their computers only to be leaked to the public. And what we see feels remarkably like, well, Apple’s OS X 10.6 Snow Leopard right down to the App Store.

Between features that are operational in the alpha version or are hinted at in the code comments and registry, users are now experimenting with a 64-bit operating system (32-bit for the ARM version) with lots of extensions for mobile use like syncing to the cloud, 3-second hibernation, push notifications (borrowed from Windows Phone 7), a built-in PDF reader, and an attractive new user interface with some elements of that borrowed from Windows Phone 7, too.

Also hinted at in the code are effortless network connections to servers, printers and other networked devices like televisions.

There could be lots of other features, too, though the user experience from Windows 7 was that Microsoft promised more than it ultimately delivered.

One feature that has been getting a lot of buzz from developers is Windows 8’s apparent ability to boot from a USB stick. The attraction of this is the idea, popularized in the Linux community, of carrying on your keychain your entire computing environment including individually tuned operating system and all needed applications and files. Put the USB stick in any borrowed PC and you are in business, right where you left off on another PC. But given that USB-boot has also been a popular way to circumvent PC security systems and it seems to go against Microsoft’s own Windows Live cloud strategy, this may be an alpha feature aimed solely at OEM hardware engineers and completely missing from the final product.

Most Microsoft product roadmaps show Windows 8 shipping to users in the fall of 2012 after entering a formal beta test at Microsoft’s Windows Developer Conference in September of this year.  Ballmer even said that last week in Japan, speaking to developers. But this week Redmond’s PR apparatus is saying Ballmer was wrong and the next version of Windows won’t ship to end-users until 2013.

Such a delay is not a good sign.

Though Microsoft is the dominant supplier of desktop software, what happens if a lot of those desktops go away or are not upgraded? That’s the fear that underlies Windows 8, making it so important. It is at platform transitions like DOS to Windows or standalone to networked where market leadership can change. Microsoft, as one of the smaller mobile players despite several tries over many years, is placing a huge bet that this time they’ll get it right. The company’s recent deal with Nokia, bringing the huge Finnish phone vendor into the Windows Phone fold, is an important part of this strategy.

But with desktops in decline overall, Microsoft losing desktop market share to Apple and being so far totally dominated in an exploding mobile market, the question to be answered is whether Windows 8 (or whatever it is finally called) will be good enough?

I doubt it.

If Windows 8 is a bust, then, what’s a Microsoft to do?  That’s my next column….

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Back in 2008 I declared that the information economy was giving way to what I called the search economy. The Internet was making it more important to know how to find information than to actually possess that information, because data — and therefore the fully-explored truth of any matter — might be constantly in flux. Even more to the point today, we need the same knowledge on many devices so it is usually better to find the link than to maintain multiple copies of aging data. This might explain in an ass-backwards way why Google just changed the name of its largest tech division from search to knowledge. A more accurate explanation for this name change is just that Microsoft’s Bing has better marketing than Google. But in the longer run the distinction between search and knowledge probably does mean everything.

Bing is a major influence on Google. Though Google is vastly more successful in terms of search volume, Bing has influenced Google’s look and feel, especially in the way that results are displayed. An even bigger success, though, has been Bing’s marketing campaign calling itself not a search engine but a Decision Engine — looking beyond the search to the answer.

Microsoft did more than just try to out-search Google. They gave some serious thought to how to make the quest for information on the Internet more productive and useful. Bing struck a chord with users and competitors alike and one result is that Google, too, is becoming more results-centric. That’s what is largely behind this perceptual shift from search to knowledge. It was behind Google’s Instant Search results, too — a technically non-trivial effort that lies at the heart of what this particular column is all about. For the moment, Google trading search for knowledge is just posturing, but in the longer run it has really significant meaning. It’s a game-changer.

“Not all smart people work at Sun (Microsystems),” Bill Joy used to say and not all smart people work at Google, either. You can put together the smartest team and still not produce the best product for any number of reasons, which Google is beginning to realize, especially as the company is having trouble retaining technical talent. It’s a small enough world where the current Google brain drain probably is worth the nine-figure bonuses the company has been handing-out here and there to keep important would-be defectors in the fold. But in the long run some of these big brains will leave anyway, so Google has to find a way to compete despite their loss. That way is through knowledge, the company has decided.

But actually moving from search to knowledge — from searching to finding — turns out to have a heavy systems component. As they show with Instant Search, Google’s sustainable advantage probably lies not in software but in hardware optimization. What they do may be a little better or a little worse, but if they can do it faster and (here’s the important bit) do more of it, Google will retain its lead and dominant market share.

This is a hardware war and Google so far is winning, primarily because most of their competitors don’t even realize that’s what is going-on.

Time for Cringely’s seventh law of information technology: all things evolve to abstraction over time, becoming uninteresting commodities. That’s what is happening right now in searching, which is why the major players are trying to jump to the next level, to finding. This is a case of evolve or die.

Microsoft and Google and their competitors, if any, may know a crapload of computer science, but for the most part that is becoming irrelevant. The fastest way to sort numbers was discovered years ago and mathematically proved. That’s not going to change. It is completely uninteresting trying to invent a faster method of sorting.

“What’s next after X?” on the Internet can usually be answered by turning the question into “what if X were utterly ubiquitous and free — what could we do then?”

That’s the question Google is now asking itself with prompting from Bing.

Next — the future of search…

There is so much to write about but I’ll begin with Microsoft buying Skype for $8.5 billion. The pundits are debating whether this move by Microsoft CEO Steve Ballmer makes good business sense, but that’s the wrong way to look at it. The better approach is to wonder what would have happened had Microsoft not bought Skype? Based on the high price alone I’m fairly confident that Ballmer felt he had no choice but to buy. In fact I’m fairly certain he felt that not buying could have doomed Microsoft.

Remember eBay bought Skype a few years ago for $2.6 billion, failed to make a go of it, then took a big write-off and sold much of the rest of the company to private equity firms. Skype was changing hands at a discount to the old eBay price only a year ago, so what had changed so remarkably to make Skype suddenly worth more than three times as much? Nothing had changed operationally. In terms of pure financial performance Skype isn’t worth anything like $8.5 billion. But the corporate chess board has changed quite a bit in the last couple years so it is possible to see where this acquisition might make strategic sense to Microsoft.

Ballmer and his company are at a tipping-point and he knows it. Microsoft is still big and powerful and rich, but no longer is it the biggest, most powerful, and richest. It is no coincidence that Department of Justice oversight of Microsoft’s anti-trust consent decree ended this week, because Redmond is nowhere near the threat to competitors that it used to be. The company can go from here either up or down and Ballmer’s fear is that the direction will be down, down, down. Microsoft will still make plenty of money but that might be from milking declining markets.

Ballmer needs a new market to milk.

Maybe that new market is telecom. Here is where I might write a paragraph about the Microsoft vision of unified communication where they’ll suck market share and market cap from the old telcos. That’s happening already and if someone is going to benefit, why not Microsoft? But I’m not writing that paragraph because I don’t think Ballmer or Microsoft are actually that smart. They have lost confidence. Microsoft no longer believes it controls or even can control the game. Worse still, they don’t have confidence that they even know the rules. So they’ve adopted a defensive posture and this Skype acquisition is more of a block than anything else.

Microsoft bought Skype to keep Google from buying Skype.

Notice I didn’t mention Apple. In terms of being the baddest MoFo in the market Apple has no peer, but Apple is following its own very different course. Apple isn’t the next Microsoft, you see. Apple is not the next anything because the role it aspires to transcends anything imaginable by Microsoft, ever. Google is the next Microsoft, so Google is seen by Ballmer as the immediate threat — the one he has a hope in hell of actually doing something about.

In the end Apple will probably beat both Google and Microsoft, but that’s not a story for today.

Were Google to buy Skype they’d convert those 663 million Skype subscriptions to Google Voice and Gmail and in a swoop make parts of Yahoo and MSN irrelevant. They’d build a brilliant Skype client right into the DNA of Android, draining telco revenue and maybe killing smaller players like Windows Phone. They’d cut deals with equipment makers like Cisco (Linksys) and NetGear and steal voice revenue from telcos and cable companies alike.  That’s all Redmondesque behavior and if anyone is going to be behaving that way, Ballmer feels, it had darned well better be Redmond.

If Microsoft is to continue to grow and have an existence post-PC it has to be first or second in the mobile market, Ballmer knows that. Buying Skype doesn’t guarantee Microsoft that success, but NOT buying Skype would have practically guaranteed Microsoft’s failure.

And the $8.5 billion price? That was effectively set by Google, not Microsoft. Ballmer would have paid anything for Skype. $8.5 billion is just the price at which Google feels it is better for them to build rather than buy.

So look for heavy activity in this space as Microsoft assimilates and Google constructs. More acquisitions will come for both companies along with any number of strategic realignments. But remember that neither is actually in control. The conclusion is not only far from certain, there’s still a chance that neither company will dominate.

This is not an end-game, not yet.

Microsoft last week bought just over 600,000 IP addresses (a /10 block and a /11 block if you are counting) for $7.5 million from bankrupt Nortel. For a moment there it was everywhere on the web, a mild reminder of what happens during famine when gluttons hoard food. But what is really going-on here, and what does it mean in the near and longer terms? Well first let’s settle something: it is immaterial to Microsoft. Had the price been $7.5 billion or better yet $75 billion, I’d say that Redmond viewed as central to its survival having that block of addresses. But $7.5 million is pocket change and probably represents to Microsoft just a cheaper way than some other of doing the same thing. What it means in the long haul to the rest of us is yet more chipping-away of our facade of IT empire as we find increasingly complex ways to preserve IPV4 while China, for example, mandates IPV6.

If you aren’t up on this broader story it is simple — there are only around 4.3 billion IPV4 addresses yet a lot more than 4.3 billion people and digital Internet nodes already in the world. There are two ways to deal with this population problem: 1) move on to a new system with more addresses (IPV6 which has more than we think we’ll ever need but didn’t we think that the last time, too?), or; 2) hold the system together with a mixture of internal and external and static and dynamic IP addresses through that happy kludge called Network Address Translation (NAT). IPV6 puts your light switch or, for that matter, every individual light from your Christmas tree on the Internet and NAT can do that, too, but with a lot more effort and a lot less fun.

It’s not that we’re actually out of IPV4 addresses, either. The simple analogy here is to money. The economy is crap right now and yet all the economists talk about trillions of dollars being “on the sidelines” and “waiting” — though it’s never quite clear to me waiting for what. Same, too, with IPV4 addresses, which are all assigned, we’re told, but not all are being used, like those 600-odd thousand snapped-up by Microsoft.

I have no doubt those addresses are for Redmond’s cloud strategy, by the way. If they want to virtualize hundreds of thousands of customer servers they’ll need hundreds of thousands of IP addresses, simple as that. Microsoft actually thinks about stuff like this unlike, say, me.

There are plenty of IPV4 addresses either not in use or improperly in use today. I’m told that Verizon, for example, has two /16 blocks (128K addresses in all) that are external addresses assigned to internal nodes like printers. Those could all be recovered since they are being misused, or Verizon could sell them for close to $2 million, following Microsoft’s act of price discovery.

I’m sure there are millions and millions of IPV4 addresses to be regained just as I am sure that most of them won’t be because the rich don’t see themselves remaining that way by giving their stuff away for free.

Routers from Cisco and Juniper have been ready for IPV6 for a decade or more. In one sense it’s just a matter of turning it on. And doing so would bring us advantages in network performance and security, too. But that isn’t going to happen anytime soon in the USA because of the complexity of all those NAT layers presently in operation, but even more so because of the threat it poses to entrenched network administrators and IT directors.

IPV6, you see, doesn’t differentiate between the workgroup and the galaxy, so workgroup sysadmins and net admins might disappear in droves. This won’t go down well in an industry based on keeping CEOs ignorant and in fear of the network and continually adding IT labor whether it is needed or not. Entrenched IT will fight tooth and nail against IPV6, telling all the appropriate lies to keep us from moving forward until we’re a decade or more behind.

They — maybe you — don’t really care.

This won’t happen — can’t happen — of course in China or India, both of which will shortly need at least a billion addresses each for smart phones alone. IPV6 is their only answer. So thanks to their late entry in this Internet thing and our gleeful willingness to self-destruct, they’ll shortly be ahead and we’ll shortly be behind.

But Microsoft, thinking ahead, will have IP addresses to spare.

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When John Sculley forced Steve Jobs out of Apple back in 1985, the former PepsiCo marketing executive very quickly produced dramatic improvements in Apple’s profitability.  Apple wasn’t losing money before, but Sculley improved the bottom line by about $200 million (a lot in those days) simply by cutting all of Steve Jobs’s pet projects that appeared to have poor prospects. Sculley raised profits by cutting expenses not by increasing sales. Expect the same thing at Nokia where, ignoring for the moment the “enormous payments” Microsoft will be making according to Nokia CEO Stephen Elop, the company can probably cut its software development budget to near-zero, saving $1 billion or more and increasing profits by that amount.

It’s one of those moments like when Cortez burned his ships to concentrate his conquistadores fully on their job of subjugating the Yucatan. Elop is burning his software development capability, betting on Microsoft. Sure, Symbian will be around for awhile in Nokia products, but two years from now it should be gone. And in that interim period, between lower development costs and Microsoft subsidies, Nokia will look better to investors even if its smart phone market share continues to fall.

That’s why Nokia did the deal with Microsoft, which will be assuming the burden of all that software development and paying Nokia for the privilege. It’s a short-term play that makes perfect sense in an industry where CEOs last an average of four years. Stephen Elop’s four years are now fairly certain, his golden parachute packed and ready.

Two years ago such a move would have been impossible in Europe simply because of employment laws making it very difficult to dump workers. But the current European financial crisis has changed that somewhat and Nokia’s obligations probably aren’t as onerous as they once would have been. Austerity is the thing these days in Northern Europe and almost everywhere else.

Now you might think I’d be against all this but I am not. Compared to Android and iOS, Symbian was, in a word, crap. We can have geeky arguments about it all day but the market has spoken loudly and I am right. Elop was right to make a platform change and righter still to do it this way, primarily at Microsoft’s expense. Nokia had to get out from under its bad software culture and this was by far the most elegant way to do it.

But having said that, I still don’t think it will work.

Trading Symbian for Windows Phone 7 with a $100 bill attached is still trading the worst smart phone platform for maybe the third best. With Blackberry retooling and coming up fast and HP’s WebOS as a dark horse backed by massive manufacturing capability, it isn’t at all clear that Nokia has selected a winner. Which is why I have some advice for Stephen Elop.

Nokia should put some of that Microsoft money into emulating Google’s Android development, where 25 programmers humbled the 1000+ working on Symbian. Hire a Bob Lee (or heck, hire Bob Lee), set up a small development office somewhere in the USA, and spend $5 million per year aiming at mobile life after Microsoft. By tying hardware and software as Apple has done with the iPhone and iPad (and Google, by definition, can’t do) Nokia can head Apple off at the pass with the equivalent of the iPhone 7, three years from now.

That’s what Nokia should do, but of course by then Elop will already by gone.

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Nokia today announced that the Finnish cellphone company is choosing Windows 7 Phone as the operating system for its future smart phones. It’s not a surprising move given that Nokia CEO Stephen Elop came from Microsoft and it’s not even that risky a move given that the alternative was a slow but certain death for Nokia smart phones running Symbian and Meego. Sure Nokia could have gone with Android, but Google has less at risk than Microsoft so Redmond had much more to offer. The only real question here is whether Nokia can make the new strategy a success?  I think they can, but there is only one way to do it — by rushing the net.

I’m no tennis player, but my understanding of this tactic (rushing the net) is that you hit deep into your opponent’s territory using a lot of topspin to make the ball harder to return then run right up to the net and attempt to slam his return shot into the forecourt while your opponent is still in the backcourt and unable to reach the ball. The Nokia version of this tactic would be to introduce the best-ever Windows 7 Phone (faster processor, better screen, expanded services, competitive price) then simultaneously introduce  another line of Windows 7 phones that have 80 percent of that capability for 20 percent of the price.

Nokia has already lost the elites but they have to make a credible showing toward the top of the market to stay in the game at all. This is one of those instances, though, where the company really can make it up in volume. They have to essentially cannibalize their own feature phone business to save the smart phone business.

Think about it. The life expectancy of a mobile phone is 18 months, meaning phone users are literally forced to change on a regular basis, often switching platforms in the process. Even buying another phone from the same vendor is a decision because the phones change so much in that time. That’s what makes the mobile handset business such a bloodbath where Motorola can be on top one minute with its Razr then a dog the next with the same phone. Phones are getting ever more powerful, too, thanks to Moore’s Law and the many cloud services coming online. So a Nokia decision to lean-into smart phones at the expense of feature phones is really just a decision to accelerate the inevitable.

Feature phones have one generation left to live. Three years from now every mobile phone will be a smart phone.

To embrace this, however, means going aggressively down-market. Apple has done this with the $49 iPhone 3GS. Nokia needs to do the same thing only even more aggressively. They need a $29 smart phone.

Here is the transition we are likely to see. Cheaper smart phones are coming. There was a story just this week about Apple announcing a cheaper smart phone this summer. I can see it now: at the WWDC in June Apple will announce the expected multi-core, 4G, international-ready, whiter-then-white, 1.2-GHz iPhone 5, but the “one more thing” will be a repackaged, smaller form-factor, $29 iPhone 3GS. Nokia has to not only have a response to this move by Apple, they must preempt it with an earlier announcement of their own.

Nokia (and Microsoft’s) survival in the phone market is dependent on staking out the lower end of the market where people buy on price as much as features and brand loyalty is less of an issue. Apple is heading there and Android is there already. Only by rushing the net — by following the time-honored Microsoft technique of throwing bodies and staggering amounts of money at a problem in a market-changing way — can these companies remain relevant in the mobile space.

But they have only one chance to make it work and they’ll have to take that chance before June.

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Microsoft isn’t going away, but they aren’t going to do a lot of things right in 2011, either. The company’s leadership is stuck, complacent, and just a bit thick. We’ve seen a lot of flux in the executive ranks reporting to CEO Steve Ballmer and I think that’s mainly because Ballmer won’t get out of the way. There is no upward mobility path so people leave. But don’t expect Ballmer to leave in 2011, either, which means more mediocrity. So Microsoft will continue to be a huge presence, but not feared in the industry the way they used to be. They’ve become the new IBM.

Windows Phone 7 is almost there, for example, but almost isn’t good enough, so it will be pummeled by Android and iPhone. Microsoft will spend a lot of marketing bucks on Win7 tablets, but those won’t be ready for prime time, either. Windows 7 isn’t really optimized for touch. It requires more horsepower to run than Android or iOS, so that means either higher prices, lower margins, or crappy performance. If tablets really takeoff it won’t be a good thing for Microsoft.

Meanwhile, Google has become the new Microsoft.

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I want to make a small point here about this week’s Windows Phone 7 launch from Microsoft. Now you can take this with a grain of salt given that I was an iPhone user until I switched this summer to Blackberry for my Startup Tour. So I am not exactly unbiased. But is it just me or are you, too, having a hard time seeing the $400 million that Microsoft claims to be spending on this product launch?

Redmond spent $100 million launching Windows 95, a number that set something of a record for its time and stood for long as the standard amount to spend if big companies were trying to make a point based mainly on the depth of their pockets. For Windows 7 (not Windows 7 Phone) I recall Microsoft set a new record, blowing-through $200 million. So when I read that they’d be spending $400 million on Windows Phone 7 — now this was something I had to see. I expected to find a Microsoft billboard on my garage door.

Not yet.

Given inflation (remember that?) $400 million doesn’t buy what it used to, but I still expected Windows Phone 7 to be as omnipresent as Windows 95 or Windows 7. And it’s out there, but the effort simply doesn’t feel like $400 million worth of marketing oomph.

But maybe this just isn’t the kind of oomph we’re used to, I thought. Maybe Microsoft is putting half or more of the money into subsidizing the handsets. If that were the case, though, wouldn’t the new Windows Phone 7 phones be cheaper than they are?

From what I have read these new phones are all around $200, which is the going rate for high-end smart phones these days on two-year contracts. So they are being subsidized, certainly by the carriers and perhaps by Microsoft, but the companies are just matching the competition: they aren’t trying to buy market share with lower prices.

I think that’s a mistake. I think lower handset prices right now are exactly what Windows Phone 7 needs to have a chance of building market share. Maybe that’s what Microsoft intended but the carriers are keeping the prices up by taking the Microsoft subsidies for themselves.  If that’s so then the carriers are betting on Windows Phone 7′s eventual failure.

Maybe Microsoft had to give the carriers those subsidies in order to get enthusiastic adoption of yet another smart phone platform. This could all be more or less out of Microsoft’s control, much like getting Matt Lauer to correctly pronounce Steve Ballmer’s name on the TODAY Show.

How can you mispronounce a name like “Ballmer?” Lauer can, but I can’t even phonetically replicate his effort here, it was so strange (and he did it twice).

Microsoft is in trouble right out of the gate because the rule of thumb is you need two or more clearly superior points of differentiation in order to gain share from an underdog position in a technology market. I don’t think Microsoft has two.

Microsoft is counting on the innate newness of Windows Phone 7, on its clever streamlined interface, on what Redmond believes — really believes (I know these guys and they love their product) — to be superior performance. That’s plenty of points of differentiation only some of them aren’t real.

Microsoft isn’t Apple. Even Microsoft knows that. So the value of “new” isn’t very much in this case. It didn’t work for the Kin, did it? It didn’t work for Bob, either. New never works if it doesn’t also mean “better,” and this doesn’t — at least not yet.

While Windows Phone 7 may or may not be technically superior, it isn’t so much superior that I can make a judgement that will stick. These phones aren’t out yet, nobody has really used them, and they haven’t been proven on a network (remember Antennagate at Apple?). So Windows Phone 7 may be dramatically superior but who would know? Is the sizzle alone enough to keep us from buying or renewing an iPhone or Android phone while waiting for the Windows Phone 7 handsets to ship? I doubt it.

Then there’s the App Store, or sparseness of it. iPhone and Android have between them about 250,000 more native applications available than does Windows Phone 7. Ironically Microsoft is the underdog here, fighting uphill againsst its own favorite strategy of market dominance. I don’t doubt their heart or determination to do so, but this is new territory for Redmond and I’m not sure they can make it.

So if I was Microsoft and had $400 million marketing dollars to throw at this new platform, I’d make every phone cost $99 or less. I’d bull my way into the market through sheer financial muscle, sending signals all the way down to my Mom in Arkansas that there’s a new sheriff in town.

Only Microsoft didn’t do that.

Maybe they couldn’t force such pricing on the carriers. More likely they are holding price cuts in reserve to be used only if needed — if the market doesn’t otherwise respond to what Microsoft sees as its clear advantages.

I can tell you right now that’s a mistake. If the goal is to get consumers to wait before buying a phone there will have to be some economic component of that motivation in the form of dramatically lower prices.

Having not started with lower prices from the very first minute, Microsoft may well have already lost the battle, no matter how good the phones actually are.

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Microsoft co-founder Paul Allen filed suit this week against a litany of Internet companies claiming they had violated patents awarded years ago to Allen’s now-defunct Interval Research. Many writers, including one passing himself off as me, claimed this made Allen a so-called “patent troll. ”

I don’t think that is the case.

Patent trolls are individuals or companies that habitually sue others over obscure patents. While the Interval patents generally are obscure, that doesn’t make them invalid. And the fact that Allen and then-partner Dave Liddle paid $100 million for the basic research behind those patents, well that hardly sounds like troll behavior.

If Paul Allen actually were a patent troll. he would have sued in South Texas, where all the whopping patent judgements are handed-down, not in Seattle.

Suing in Seattle is bad trollmanship.

What we have here is a guy who may be the 37th richest person in the world, but he used to be the second-richest. He’s pledged to give away his fortune and maybe wants more to give. In short, I don’t see a problem with these legal actions.

That doesn’t mean, however, that Allen will prevail. The odds are against him. While Interval developed upwards of 300 patents, that isn’t like the thousands of patents now controlled by Nathan Myrhvold’s company, Intellectual Ventures. Myrvold has acquired baskets of patents creating a strategic mass of IP and an associated legal team he can use to bludgeon almost any company into cross-licensing. Allen has no such depth (or power).

He’s just trying to turn lemons from lemonade.

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Near the eve of Apple’s tablet announcement, I’d like to turn my 2010 predictive eye again to the mobile space where, as my title suggests, there are only three software players that matter — Apple, Google, and RIM (Blackberry).

But wait a minute, isn’t Nokia the big Kahuna in this space and aren’t they right now suing the heck out of Apple? Yes, but that’s an act of desperation, a stalling tactic intended just to slow Apple down or, possibly, send some useful license revenue from Cupertino to Finland. It doesn’t change the inevitable.

So-called “feature phones” are going away, to be replaced within two product cycles (three years, tops) entirely by smart phones driven by mobile app stores and the need for carriers to generate additional revenue. It’s not like you’ll even be able to find a feature phone to buy.

The smart phone marketplace will consolidate around three operating systems — Android, Blackberry, and OS X. Though there will be some ups and down in the market and the complete transition will take longer to complete than my usual 12-month timeline, Symbian, Windows Phone, and every other smart phone OS that isn’t from Apple, Google, or RIM, are likely to die or be reduced to insignificance.

None of these platforms expect to die, but that’s the way it is with these things. You don’t expect to lose until you’ve lost, generally.

On some level Nokia even thinks it still has a chance to win the war, but it doesn’t.

Nokia has faith in its very popular cross-platform application development environment, Qt, which it acquired in 2008 with the $153 million acquisition of Norwegian company Trolltech, father of Qt. Nokia sees Qt as its secret sauce — a potent weapon against Apple.

Qt, like any of a number of 4GLs can write once and deploy a lot of places. Where Qt is different from the other 4GLs (in the mind of Nokia at least) is that it manages to do what it does without killing app performance, probably because Qt began as a mobile product and mobile apps have to be lean and fast.

So Qt is growing up at just the time applications and OSes are growing down, thanks to OS X and the iPhone. Qt has made notable progress supporting 3D apps and a huge variety of processors, chipsets, and GPUs. They showed at CES the same apps running from the same source on a ton of different hardware platforms from handsets to desktops to set top boxes. And now Nokia has reportedly done the unthinkable, which is to rewrite Maemo, its Linux, in Qt.

Meanwhile, Apple has been rolling forward with its PA Semi strategy, the first fruit of which we’ll apparently see announced next week. I sense that Apple is headed toward a family of devices from handhelds to servers all linked to a cloud and ostensibly running the same OS. Apple is mining the ARM ecosystem for this move in addition to its own PA Semi extensions.

Nokia thinks that, through either Qt or various legal moves (or both), it can slow Apple’s mobile juggernaut. They won’t, and here’s why.

Apple hires the meanest lawyers it can find, paying extra bucks for that “kick them for good measure” attitude. I know a company that had long legal battles with both Microsoft and Apple and they said Apple’s legal team was far worse than Microsoft’s, hands down. So while Nokia’s appeal to the World Trade Organization (WTO) to punish Apple, is an act of desperation, Apple’s similar response is just the way they do these things.

This legal situation is going to get uglier and uglier but in the end it will be settled with patent cross-licensing, no monetary damages or license fees, and Nokia feeling relieved to get out of the negotiating room alive.

This will happen, I believe, because Apple doesn’t really give a damn about Qt or Nokia. They care much more about Google and Microsoft.

Nokia is going to fail in using Qt and Symbian to compete with Android or iPhone application frameworks because Nokia just doesn’t understand software. Nokia is a hardware company that does software and hardware companies aren’t fighting this new war, they just build the weapons.

Remember Apple is a software company that sells its products in an expensive hardware box.

Ultimately (more than 12 months from now) there will be a shakeout and Nokia will drop Symbian and even Maemo in favor of Google’s Android and Nokia custom apps, UI, and hardware.

Meanwhile Microsoft will cut its rumored (and incredibly expensive) iPhone search deal with Apple, then it will introduce Windows Phone 7, which will fail to gain market traction for Redmond. Microsoft will ultimately align with Apple to avoid the embarrassment of working with Google, but this alignment will be solely for mobile.

That is unless Microsoft buys RIM and then doesn’t screw it up.