Microsoft Corp. is bringing its video-game expertise to the forthcoming Windows Phone 7 line, an attempt to capitalize on the success of the Xbox 360 as the software maker tries to compete with Apple Inc.’s iPhone.

Microsoft says a dedicated group inside of Microsoft Game Studios will develop video games for Windows phones, help outside game publishers and scout out small, independent game makers. Video game companies will be able to use the same tools to make a game for a Windows phone or for the Xbox 360 console.

The company is also announcing a preliminary lineup of games that will be available when the phones go on sale during the holidays. The list includes popular Xbox 360 console games such as “Halo Waypoint,” “Crackdown 2: Project Sunburst” and “Guitar Hero 5,” as well as newcomers including “ilomilo,” a puzzle game in which players try to unite cute little cartoon critters separated by increasingly tricky paths and mazes.

New figures released by Microsoft shows that nearly half of all Windows 7 installations are running on the 64-bit version of company’s flagship operating system (OS). Windows Communications Manager Brandon LeBlanc revealed the figures on the official Windows Team Blog late last week:

“As of June 2010, we see that 46% of all PCs worldwide running Windows 7 are running a 64-bit edition of Windows 7.”

LeBlanc noted that this represents a huge increase in favor of 64-bit Windows. Three-and-a-half years after its release, Windows Vista saw only 11 percent of PCs in the world running the 64-bit version, while the situation with Windows 7 is one in which “running a 64-bit OS is becoming the norm.” Not surprisingly, less than 1 percent of 64-bit Windows XP machines are installed.

Microsoft Corp will begin selling its “Kinect” motion-sensing game system on November 4, before the crucial holiday season, hoping to lure new and casual players to the Xbox and steal a march on rivals Nintendo Co Ltd and Sony Corp.

The world’s largest software vendor, which has ambitions of making its Xbox 360 not just a gaming device but a hub of home video and Web entertainment, will also begin selling a smaller, same-priced version of the console this week.

Microsoft would not say how much Kinect — which plugs into Xboxes and lets players control games with body and hand gestures — will sell for, though analysts’ estimates range from $50 to $200. Executives said 15 titles, including one from Ubisoft, will be available at the time of launch.

As part of its regular Patch Tuesday, Microsoft released an update for its various toolbars, and this update came with more than just documented fixes. The update also installs an add-on for Internet Explorer and an extension for Mozilla Firefox, both without the user’s permission. As you can see in the Windows Update screenshot above, Microsoft does not indicate that the update will install anything for either browser. It’s also not really clear what the installed extension actually does.

To make matters worse, the update was marked “Important” instead of “Optional,” which means it was more likely to be installed either automatically (if the user has Automatic Updates on) or manually when the user clicks Install (Important updates are checked by default).

Web search group Google Inc is phasing out internal use of rival Microsoft Corp’s Windows operating system because of security concerns following a Chinese hacking incident, the Financial Times reported on Tuesday.

Citing several Google employees, the FT said the decision to move to other operating systems including Apple Inc’s Mac OS and open-source Linux began in earnest in January after Google’s Chinese operations were hacked.

Internet security firm McAfee Inc said at the time the cyber attacks on Google and other businesses had exploited a previously unknown flaw in Microsoft’s Internet Explorer browser, which was vulnerable on all recent versions of Windows.

Apple has surpassed Microsoft as the largest technology company in the world by market capitalization.

Apple’s move comes as the company’s iPhone, and now its iPad tablet computer, have taken on more of the personal computing tasks once handled by computers running Microsoft’s Windows operating system and other programs.

Market cap is the dollar value of a company’s outstanding shares. On Wednesday, Apple Inc.’s shares slipped $1.11 to close at $244.11, making its market cap about $222 billion.

But Microsoft Corp.’s stock fell $1.06, or 4.1 percent, to close at $25.01, for market cap of about $219 billion.

Microsoft Corp launched an updated version of its Office software on Wednesday, aiming to keep its grip on the hugely profitable business application market while countering the challenge of free online alternatives from Google Inc.

The world’s largest software company is upgrading its popular Word, Excel, Outlook and PowerPoint applications and rolling out its own online versions to keep up with the new class of mobile, Web-connected users that has emerged since the last upgrade in 2006.

Microsoft announced several improvements on Wednesday, such as editing photos in Word, using video in PowerPoint, collaborating on documents and connecting email contacts to Facebook information.

But the biggest change is Microsoft’s move into the “cloud” — allowing users to manipulate documents stored on remote servers from anywhere — where Google has been setting the pace.

Microsoft offers support for its products for five years and extended support for another five years. That time will soon be up for Windows 2000 (desktop and server) and Windows XP SP2: July 13 is the last day that extended support will be available.

According to Microsoft, self-help online support (such as Microsoft online Knowledge Base articles, FAQs, troubleshooting tools, and other resources) will be available for at least a year longer. But paid support, support assistance, and security updates will be discontinued on July 13.

Nokia and Microsoft unveiled on Wednesday the first result of their new software collaboration aimed at breaking the dominance of Research in Motion’s BlackBerry in wireless services for corporations.

The companies unveiled Communicator Mobile software, which enables people to see their colleagues’ availability, and click to communicate with them using instant messenger, e-mail, text or phone call.

The names and status of colleagues are embedded directly in the devices’ contacts application. Owners of Nokia E52 and E72 models can download it as of today from Nokia’s Ovi Store.

Microsoft Corp. unveiled two cell phones Monday that are meant for social networking-savvy teens and twenty-somethings, in an attempt to revitalize its mobile business and regain ground on iPhones and BlackBerrys.

Microsoft said its new touch-screen phones - a short, square-shaped handset called Kin One and a longer, more rectangular one called Kin Two - will be sold exclusively in the U.S. by Verizon Wireless. They are being made by Sharp Corp., which has produced Sidekick cell phones, whose software comes from Microsoft-owned Danger Inc.

Microsoft Corp will show off its latest mobile phones on Monday, but don’t expect a direct rival to the iPhone.

The world’s largest software company is trying a new tack in the hotly contested arena with its long-awaited “Project Pink” devices.

Unlike Apple’s popular device or Research in Motion’s BlackBerry, they are aiming at hyperactive teenagers who want multiple instant messaging accounts, e-mail, games, music and Facebook in a cool-looking package.

Microsoft through a pair of job postings has revealed that it’s planning to implement new anti-piracy measures but also to keep its practice of arbitrarily different OS versions. An ad for a Senior Development Engineer would have the new recruit develop “new anti-hacking mechanisms” and drivers to prevent illegal copying. What it would involve isn’t said, but it would affect every layer of the OS.

The anti-piracy measures are partly expected but do point to the company still being unsatisfied with its existing anti-piracy steps. Windows 7 already checks for sudden, drastic changes in hardware and requires activation, and just last month added an update that periodically scans for known cracks to prevent modifications.