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Mobile phones play an important role in Microsoft's software plus services vision, CEO Steve Ballmer said Tuesday.

Microsoft Corp.'s software strategy a few years ago revolved around software that was either embedded on devices or burned onto CDs and shipped to users, he said. Today, however, software works in tandem with the Internet, which can back up and update the software.

"There's no better way then the cell networks of the world to make this model happen," he said, speaking during the opening presentation at the CTIA Wireless I.T. and Entertainment conference in San Francisco. He envisions a time when software is wirelessly updated and works in tandem with services hosted on the Internet.

But the software plus services concept won't be different for the PC and the mobile phone, he said. At the top of Microsoft's innovation agenda is unifying a variety of devices and applications. Microsoft is focused on enabling developers to create single applications that take advantage of phones, desktop computers, the enterprise environment and the online environment, he said.

Microsoft is enabling that in part by offering a consistent platform that developers can use to create applications for the PC and mobile phones. For example, a developer can write a thin client for mobile phones using HTML, Ajax and in the future Silverlight. Microsoft's .Net and Visual Studio can be used to write rich applications for mobile phones. Microsoft also offers a compact version of SQL so that developers can write applications for Windows Mobile phones for database manipulation.

The phone is particularly important in achieving Microsoft's unified view, he said. "The PC is the most powerful device, but the phone is the most popular," he said. Particularly in the developing world where PC's may be cost prohibitive, cell phones may be more widespread.

Microsoft is focused on providing software for partners to use and it is working carefully not to compete with them, he said. Unlike Google Inc., Microsoft won't be participating in the upcoming 700MHz spectrum auction. "What would it buy us to own a piece of spectrum?" he said. "It would probably do a lot to alienate the telecom industry. It does not do a lot to advance our goal which is to take some exciting technology and spread it."

Windows Mobile is a big opportunity financially for Microsoft from two perspectives, he said. If Windows Mobile runs hundreds of millions of devices, that's a great business for Microsoft, he said. "Also, I don't think we can serve our customers' broad desire to bring together desktops, devices, enterprise and online if we ignore the mobile area," he said.