Microsoft held its annual shareholder meeting this morning at Meydenbauer Center in Bellevue to a sunnier outlook overall, except for shareholder questions about the popularity of Macs and iPhones.

Chief Executive Steve Ballmer looked backward and forward in his address:

"There's no doubt that fiscal year 2009 was one of the most challenging we've ever face. The economic reset had a major impact on companies around the globe and Microsoft was certainly no exception," he said.

While "we saw revenue decline for the first time in the company's history, fiscal year 2009 was actually a good year in terms of execution and fiscal management," pointing to the launch of Bing, Zune HD and other products. Windows 7 came out in October, which was after fiscal year 2010 began.

"Today we're certainly more efficient, definitely more agile and definitely more competitive than ever." The company beat analyst estimates in the first quarter of 2010 that ended Sept. 30.

And in the long, long term: "When we meet back here in 10 more years, we will look back and say, 'Wow, wasn't technology really primitive in 2009? Computers didn't recognize our speech, they didn't recognize our gestures .. we didn't have instantaneous access to the world's information, we still used pen and paper.' ... Microsoft is investing to be at the forefront of these changes."

About 400 shareholders, mostly retirees, attended the meeting.

Some highlights from the shareholder Q&A session:

One man said Microsoft shares had done well for him. But his kids are now in college and they all have Macs. They think Microsoft is stodgy and the Apple ads make Microsoft look like a "buffoon."

Ballmer's response: "The truth of the matter is we do quite well, even among college students. Do we have an opportunity for improvement? We do. Some of that is marketing, some of that is phase of life. Ninety-six times out of 100, people choose a PC with Windows. ... Mac has picked up a couple of tenths of a percent of market share last year. But every tenths of a percent MATTERS."

Another shareholder said Microsoft needs a stronger mobile product to compete with Apple's iPhone and Google's Android.

Ballmer's response: "Good question. We have greater market share to Google Android. ... Our objective is to have a leading position among these competitors. We have just recently launched a new generation of Windows phones with new software. We are going to keep making investments, we have a lot of oppportunity. We're on the right strategy, which is to focus on building the software for the phones, not (building) the phones."

Ken Hutcherson, the vocal pastor from Redmond who opposes gay-marriage rights, spoke at length supporting a shareholder proposal that would require the company to disclose who it makes charitable donations to. He wanted to know specifically which gay-rights nonprofits the company gives to. Microsoft made large donations to campaigns to approve Ref. 71 this year, extending domestic-partner benefits. The proposal failed to win shareholder approval.

Bill Gates made nary a peep at the one-hour meeting, even though he was seated on stage with Ballmer, Chief Financial Officer Chris Liddell and General Counsel Brad Smith.

• All nine directors were re-elected. The seat vacated by James Cash's retirement was not immediately filled.
• Deloitte & Touche was selected as Microsoft's independent auditor.
• Shareholders approved changing the articles of incorporation to allow major shareholders to call a special meeting.
• Shareholders also approved an advisory vote for new executive compensation, also known as say on pay. This refers to shareholders having a say on pay. (This is not like my dad's philosophy of say on pay, which he calls, "You say, you pay." If you get to say where we're eating dinner, you get to pay.)

One other shareholder initiative failed:

• A statement of support for universal health care proposed by the AFL-CIO, received four percent of the yes votes.

The meeting was a rather spartan affair, with only Ballmer's occasionally shouting words to liven it up. There wasn't even a Powerpoint to spice things up. Shareholders got free coffee and a breakfast buffet.

Starbucks, another local shop, has put Tony Bennett on stage during their shareholder meeting and piped in Paul McCartney by satellite. The company usually sends everyone home with goodie bags.

Earlier this week, Microsoft gave everyone a free touchscreen laptop to everyone at the Professional Developers Conference in Los Angeles. (Full disclosure: To maintain our independence as members of the press, The Seattle Times newsroom has a strict gift-acceptance policy: We accept no work-connected gifts or gratuities of significant value. Gifts of insignificant value – key chains, pens, calendars, etc. – may be kept if it is impractical or awkward to return them.)

Here are my earlier livetweets from the meeting, and here is an earlier story we ran Wednesday with some interesting thoughts from CFO Chris Liddell.

I will be livetweeting the Microsoft shareholders meeting at 8 a.m. today. They are meeting at Meydenbauer Center in Bellevue. You can follow me in the right corner of the Pri0 blog or at www.twitter.com/sharonpianchan.

LOS ANGELES -- If you want to try out Office 2010, the beta is now available by download for anyone. You can get it here. Office Web Apps, Microsoft's online competitor to Google, will also be available for anyone to preview who downloads the 2010 beta.

Office Mobile 2010 is also available in beta, which you can get by going to the Marketplace for Mobile if you have a Windows phone.

An interesting new feature for Office is a Social Connector to Outlook that can pull in status updates from social networks. LinkedIn was the partner announced today, which will connect early next year. No word on Facebook or Twitter.

Also, for you IT administrators out there, betas are also available for Sharepoint Server 2010, Visio 2010, Project 2010. Office Web Apps on-premise is also available to beta test if a company wants to install it on its own servers.

The final version is supposed to be available in, not surprisingly, 2010.

"People may have historically thought of Office as desktop or PC thing," said Takeshi Numoto, corporate vice president of marketing for Office. "With 2010 we are really focused on giving that productivity experience across the PC and browser."

LOS ANGELES -- Four months after releasing Silverlight 3, Microsoft is making Silverlight 4 available for beta testing. You can find it here.

Silverlight is multimedia user experience software that competes with Adobe Flash. For instance, Silverlight is being used by to stream the Vancouver 2010 Winter Olympic Games online, as well as te Victoria's Secret Fashion Show.

New features include:

• The ability to create experiences in non-browser places, like on the desktop.


• Web cam and microphone support.


• New animation features, like the ability to break a video screen into jigsaw puzzle pieces.


• More manipulation of photos. Scott Guthrie, corporate vice president of the .NET Developer Platform, demonstrated this by warping a photo of himself that he then posted to Twitter as his profile pic.

LOS ANGELES -- Windows President Steve Sinofsky gave some details on the development of the next version of Microsoft's Web browser, Internet Explorer 9.

He said the browser would be more interoperable, and its performance would be improved from IE 8. The development team has been working on the new browser for three weeks.

IE9 will support DirectX and other standards, including CSS3, HTML5.

Sinofsky gave a brief demo of animations running in Internet Explorer 9 in his keynote today at PDC. He also showed its ability to draw rounded borders and its sharper image display.

At least in the demo, the animations ran more smoothly compared with the "ka-chunk, ka-chunk, ka-chunk" of Internet Explorer 8, as Sinofsky described it.

"We intend to make sure Internet Explorer represents the very best browser for Windows and represents the most world-class browsing," Sinfosky said.

He said the devlepment team has been focusing on improving the performance of the browser as measured by Acid3 tests.

Internet Explorer, which at one point dominated the market for browsers, has been steadily losing share, mostly to Mozilla's Firefox. Microsoft has a little less than 65 percent of the market and Mozilla has 24 percent. Other competitors include Google Chrome, Apple Safari and Opera.

LOS ANGELES -- I will be livetweeting today's keynote featuring Windows President Steve Sinofsky at 8:30 a.m. You can either look in the top right corner of the Microsoft Pri0 blog for the Twitter feed, or you can follow me on Twitter at www.twitter.com/sharonpianchan/.

Other speakers at the second-day keynote are Kurt Delbene, SVP of Office Business Productivity Group, and Scott Guthrie, CVP of .NET Developer Platform.

LOS ANGELES -- Ray Ozzie, Microsoft's chief software architect, talked up cloud computing this morning in his opening keynote at Microsoft's Professional Developers Conference this morning.

Ozzie announced that the Microsoft cloud, Windows Azure, will light up for customers on Jan. 1. The first month will be free and the meter will start ticking for customers on Feb. 1.

The vision, as he said last year here, is "three screens and a cloud." The three screens are the mobile phone, the PC and the television, all connected by the cloud. The cloud consists of applications and software served up through the Internet browser. Most consumers are already using the cloud, whether it be Gmail, iTunes, online flight booking or Web banking. The larger opportunity in cloud computing is for businesses, which can migrate their computing from software installed on PCs and internal servers to the cloud -- servers run by Microsoft.

"We at Microsoft have but one strategy and that is to focus on leverage and seamelessness across everything we do," Ozzie said. "Across the PC, phone, TV , Web and cloud, across our many platforms, across products serving both consumers and businesses."

Windows Azure will be only as successful as the number, diversity and depth of applications developers build for it, and the goal here was to attract as many as possible. Microsoft is competing in the cloud with, among others, Google, Yahoo, Amazon.com and Salesforce.com. Ozzie said in his keynote that "tens of thousands" of developers participated in the technical preview.

He also invited customers to come on stage and via satellite to talk about what they are building in the Microsoft cloud, including these cases:

• WordPress is using Windows Azure, which takes away the stress of managing unexpected massive traffic, as in a situation where Perez Hilton links to a blog item that dries a bunch of hits to your blog.

• ICanHazCheezburger, famous for funny cat photos, is launching a new humor site featuring funny signs, www.oddlyspecific.com on Windows Azure.
  
• Domino's Pizza (via video) is using the Microsoft cloud to manage its ordering system, key to managing the pizza peak on Super Bowl Sunday.


• The White House (via satellite) is building apps off federal databases for the public. NASA is holding a "Be a Martian" competition for anyone who wants to build a cloud app based on Mars Pathfinder images. A less happy moment for Microsoft was when Vivek Kundra, chief information officer for Obama, showed off a Career Finder mobile app on an iPhone.

For an archive of my Tweets from the session, check out my Twitter posts between 8:30 a.m. and 10:30 a.m.

Other highlights:

• Bob Muglia, president of the Server and Tools business, did a video on the cloud with him as Life Coach helping a man dressed as a cloud with an identity crisis. I think we can all relate: What's a private cloud? Public cloud? Hosted cloud? It ended with Muglia, jumping around like Microsoft Chief Executive Steve Ballmer, shouting, "Soar, cloud, soar!"


• Steven Sinofsky, president of the Windows business, will take the stage at Wednesday's morning keynote. I will livetweet that keynote at www.twitter.com/sharonpianchan/.


• Expect lots more details on developing for Windows phones, probably Windows Mobile 7.0, at the Mix conference next year.


• Muglia also showed off Project Sydney, a development platform for Windows Azure that I don't quite have a grasp on yet. Microsoft built its online auction for the annual employee charitable giving campaign on Sydney, and in the demo Muglia showed, a 16-inch chainsaw was going for $1,000.

In case you didn't see it Monday, Microsoft co-founder Paul Allen has been diagnosed with non-Hodgkin's lymphoma.

Here is the story that my colleague Brier Dudley wrote.

And here is the full e-mail that Paul Allen's sister Jody released to the public:

To employees of Vulcan and affiliates:

I want to let you know that Paul was recently diagnosed with non-Hodgkin's lymphoma.

He received the diagnosis early this month and has begun chemotherapy. Doctors say he has diffuse large B-cell lymphoma, a relatively common form of lymphoma.

This is tough news for Paul and the family. But for those who know Paul's story, you know he beat Hodgkin's a little more than 25 years ago and he is optimistic he can beat this, too.

Paul is feeling OK and remains upbeat. He continues to work and he has no plans to change his role at Vulcan. His health comes first, though, and we'll be sure that nothing intrudes on that.

We would ask you to respect Paul's privacy and not discuss this outside of the office.

If you have any questions, please ask your EC member.

Thank you in advance for what I know will be all your good thoughts for Paul.
Jody