In the constant game of thrones that is the Silicon Valley tech giants’ battle for dominance, 2012 could be the year that Microsoft comes back from exile.
Having lost its beat about a decade ago, the software giant has more recently been plotting an aggressive grab for territory.
And it's getting back in the game with actual innovation.
Flush with capital from its steady core businesses of software and servers, the company has been quietly busy with research and development in recent months and years.
The results are showing.

>> Windows 8, expected to come out in February in beta, is meant to operate at the heart of a Microsoft-wide ecosystem, one that bids to challenge Apple’s intuitive array of linked devices and functions. In introducing 8 at a developer's conference in Anaheim in September, Microsoft CEO Steve Ballmer (pictured) was expansive, promising, "If Windows 8 is Windows re-imagined, we're also in the process of re-imagining Microsoft."
>> The X Box 360’s upgrade, via an improved dashboard and the Kinect add-on, is ahead of the pack as a user-friendly voice- and gesture-controlled device and stoking enthusiasm not only among the early adopters and tech geek websites but on Wall Street. With its inviting user interface, it set a record for Black Friday weekend console sales.
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Demand was so great that the national Black Friday X Box stampede, in which 800,000 units were sold, included what may be the first single-person-shooter shopping brawl, in which a Los Angeles woman pepper-sprayed the competition in a frenzy over half-price X Box 360s at a Walmart.
"The X Box is optimized for television and already connected to 50 million TV sets," says influential tech consultant and former head of digital for Oprah's network Robert Tercek. "If they can get everybody to sign up for their service [no mean feat with an upfront $60 fee to join X Box Gold and monthly charges for access to some channels], they could be as big a player as Netflix."
>> Nor is the company shrinking from a battle for mobile phone -- and tablet -- business now dominated by Apple and Google’s Android. The Lumia, which has been out in Europe in the form of the 710 and a fancier 800 model (introduced in London Nov. 30 with Deadmaus deejaying), will be available Jan. 11 in the U.S. at $49.99 with a two-year plan and is aimed at first-time buyers. (Upgraded versions are said to be on the way this spring.)
It’s the first phone since the introduction of the iPhone to give Tercek gadget lust. “Have you seen the phone?” he asked TheWrap, pointing to the OLED screen that's easily read in sunlight and the tactile response of the touch screen compared to the iPhone’s hard glass and the operating system. “It’s a wonder to behold -- a terrific comeback.”
