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Apple iPhone to dial Bing?

Steve Ballmer declined to comment on reports Microsoft's new search engine Bing might replace Google on Apple's iPhone, but smiled when asked the question in an interview at the Mobile World Congress trade fair in Barcelona.

Speaking to Reuters as Microsoft launched Phone 7, which it hopes will help it claw back some market share, Steve Ballmer said the new software would distinguish Microsoft's smartphones from anything else on the market.

'Look at the user experience around these new phones, and they're really quite different from anything that lives in the smartphone world today,' he told Reuters Television on Monday.

The new software is more geared to the leisure aspects of the lives of its core business customers, and includes features of Microsoft's Xbox gaming and Zune music player as well as Microsoft Office and social networking.

But many analysts believe Microsoft needs to make a more radical move, such as buying a hardware maker.

Asked whether Microsoft might ever buy a more fashionable rival, like BlackBerry maker Research in Motion, Ballmer said: 'The word 'ever' is a big word but I certainly don't feel like that's the right strategy for us today.'

He also said no major change should be expected in the company's policy of charging license fees to handset makers for its mobile software. Microsoft is the only major company to still charge a fee for using its mobile operating system.

'We don't comment generally but there's nothing that interestingly new,' he said. Later, he told a news conference: 'We plan on staying with the model that we are on.'

One potential bright spot in the fortunes of Microsoft's consumer business is the prospect of replacing Google as the default search engine on Apple's iPhone -- a possibility that has been rumored in recent media reports.

When asked about the reports, Ballmer said 'I wouldn't comment either way,' but smiled, and repeated the phrase when the reporter remarked that Ballmer looked happy.

If Apple displaced Google from its preferred status on the smartphone, it would be perhaps the clearest sign of the growing tension between two Silicon Valley icons that were considered allies in a common cause against Microsoft.

Google's chief mobile engineer, Vic Gundotra, said earlier that Apple was a 'very close and valuable partner' and he saw no reason for that to change.

Ballmer also declined to comment on whether the desktop version of Windows might one day run on mobile devices based on ARM chip designs -- a move that could change the dynamics of the burgeoning netbook market.

Currently, ARM designs dominate in smartphones but Intel chips run most notebooks and also the smaller, lower-cost netbooks designed for simple tasks such as Web browsing.