Verizon Communications Inc. is taking more of its television technology development into its own hands and relying less on its close partner Microsoft Corp. as the phone company struggles to leapfrog cable in an urgent battle to add TV service to its traditional offerings.
But, later in the article:
Christine Heckart, a Microsoft general manager, defended the company's work for Verizon, noting that her company's software is now running everywhere Verizon's service has been introduced. Microsoft executives say that any difficulties that may have occurred in developing the Verizon boxes weren't out of the ordinary for a project of this sort. They also say the plan from the outset had been for Microsoft to reduce its staff devoted to the project while Verizon would be increasing its own.
Ultimately I think this is more about Microsoft's relationships with Cisco and Motorola, as they're the dominant set-top box companies (via their Scientific-Atlanta and General Instrument acquisitions, respectively), at least in North America.