He is joining the company as corporate VP of strategic and special projects, reporting to CEO Steve Ballmer. According to a Microsoft statement, Penn will focus on “key consumer initiatives.”

The company said:

Penn will lead a cross-functional team focused on consumer initiatives and will draw on his experience in strategic development, branding and positioning to develop and deliver breakthrough ideas that meet consumers’ changing and dynamic needs. He will continue to write about consumer, demographic and social trends but will not be involved in public policy issues for Microsoft. Penn will remain based in Washington, D.C., but will spend substantial time in Redmond.

By most accounts Microsoft does need help in this consumer sector. It has seen wild success with its Xbox-Kinect tandem but otherwise is viewed as an also-ran in consumer electronics where it’s trying to catchup with Apple in tablets and smartphones. In short, Microsoft needs help there.

Penn is somewhat controversial. He left the Hillary Clinton presidential campaign under something of a cloud.

The 58-year-old Penn was worldwide CEO of PR giant Burson-Marsteller and CEO of the polling firm Penn Schoen Berland LLC. It was unclear if he would leave his role at the polling company. Penn also wrote Microtrends: The Small Forces Behind Tomorrow’s Big Changes.

This is not the first time a tech company has turned to D.C. power players and master spinners for help. Oracle hired Clinton spokesman Joe Lockhart as a senior VP in 2001 but he left six months later. More recently, Amazon added Jamie Gorelick, a former deputy attorney general in the Clinton administration, to its board early this year.

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There are write downs — and then there are write downs. Microsoft is wiping the books clean of almost all of the $6.3 billion it paid for interactive ad company aQuantive in 2007. The company is taking a $6.2 billion non-cash, non-tax deductible charge against the goodwill in its Online Services group for the fourth quarter of the fiscal year that just ended. The announcement came after the market closed Monday.

The splashy acquisition, which included Avenue A/Razorfish, was meant to counter Google’s DoubleClick buy and to give far-behind Microsoft a much-needed boost in online advertising. Microsoft CEO Steve Ballmer called it the next step in the evolution of Microsoft’s ad network. Rather than risk having the then-hot property fall into the hands of frenemy WPP or others, Ballmer offered an 85 percent premium. The deal cost Microsoft $6.3 billion in cash when it closed that August.

After the deal, Ballmer suggested advertising could make up a quarter of the company’s revenue in a few years. It never came close to fulfilling that kind of promise. Or, as Microsoft put it in Monday’s announcement:

While the aQuantive acquisition continues to provide tools for Microsoft’s online advertising efforts, the acquisition did not accelerate growth to the degree anticipated, contributing to the write down.

When it came time for this year’s annual goodwill check — whether the intangible assets are worth as much as a company paid, Microsoft admitted it wasn’t and wasn’t likely to do so. The acquisition accounted for nearly all of the goodwill claimed by Online Services Division OSD). The division includes search engine Bing, MSN and adCenter. In the third quarter of FY2012, it brought in $707 million in revenue — a 6 percent year-over-year increase — and lost $479 million with the slight victory of cutting its operating loss by some $300 million.

The announcement included a warning about the entire division:

While the Online Services Division business has been improving, the company’s expectations for future growth and profitability are lower than previous estimates.

As vast as the amount sounds, it was barely a blip for Microsoft then and it’s barely one now.

As to what it says about Microsoft, there’s not much new other then, possibly, the admission that the company is getting a lot more realistic about its Online Services Division. We’ve know for years that Microsoft hasn’t been able to crack the nut on interactive advertising.

As CNBC analyst Hank Greenberg pointed out, it says more about how companies with a lot of money are likely to pay too much. He wondered if we’ll be hearing the same announcement down the road from Facebook on Instargram or some other big-ticket acquisitions.

The notice posted by the FTC included no further information about the deal, which will become Microsoft’s largest acquisition to date.

The FTC clearance is the latest, and a significant, bit of approval that Microsoft needs to complete the purchase.

Although Microsoft has in the past faced regulatory problems for some acquisitions — a $1.5 billion purchase of Intuit was blocked in 1994 — this deal has so far gone relatively smoothly.

Now come the real challenges. Here are some of them:

– Microsoft integration. Skype is set to become a standalone division of Microsoft, and it will be led by Tony Bates, who is the current CEO of the Internet telephony company.

But apart from Bates, there are some question marks over how that new organization will be run, and how much of the current structure of the company will be retained going forward.

Apparently, at least eight senior executives at Skype have been let go. They are VPs David Gurle, Christopher Dean, Russ Shaw and Don Albert; CMO Doug Bewsher; human resources head Anne Gillespie; and Ramu Sunkara and Allyson Campa, who joined when Skype bought Qik earlier this year.

Some of these people have been long-time and significant contributors to Skype’s position in the market today. Albert, writes Skype Journal, had been with Skype since 2006 and played a big part in making Skype a “household name” in the U.S. Meanwhile, Shaw, as VP in charge of mobile, effectively spearheaded not only the company’s deals with operators like Verizon, but also played a big part in its huge growth in mobile apps.

The news was first reported by Skype Journal, and then picked up by Bloomberg. Skype has since confirmed some, although not all, of the dismissals.

Why now, you might ask? The positive spin is likely to be streamlining redundant positions, but Bloomberg makes the guess that the timing of the these departures means that Skype will not have to make big payouts to the executives when the Microsoft deal gets completed.

On the services side, we have yet to see how and where Skype will sit in Microsoft’s existing software, specifically in products for consumers and small businesses, which have already proven to be the big users of Skype.

Up to now, Skype has found it a challenge to monetise its audience to any significant extent — it has significantly more users of its free services than it does of its low-cost SkypeIn and SkypeOut services, or other value-added services — so it remains to be seen whether Microsoft will be able to do what Skype has not.

There are also some question marks over the reliability of the service; Skype has had a few large service outages in the last six months.

– Mobile integration. Operators will be watching closely to see how Microsoft integrates Skype into its Windows Phone operating system. Although the service has proven popular on mobile devices, Skype has made few friends among mobile operators and has direct deals with only a handful, which include Verizon in the U.S. and Hutchison Whampoa-owned Three. One mobile operator executive noted to mocoNews that putting too much emphasis on Skype in Windows Phone could alienate some operators.

– Platform-agnostic? At the same time that Microsoft looks to integrate Skype into its own products, it will have to carefully balance that with its other stated goal to keep it platform-agnostic. Both Google (NSDQ: GOOG) and Apple (NSDQ: AAPL) have been slowly building up their own capabilities to offer much more extensive video and instant-message chat services that could be direct competitors.

Skype currently has around 145 million users per week. In 2010, about 42 percent of its calls were made on video. It currently has apps for Apple’s iOS, Nokia’s Symbian and Google’s Android platforms, and there will be one for Windows Phone 7 in the upcoming Mango update.

Microsoft is at a crossroads, not the first one it has stared down in its 36-year-history, but perhaps the most important. It is both enormously successful and astonishingly off-course at the same time, generating billions in profits off of Windows and Office but ill-prepared and out-gunned in making the transition to a new style of computing that old rivals like Apple (NSDQ: AAPL) and Google (NSDQ: GOOG) are appearing to lock up for themselves. As a result, its stock has been stagnant for quite some time, prompting no small amount of grumbling among its investors.

That frustration boiled over this week. David Einhorn, a hedge-fund manager famous for betting against Lehman Brothers just before it collapsed and infamous for investing $200 million in the lackluster New York Mets (a baseball team with which, in the interest of full disclosure, I have carried on an irrational love affair since the mid-1980s), called Ballmer and Microsoft’s board on the carpet.

“(Ballmer’s) continued presence is the biggest overhang on Microsoft stock,” Einhorn said at the prestigious Ira Sohn Investment Conference, a gathering of some of the best minds in finance to discuss investment opportunities. “Ballmer’s problem is he’s stuck in the past,” he said, as reported by the Wall Street Journal.

Microsoft’s board quickly rallied to Ballmer’s defense. But after witnessing the last six months of Microsoft’s mobile strategy, one has to wonder how much rope the charismatic CEO has been given. Windows Phone 7 is the best mobile software the company has released to date, but it’s languishing amid developer fatigue. Microsoft is counting on a groundbreaking partnership with Nokia (NYSE: NOK) to jump-start demand, a gambit that will require both companies to quickly roll out innovative products that can give consumers and developers a reason to think twice about the iPhone or Android. And we still aren’t quite sure what they have in mind for tablets.

For all the angst, the overall situation is not catastrophic. Despite all the clamor over slowing demand for PCs, that type of computer isn’t going anywhere for a very long time, and Microsoft enjoys a dominant position in both the operating system for that type of computer as well as one of its most useful applications. But it finds itself in the same position in that IBM finally hit in the early 90s: long on history, flush with cash and short on vision.

It took a new CEO from a completely different industry who was willing to question every single part of IBM’s business and culture in order to prime the company for a new era, and IBM remains one of the strongest tech companies on the planet as a result. Perhaps not as top-of-mind as it once was, but secure in its own identity and now once again more valuable than Microsoft.

Microsoft needs such a leader. Microsoft has made but two commendable forward-thinking product and strategic decisions since the dot-com bubble: the commercialization of the Xbox and a shrewd investment in Facebook that will one day pay huge dividends. Everything else has been a wash, from the Zune to the Kin, from a willingness to let Intel’s short-term concerns impact a huge product launch to its bizarre courtship of Yahoo.

The last five years marked the beginning of a sea change in the technology industry, one in which money, talent, gumption, and buzz have encircled a new type of computer. And at the same time, those using traditional personal computers are spending more and more of their time in the browser as opposed to running native applications, a trend that does not benefit Microsoft.

Ryan Block of gdgt suggested that only Bill Gates could right Microsoft’s ship by coming back to helm the company he founded, but truth be told, even Gates isn’t right for Microsoft at the moment. After all, Gates remains the chairman and single-largest shareholder of Microsoft: if he wanted Steve Ballmer to be gone, Steve Ballmer would be gone.

“Transformation of an enterprise begins with a sense of crisis or urgency,” Gerstner told Harvard Business School students in 2002, recalling his first days at IBM. “No institution will go through fundamental change unless it believes it is in deep trouble and needs to do something different to survive.”

Perhaps the only way that Microsoft board members and shareholders can create that sense of urgency is by making a huge statement in removing the man perhaps most responsible for forcing their hand, and by selecting a replacement completely disengaged from Microsoft’s current state of mind to reinvigorate the company. Sometimes, if the party turns sour, it’s better to dance with someone other than the one that brung ya.

A speech that started out looking like a tutorial on a product that is already nearly half a year old, took a turn for the more interesting today in Barcelona. With almost total absence of Internet connectivity, Ballmer and Joe Belfiore, the VP overseeing the Windows Phone platform, took the audience through some of the key new features that will be part of the next release of the platform, scheduled for sometime in 2011 and free for all Windows Phone users:

– Internet Explorer 9: Belfiore showed us the newest iteration of Microsoft’s web browser looks is getting a very tight integration with the company’s mobile platform, with a particular emphasis on video graphics. The demo, predictably, showed the browser running on a phone with incredibly smooth video, particularly compared to other browsers like Firefox on mobile.

Will users need to be on Windows phones for that experience to be as optimized? That’s not clear yet, but what is is that Ballmer made a point of emphasising how such a killer browser meant that there could be much richer mobile web-based apps created, potentially in place of native apps. That kind of conclusion might not come as a surprise from Microsoft: they are far behind Android/Google (NSDQ: GOOG) and Apple (NSDQ: AAPL) when it comes to well-populated app stores. But it is a very true and valid point, nonetheless.

– Multitasking: One of the main detractions of Windows Phone 7 was that a user, for example, could not listen to music and check an e-mail at the same time. This will get corrected in the new version of the OS. “We don’t multitask third-party apps because we wanted to make sure that we had long-life capability,” said Belfiore. “So we are shipping multitasking that we think is the right balance.”

– XBox Kinect integration: This is a nifty-sounding addition to the platform, which plays into this idea using one Microsoft device to encourage users to buy more Microsoft devices. But it is perhaps only an idea that Microsoft had thought about after the holidays, when the Kinect sold so well. Belfiore demonstrated to the audience a gaming experience where one user played a Kinect-enabled dodge ball game, while two other people, using their phones tracked him and tried to hit him with balls.

Ballmer, back to the floor after the demos, told the audience that there are now 30,000 developers registered with Windows Phone, and the toolkit has been downloaded one million times: that shows “promise” for the platform, “But we know we’ve got a lot of work to do. The WP7 platform will only thrive with scale and variety.”

Scale will, of course, get a potentially massive boost with the announcement last week that Nokia (NYSE: NOK) will be making Windows Phone 7 into its primary smartphone platform in the future. (“Concept” phones, pictured, were revealed by Nokia yesterday.) That’s something that both Nokia and Microsoft are banking on. “Nokia has incredible capabilities, whether it’s industrial design or cameras or a broad, efficient supply chain,” said Ballmer. “We’re sure from that based that Nokia will deliver absolutly phenomenal capability.”

Elop made a brief appearance (his second with Ballmer; the first being last Friday) at the end of Ballmer’s keynote to bring that partnership home — how will that go down with Microsoft’s other OEM partners, I wonder? — but it will take more than regular appearances together to convince the market: Nokia’s share price has been in decline since the the news first broke last Friday.

The result was a re-run for people who went through the launch just a couple of months ago and a demo to show why consumers, especially women, should be want a phone that so far is being bought mostly by businesses. Instead of wowing with what’s coming, Ballmer was selling a product that’s in the stores. Why? “Job #1 is showing this new phone to people. What we find is once people see the phone, they fall in love with it.”

The real pitch was left to zealous runner, mom and Windows Phone team member Liz Sloan, who went through seven things about “that are great for people like us” including how to find the nearest In-N-Out. (As she went about planning a team dinner there, I had a flashback to Jerry Yang on the same stage showing all the cool things you’d be able to do with Yahoo’s mobile widgets, like arrange dinner. That was 2008.)

App growth: At its current pace, Microsoft is nearly two months away from breaking 10,000 apps for Windows Phone 7. During his pre-CES keynote Wednesday night, CEO Steve Ballmer said the app store has more than 5,500 apps and is “typically” adding more than 100 a day. That looks like bupkes compared to more established stores — Android, the hardest to maneuver, has an estimated 200,000 while the iPhone has more than 300,000 — but it’s been growing at a faster pace than either of those did to start.

Ballmer said more than half of the users download an app every day. That, too, could put them ahead of the estimated averages for rivals: a survey of users last fall suggested iPhone users had an average of 40 apps while Android users averaged 25 and Blackberry users had 14. More than 20,000 developers have registered with Microsoft.

At first, Ballmer’s keynote seemed as if it had ambitious plans to reveal as he talked of the “big technology bets” that had given Microsoft a strong 2010. And XBox was the very first subject the keynote explored in depth.

Then the night’s first surprise was the Hulu Plus/Netflix announcement. Beginning this spring, XBox Live members will be able to navigate the viewing experience without using their controllers. If anything, shining the light on Netflix and Hulu Plus only reinforced the weakness of Microsoft’s own content storefront, Zune.

In addition, Kinect yielded another interesting announcement in the form of AvatarKinect, which captures facial expressions and renders them on avatars. In a demo following that disclosure, the avatars are depicted discussing the viewing experience–a nifty value-add to the social aspect of XBox.

But there was little else to share on the TV front. While some attention was paid the ESPN-XBox partnership, no further information was offered on what else that would yield or if other programming partners were on the way.

Rumors and speculation have been swirling in recent months that Microsoft was not about to cede the burgeoning over-the-top video category to Google (NSDQ: GOOG) TV or Apple (NSDQ: AAPL) TV, which made Ballmer’s keynote a logical place for making a big splash with a relevant announcement. In November, Reuters reported that Microsoft was angling to turn XBox into a “virtual cable operator” that would be a significant player given the console’s 30-million-strong footprint in U.S. living rooms.

And just last week, the Seattle Times reported that Microsoft was looking to introduce its own set-top box powered by a stripped-down version of Windows Media Center.

The fact that Microsoft didn’t even allude to interesting developments in the pipeline on the TV front may very well be a sign that for all the speculation going on, little of it is real. Or perhaps when it comes to TV, Microsoft’s plans just aren’t ready for primetime. Stay tuned.

Kinect: Microsoft’s Ron Forbes said that Xbox owners would now be able to use the controller-free system to select content to stream on their consoles from Hulu Plus and Netflix (NSDQ: NFLX). Microsoft is also launching an update to Kinect this spring so that it can be used to read a user’s facial expressions — like a smile or raise of an eyebrow — in addition to tracking his or her body movements.

Xbox Live: The Xbox 360′s online Xbox Live service now has 30 million users worldwide, Ballmer said. That’s up from 20 million users a year ago, a metric that Microsoft released at the 2010 Consumer Electronics Show.

Windows Phone 7: Ballmer hyped the company’s new mobile operating system as a destination for game playing, announcing a slate of new mobile games that will be available. He also said that there were more than 5,500 applications — game and non-game — available via the Windows Phone 7 app store, a figure that is up from the 4,000 Microsoft said there were in late December. Ballmer said updates were coming to Windows Phone 7 early this year that will add a copy and paste function and “significant performance improvements.”

Windows: Microsoft showed off various forthcoming Windows PCs, including a tablet from Asus, which goes on sale today. CVP Michael Angiulo also demonstrated a new version of the company’s Surface table computer. It’s much thinner and is made in partnership with Samsung. Thanks to support for a new type of chip architecture, the next version of Windows will support a “broader set of form factors,” Ballmer said.

Ralph de la Vega, president and CEO of mobility for AT&T (NYSE: T), then took over to introduce his company’s various Windows Phone 7 features that will run on the three partner device makers. As part of a deal with AT&T, Microsoft will bring the carrier’s U-verse TV service to all its phones. It will be available to Windows Phone 7 users, whether they’re AT&T subscribers or not (for an unspecified monthly fee).

The smartphones in the system will also come loaded with Netflix (NSDQ: NFLX) as well as Electronic Arts (NSDQ: ERTS) games, including The Sims, at launch.

Some of the features of Window 7 Phones that Microsoft execs highlighted:

– A customizable start screen with “Live Tiles,” which are set with real-time updates where users can plug in news, appointments or the status of friends.
– Comes with all the existing Microsoft tools PC owners are used to, including Xbox LIVE, Zune, Windows Live, Bing and Microsoft Office Mobile (with Powerpoint and Word).
– The mobile version of OneNote lets users create and organize quick jottings and stores it on the cloud for access on the phone or PC. The ability to “cut and paste” text will come early next year.
– Users can create an “avatar” that represents you on your phone when you use Xbox and other social media features.

The many touchscreen aspects of the Window 7 Phones would be very familiar to Google (NSDQ: GOOG) Android and Apple (NSDQ: AAPL) iPhone owners. Ballmer seemed to acknowledge that there was nothing new here as he spoke about making it easy for everyone else to use. Despite the dominance of iPhone and Android in the smartphone arena, there’s still a big world out there.

Microsoft has taken a bold step with the Windows 7 Phone suite. First, the company threw out their old OS, and replaced it with something that doesn’t look like Android or the iPhone. BlackBerry and Nokia (NYSE: NOK) are stuck upgrading old platforms that don’t easily support high-end devices like full web browsers and touchscreens.

But it’s still a gamble and despite the demonstration over the past 45 minutes, there are a lot key questions that will have to be answered:

– Community: How many apps will Microsoft have? How many developers have decided to support the platform? How many handset makers are building handsets based on the OS? People will be very critical of this because it is a way to gauge how people will think the OS will perform.

– Kickbacks: How much money is Microsoft kicking back to developers to ensure they make apps, how much money are they throwing at advertising campaigns, or to the carriers?

– Other sources of revenue: They probably won’t get to this, but how will Microsoft make money on all the integrated services, like Bing, Xbox and Zune? There’s got to be a bigger opportunity than just the revenue they collect from each device sold.