Microsoft has taken an unusual step. It has relaxed a strict rule and will let employees moonlight in their spare time and keep the resulting intellectual property and most of the revenue, as long as that second job is writing apps for Windows Phone 7-based devices.

And they don’t have to do that work quietly. The company is having weekly pizza parties for workers who pitch in to write code for the platform and is planning ways to publicize their work, including posters and awards of recognition, said Brandon Watson, director of developer experience for Windows Phone 7. Free Windows 7-based phones were given to all employees in the 19 countries where the phones are available.

The downside is that if an app doesn’t catch on, there is no money in it for the employees who developed it in their leisure time. This makes it a less attractive incentive than, for example, some of those at Google, which has a policy of permitting engineers to spend 20 percent of their paid time on projects of their own choosing that benefit the company.

How desperate have Microsoft become?
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