In a recent confirmation, Hewlett-Packard (HP)’s Senior Executive Todd Bradley told CNBC on Friday that the company will build its forthcoming phones with Palm’s WebOS – the mobile operating system that HP acquired with the Palm takeover - in place of Microsoft’s latest mobile software Windows Phone 7.

The revelation from Bradley, that HP will not be selling any Windows Phone 7-based handsets, comes as a surprise - more so as HP had spent $1.2 billion to acquire the Microsoft software.

However, HP has also revealed that it still intends taking advantage of its relationship with Microsoft in a few other ways. Clarifying the speculations about which OS the forthcoming Slate tablet from HP will run, Bradley said that the tablet will ship with Windows 7.

Nonetheless, HP’s decision about Windows Phone 7 will be a clear setback for Microsoft, as HP is the software maker’s biggest customer. Lack of full backing from the leading tech company might hamper the prospects for Windows Phone 7, which has been scheduled for a later-this-year launch.

Despite the fact that Microsoft still reportedly has some of the smartphone industry’s other big names - like Dell, HTC, LG, Asus, and Samsung - signed up for the Window Phone 7; it is apparent that the growing popularity of the Android, as well as WebOS, has taken its toll on the Microsoft offering for mobile, making it less attractive than before to hardware makers.