Microsoft has confirmed that Hewlett-Packard's MediaSmart boxes, which run Windows Home Server, are being discontinued at the end of the year. HP has also told Microsoft that it has no intention of developing products that run Windows Home Server 2 (codenamed Vail).

Ever since HP acquired Palm for $1.2 billion, the company seems to becoming more competitive with its various partners. The company apparently has lost interest in selling Windows Home Server boxes. Instead, HP is promising to continue support for its existing MediaSmart products but has already redeployed development teams to focus on WebOS, according to Engadget.

Despite suspicions by many that the company would kill webOS, so far it has done the exact opposite. Two months ago, HP officially introduced webOS 2.0, the most significant update to the platform since its launch in 2009, along with the Palm Pre 2, the first device to sport it. Four more webOS 2.0 devices are slated to arrive in early 2011, and the company also plans to roll it out for current devices. Developers will thus be able to target eight webOS 2.0 devices in total, plus whatever Windows Home Server replacements the company may have under its sleeve.

"Microsoft continues to work on delivering 'Vail' to our customers," a Microsoft spokesperson said in a statement. "We are working very closely with our partners such as Acer, Tranquil and many System Builders to bring the best solution to market. HP and Microsoft have a long-standing strategic relationship across both consumer and commercial markets and will continue to work together moving forward."