Crave

(Credit: Matt Hickey)

There are a ton of rumors flying around right now saying that Microsoft just might introduce a Zune-ified competitor to the iPhone at CES next month. There are also those who call that a ridiculous notion. I happen, to a degree, to agree with both sides.

You won't see it at CES, but new a mobile phone initiative is brewing at Microsoft right now, and the Zune team is involved.

I live in Seattle. I run with the Microsoft/Amazon/Real/Whatever circle of geeks in the area. Sadly, because I'm a technology journalist, this means that when I run into them at parties they often have to clam up. I was, though, fortunate enough to have a sneak peek at a prototype Zune more than two years ago before anyone knew what it would look like or do. I was also lucky enough to snap a shot of it with my Treo. This became the first public photo of the device. It was black and white and wrapped in its own headphones, you might remember it. You could say I broke the Zune. I thus love the Zune. I pay close attention to what the Zune teams are doing. I listen to the Zune rumors. I have my ear to the Zune ground.

And I can tell you this: There will be a cellular communications device with Zune-like features in the near future.

Updated 3:45 p.m. PDT, with additional Microsoft comment.

Microsoft has indicated for some time that it sees a Zune future in the cell phone arena, but the company has been hard to pin down on just what its plans there are.

There would seem to be two main scenarios--the rumored ZunePhone, or just making Zune software for Windows Mobile or other phone operating systems. A magazine interview with CEO Steve Ballmer suggests that Microsoft at least plans the latter approach.

Asked why the Zune is important to Microsoft, Ballmer told the magazine that it was about more than just the device itself.

"Now, we built the Zune hardware with the Zune software--and what you'll see more and more over time is that the Zune software will also be ported to and be more important not just with the hardware but on the PC, on Windows Mobile devices, etc.," Ballmer said.

Asked for clarification, a Microsoft representative provided the following statement.

"We've always said that software and services is a key focal point for Zune and it does make sense to extend the Zune experience to other devices," the representative said. "In terms of specific timing we have nothing to announce at the moment."

Is Yanko's concept design for a Zune smartphone intriguing, or frightening?

(Credit: Yanko Design)

It's a fake, folks. The "Zune Contact" phone dreamed up by Adam Huffman from Yanko Design is pure fantasy, and it's not the first.

If you like what you see, don't hold your breath. With the Zune brand still recuperating from its awkward first attempt to unseat Apple's iPod, the chances of Microsoft developing a new phone under the Zune umbrella seems unlikely. Still, it's fun to think about, if only to guess at the countless ways it would likely flop in the face of the iPhone.

Then again, with all the iPhone headaches people are experiencing these days, maybe a smartphone newcomer would be just the thing to stir things up. God knows the touch-screen iPhone clones spewing out from all the usual places aren't quite up for the challenge.

So what do you say? Would Zune's hypothetical phone suffer the same fate as its MP3 player, or is the company that brought you the Xbox 360 the perfect manufacturer to humble the iPhone?

How long have we been reading these Zune Phone rumors? Microsoft still hasn't officially announced any plans to build an iPhone, but yesterday's corporate reorganization clearly points that way.

This mockup of a smartphone UI appeared in a June 2006 Microsoft patent filing.

(Credit: Microsoft patent application)

Microsoft has reason to be worried. After about five years of plugging away with Windows Mobile, Microsoft's managed to create a reasonable competitor to Research in Motion for e-mail-enabled phones. But that's about it. In contrast, Apple launched the iPhone in June 2007 in the U.S. and by Q4, it was already the number-two provider of smart phone (or "converged device") OSs in the U.S., with 28 percent market share--ahead of Microsoft's 21 percent and behind RIM's 41 percent. Worldwide, despite an October European launch and a smaller global footprint than its competitors, Apple managed to reach 7 percent share worldwide, just behind RIM's 11 percent and Microsoft's 12 percent , although all of these folks are bit players compared with Symbian's 65 percent share. (All numbers courtesy of a February 2008 report by Canalys.)

Microsoft's acquisition of Danger has already been the subject of much speculation on CNET and elsewhere, so I won't spend too much time pondering how long it will be until Microsoft kills the Sidekick and its Java-based OS (as long as it takes to build a Windows-based version) or guessing about the acquisition price ($500 million sounds high, but possible given the premiums Microsoft has been offering lately).

The interesting part is buried in yesterday's press release announcing the latest Microsoft reorg: the company has appointed Roz Ho to lead the Danger integration. Ho has spent the last few months in an unspecified "special projects" role under J Allard, Mr. Zune himself. But before that, Ho was the longtime leader of Microsoft's Mac Business Unit, which means there's probably no Microsoft executive more familiar with Apple. Connect the dots and they spell iPhone.

So how will Microsoft go about it? My guess is they'll whip out some sort of Zune client software for the current iteration of Windows Mobile as a stopgap measure, while simultaneously building a completely new device that combines a consumer-oriented UI, mobile services, and an associated hardware reference design. They will probably brand it as a Microsoft product (like Zune and Xbox), instead of merely licensing the software (Windows Mobile) or software+reference design (the short-lived Portable Media Centers). Sidekick's manufacturing partners, Sharp and Motorola, might be involved. Timeline: probably not until 2009, although the Windows Mobile Zune client could come out this year.

Microsoft's mobile phone strategy and its digital media strategy often seem to be in different worlds. For mobile phones, the company has focused primarily on the Windows Mobile OS, a few mobile applications (Outlook being the most useful one), and--more recently--online services such as Live Search that can be used on many mobile platforms, including (gasp) the BlackBerry (the No. 1 competitor that Windows Mobile has in its sights).

For digital media, the company first pursued its partner-driven approach, promoting the Windows Media Platform for both online stores and devices, and then went with the end-to-end approach of Zune. At times, there's been overlap--for example, Verizon uses the Windows Mobile platform to power its VCast service, and there is a version of the Windows Media Player for Windows Mobile. (Does anybody use it? I have no idea.) But there hasn't been any big coordinated effort to push digital media on the Windows Mobile platform, and certainly nothing resembling the all-in-one experience of the iPhone.

On Monday, Microsoft announced its intent to acquire Musiwave, a provider of digital music services--downloads, ringtones, and so on--to phone carriers, mostly in Europe, although Canadian provider Telus is also a customer. The official release name-drops several Microsoft brands that could make use of Musiwave's services, including MSN, Windows Live, Windows Mobile and--yes--Zune.

So is this going to drive the long-rumored Zune Phone? I doubt it. It looks like this possible acquisition was driven by the Windows Mobile group, which still believes that the best long-term business model for Microsoft is to sell platform software and services to as many carriers and handset makers who will buy it. Zune and Xbox aside, Microsoft still doesn't have the DNA of a hardware company--it would prefer to sell huge volumes of broad-market, horizontal software. The margins are higher, the cross-pollination with its other pure-software businesses is more effective (if Outlook Mobile worked only on Microsoft-built phones, how would that help the company sell more e-mail servers to corporations?), and there's no dominant handset maker that threatens another core Microsoft business (unlike Xbox, which responded to the threat that network-connected game consoles would cut into consumer PC sales, and Zune, which responds to the iPod halo effect on Mac sales).

Two possibilities seem more likely to me than a Microsoft-built Zune phone. One, Microsoft could offer Musiwave as a turnkey service for operators to add mobile music services quickly and easily--the carriers get to retain control of the billing relationship with the consumer, which they're loath to give up, and Microsoft sells infrastructure software (Windows Server, for example) as facilitating technology.

Or, Microsoft could in fact be building a Zune client for Windows Mobile, or for various mobile platforms (as they did with Live Search). In that case, Musiwave might provide some sort of necessary technology to make the Zune Marketplace available via third-party carriers. Although I can't imagine the carriers being too happy about that, it's better than losing customers to the iPhone.

No phone for Zune says Ballmer

(Credit: CNET Networks)

There's been much ado about the possibility of a Microsoft Zune cell phone lately, and Crave has joined the chorus of musings with several posts of our own. While a Microsoft exec said last year that such a device is a possibility, CEO Steve Ballmer wasn't so optimistic when he was asked that very question last week. "It's not a concept you'll ever get from us," Ballmer said while speaking at the University of Washington. "We're in the Windows Mobile business." While such comments obviously are open to interpretation, Ballmer went on to speculate (and may I say rather perceptively) what most people want from their cell phone. "A phone is really a general-purpose device," he said. "You want it to make telephone calls. You want to get and receive messages--text, e-mail, whatever your preference is." So is Ballmer pulling our leg? Give Crave your feedback below.

The mysterious patent application image

(Credit: Mad4MobilePhones)

Earlier this week, Microsoft filed what appeared to be a patent application for a smart phone interface, causing many a blog to begin speculating that maybe it was for a "Zune phone" (for better or for worse)--something that's been talked about for some time now. The images in the application, showing a tiled graphical interface, definitely look somewhat iPhone-ish, and plenty of buzz arose that perhaps Microsoft was trying to develop an "iPhone killer."

ZenZui's tiled user interface

(Credit: ZenZui)

But a few sharp eyes (namely, those of our Microsoft guru Ina Fried) noticed that the interface also bore a striking resemblance to that of the software made by ZenZui, the Seattle-based mobile Web start-up that's using Microsoft's research labs to develop a "zoomable" user interface for smart phones. (Not to be confused with Deepfish, a "zoomable interface" browser developed by Microsoft Labs that aims to facilitate Web surfing on small screens.)

So we called up ZenZui to check it out. But company co-founder John SanGiovanni was quick to debunk the speculation: the patent application, he said, does not depict a "zoomable" interface and is unrelated to ZenZui's technology. As for what it actually was, he said he didn't know.

So maybe it is a "Zune phone." Or not. I suppose tiled interfaces are just rather hot right now.

(Credit: Mad4MobilePhones)

There have been plenty of Zune 2.0 rumors recently--flash memory, a "watermelon" version this summer, and what-have-you. Now here's another one to add to the pile; Engadget recently pointed us to a "Zune phone" interface patent application unearthed by Mad4MobilePhones. It appears to be a sort of "tiled" setup for for "improved user interface for mobile devices such as smartphones" and "personal digital assistants." Looks like a fancy Bingo card to me.

Engadget pointed out that some of the icons appear to point to weather, music, and the like. There's also a TV icon with rabbit ears (umm, online video?), a globe (mobile Web?), a shopping cart, and...a dog? From the looks of it, it definitely seems like a Microsoft answer to the iPhone.

Concrete Zune phone rumors started flying around a few months ago. And keep in mind that Microsoft has filed other applications involving wireless communication over a 4G WiMax network. Hmmm...

Anybody else think that Microsoft plants rumor fodder in an attempt to deflect from the recent onslaught of Apple rumors? Sneaky, sneaky Steve Ballmer!

Microsoft's Zune

(Credit: CNET Networks)

Rumors have been flying left and right about Microsoft releasing a Zune phone--in response to the much-awaited Apple iPhone--which would presumably be a cell phone integrated into its existing Zune player. While we wouldn't want to raise anyone's expectations, we have noticed some buzzing around the blogosphere in response to Microsoft filing an application with the FCC recently to allow them to use a wireless device to communicate via a 4G WiMax network. This would presumably allow Zune Phone users to "squirt" or share their songs with each other from anywhere in the country, as long as they are on the WiMax network. WiMax may not be widely implemented yet, but Sprint/Nextel has made it known that it plans to build a 4G network later this year, so rumors are that if the Zune Phone were to be released, Sprint/Nextel would be its designated provider.

While this may all seem like random speculation, the folks over at CrunchGear have apparently received several tips that led them to believe that the Zune Phone is indeed real, and that Microsoft is working to get it released in May this year, preceding the rumored release date of the Apple iPhone by a whole month. Not only that, but Microsoft is said to be announcing it before March 17. Even if all this were true, many of these details might change at a drop of a hat, especially due to the accelerated time line of such a release. We can't help but put on our skeptic shades for such off-the-wall rumors, but we'll be sure to keep our eyes and ears peeled.