Analyst: Zune Phone coming in next two months

Jefferies & Company analyst Katherine Egbert told her clients last night that Redmond is getting ready to launch a phone based on Windows Mobile 7. "Our recent industry checks indicate Microsoft will be debuting its own phone sometime in the next two months," Egbert said. "We expect the new phone to debut soon, at either the Feb 15-18 Mobile World Congress conference in Barcelona Spain, or possibly at CTIA in Las Vegas one month later."

Egbert says the company is "partnering with a few OEM manufacturers," similar to what Google has done with the Nexus One, to create a Zune-like phone which will have 720p HD video capabilities, at least a 5MP camera, and that will run Windows Mobile 7. She also notes that Windows Mobile 7 will include "premium mobile services," including a Zune video store and music subscription and purchasing services. It will have an interface "similar" to the Zune HD UI, "and could include social networking apps like Xbox Live, Facebook and Twitter," she writes. "We don't have any information about the cost of the Pink phone, nor do we know what service providers might be partnered with Microsoft," she admitted.

"Revenue from the phone is also very unlikely to be meaningful for many years," she believes. Her reasoning for the phone is a little odd though. "However, the new phone might explain why Microsoft has allowed WinMo to dwindle to less than 10 percent mobile OS market share. Pink would be the 'third screen' (after Windows and Xbox) and [the] final component in Microsoft's '3 screens and a cloud' strategy."

If she's right, Microsoft would be fulfilling the dreams of Zune fans, Windows Mobile fans, and many others who have been waiting for Microsoft to counter Apple's iPhone with its own software and hardware combination, as opposed to just a new version of its mobile OS. Speculation and rumors about a secretive effort known as Project Pink to develop a Microsoft-branded handset have been around for many, many months.

The tidbits mentioned by the analyst have a strong resemblance to recent rumors about a media edition of Windows Mobile 7 that has "Microsoft Zune Phone Experience," and supposedly features HD video, a Zune-like music player, and streaming media, as well as Silverlight, Mediaroom, Xbox Live (possibly gameplay), Facebook and Twitter interfaces (similar to Xbox), and Zune Music integration. The media edition doesn't refer to a single "Zune Phone" though, and the latest rumors say it's coming in 2011.

Each time rumors about a Zune Phone spring up, Microsoft is quick to knock them down, insisting that it is only interested in the mobile OS business, not competing with hardware manufacturers. Officially, the company insists that releasing its own branded smartphone would be contrary to its strategy of offering just the operating system to a number of partners who then provide various hardware options so that consumers can have a myriad of devices to choose from. Earlier this month, Microsoft Entertainment and Devices President Robbie Bach bashed Google for its move with the Nexus One, saying that handset makers may fear the company will prioritize its own product over theirs and ditch Android as a result.

source