Microsoft to Launch Zune Phone in Two Months?

Published on January 19, 2010
by John Paczkowski

pretty-in-pink-revisedMicrosoft has long claimed that its mobile strategy is to provide a software solution, not devices. As Microsoft CEO Steve Ballmer told attendees of a McGraw-Hill (MHP) media conference last spring:

“With Windows Mobile, we want to permit a range of hardware innovation, and yet, still have a pretty good experience end-to-end, with good applications, and we want the ability for software developers to target both a very high-end and a lower range or mid-range phone. And the ability to scale up and down, to work with multiple hardware vendors, to get a range of competition and innovation and price competition amongst the hardware guys is a big asset. It is certainly what our strategy is.”

That being the case, it’s intriguing to learn that talk of Microsoft’s (MSFT) long-rumored “Pink” phone project has started up again. In a note to clients today, Jefferies & Company analyst Katherine Egbert claims that Redmond is gearing up 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 writes. “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.”

The device, “a Zune-like phone” according to Egbert–is likely the result of an OEM partnership similar to the one between Google (GOOG) and HTC that produced the Nexus One. She believes it will boast a five-megapixel camera and support 720p HD video and some music subscription/purchasing scheme.

Beyond that, Egbert is at a loss. “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 explains.

“Revenue from the phone is also very unlikely to be meaningful for many years,” the analyst adds. “However, the new phone might explain why Microsoft has allowed WinMo to dwindle to <10% mobile OS market share. Pink would be the 'third screen' (after Windows and Xbox) and final component in Microsoft's '3 screens and a cloud' strategy."

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