Talking to the blog editorial director Javier Pérez Cortijo—and, full disclosure, long friend of mine—the Zune Phone presentation is 100% confirmed.

MuyComputer says that the Zune Phone will have a 480 x 272 screen, HDMI out, weigh around 70 grams, and use Windows Mobile 7. This strong rumor seems to be inline with the mention of three phones in the Zune software last week.

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All I want to say is that whatever touchscreen multimedia phone MS will release through Verizon, it better have an OLED display.

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Financial analysts attending the Mobile World Congress show in Barcelona this week asked Andy Lees, Senior Vice President for Mobile Communications, during a Q&A session on February 16 about Microsoft’s phone plans. (I listened to the Q&A with analysts via a Webcast.)

Lees acknowledged Microsoft has been beefing up its hardware-engineer headcount in its mobile business unit, as of late. (A good part of that new headcount is the result of Microsoft basically disbanded the Zune business, sending the software engineers to Media Center TV land and the hardware-focused folks to the Mobile business unit.)

But Lees insisted that Microsoft is adding to its hardware ranks inside the mobile unit not because it is building a phone itself, but because it is attempting to provide tighter hardware/software/services integration in the phone space.

Lees disagreed with one financial analyst who posited that the only way to create a runaway best-selling phone is for a vendor to provide both the hardware and the software, like Apple is doing with the iPhone. Lees said Microsoft’s intent is to provide users with  a choice of third-party phones at  variety of price points — and to work hand-in-hand with phone makers to ensure the software is tailor-made for their phones..

Read the entire article here:

http://blogs.zdnet.com/microsoft/?p=2053

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It’s not over till the fat lady sings eh? Well she hasn’t even made it out on stage..

New reports from Microsoft say the zune-hardware isn’t going anywhere despite some recent negative speculation. A Zune spokesman told Wired blogger Eliot Van Buskirk that “we’re not getting out of the hardware business at all,” and that Microsoft remains “deeply committed” to the Zune—and yes, that includes the boxy HDD- and flash-based hardware players.

Speculation about the Zune increased after this Financial Times story, in which Microsoft CEO Steve Ballmer says that we “should not anticipate” a Zune phone (no, really?) and that Redmond (as the FT paraphrases) “would stick to its strategy of developing software to support a range of mobile devices.” The Financial Times story then goes on, noting that Ballmer “seemed all but ready to throw in the towel on the Zune mobile device” during his CES keynote, and speculating that “if there is a future for Zune, it lies in planting the software and online service linked to the player in other devices.”

Adam Sohn a Zune spokesman insists that the Zune hardware is here to stay. “A lot of people … took Ballmer’s comments and ran in the wrong direction,” Sohn told Wired, adding that it’s not a question of “either/or,” for the Zune hardware and software, but rather “a ‘both/and’ situation.”  Could this mean a Zune Phone?

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Microsoft revealed back in April of 2007 it’s patent application for the zune phone.  It’s almost been almost two year and no suprises yet. The patent application that gives us a glimpse of what the Microsoft Zune Phone user interface (UI) could look like. Microsoft has already announced their work on a tiled, zooming UI for mobile phones, and this patent application bolsters the possibility for a tiled UI for the Zune Phone. The patent, published April 12, 2007, discusses the benefits of using tiles that will provide an “improved user interface for mobile devices such as smartphones, personal digital assistants.” Keep reading for a look at the tiled interface.

http://www.intomobile.com/2007/04/18/microsoft-zune-phone-new-patent-application-hints-at-zune-phone-tiled-interface.html

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Come on Mr. Softy!  Like many insurances companies  the only statement from MicroSoft has been to deny, deny, and  deny rumors of the Zune Phone.   I can think of a few good reasons why Microsoft would do this.   First of all why give any clues to your competitors about what your building?  That would only fuel more ideas for the other players and we all know anyone can release something  faster then MicroSoft.  Surprise us at CES Ballmer!  You won’t regret it.

Even Matt Buchanan from Gizmodo stated today “So, Ballmer, please, please, please pull a Zunephone out of your pants. I actually want one. Well, not the one from your pants, but I suppose beggars can’t be choosers.” I’m with you Matt!

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At the Consumer Electronics Show in Las Vegas, Gates’ stage will be manned by Microsoft CEO Steve Ballmer and Sony chairman Howard Stringer. Over at Macworld, Apple marketing chief Phil Schiller will run the show for the first time.

All three are entertaining presenters. But unlike Gates and Jobs, they all have something to prove.

Ballmer’s reign at Microsoft sees huge revenues from its core business, but chronic marketing woes at the periphery. A sequence of incompatible DRM platforms helped secure Apple’s dominance of digital music. Billions were spent losing console wars with Sony and Nintendo. Windows Vista, years late and mostly hated when it finally arrived, is Ballmer’s crowning achievement to date.

Many believe he’ll announce a Zune-phone next week. More certain is a standard yawnfest of corporate mythologizing and stuff we already know about, like Windows 7 and Home Server. It’ll be obvious when Ballmer, a naturally enthusiastic fellow, doesn’t care about something: viva Games for Windows!

Surprises to watch for: New haircut. Zunephone. Us staying to the end if there’s no Zunephone.

As captain of an ungainly ship that employs some 180,000 people, even after layoffs, Stringer’s got to make a convincing case that Sony does more than just make one of everything.

Trying economic circumstances recently put him back at square one after some successes. He unified a tech-zaibatsu that should be a dozen different companies, hired Spiderman to print money, and polished off maniacal rival Ken Kutaragi. However, Sony’s products are still pricey marvels ill-suited to hard times, and the company is still grossly over-manned. He’s been slow to unravel its engineering culture and instinct for self-destructive propriety. Vultures circle over the PlayStation 3 after dismal holiday sales.

Stringer won’t opt for a mere gadget show. He must articulate an all-encompassing vision of how we’ll all be using technology in years to come. He’ll pitch Sony’s gear as nodes of a cradle-to-grave entertainment ecosystem built around Home.

Read Rob Beschizza’s article, “Gates And Jobs Ride Into The Sunset” at BoingBoing.net

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Microsoft’s Zune was already a laughing stock. Perhaps the best and brightest competition against Apple’s iPod juggernaut, people largely saw it as an “also ran”. Its best feature was its social networking functionality. It led a pack crowded with Sony, Archos, iRiver and Creative, but combined, the whole lot of them were still second best to the trend setting iPod. Even when this lot came out with avant-garde features that trumped the iPod (Archos has been integrating video into its players for years), all they did was fuel the Apple idea machine, giving the boys at Cupertino a chance to take something mediocre and make it better. After all, Apple didn’t invent the MP3 player. Diamond Multimedia and its Rio player was on the market years ahead of Apple, and they’re the ones who fought the MP3 wars with the RIAA (For those of you too young to remember, a judge once ordered Diamond to halt all MP3 player production because it had the potential of infringing on music copyrights). Apple was John-come-lately, taking a handy device and making it prettier (and maybe a little bit handier). Microsoft is notorious for playing the “me too!” game, but their products are rarely up to snuff. So they frequently go out and buy a little company with great potential and use them to leverage their way into new markets (see DOS). Redmond’s alternative is to try to go at it alone, and throw truckloads of money at the product until it finally succeeds (see Xbox). With the Zune, Microsoft chose the latter. With this second strategy, Microsoft invariably comes out as not good enough, implementing features we’ve seen for years in other products, and new features no one really cares about. Owners of Microsoft’s Zune love the sociability aspect of the device, but those owners are few and far between. The Zune has become such a mockery that when President-elect Barack Obama was spotted using one, efforts were quickly made to dismiss this abhorrent behavior. How could it be? The cool new President was using one of those? The perception is that the Zune should be held at arm’s length while pinching your nose with the other hand, something akin to a stinky diaper. And then… New Year’s Eve came around.

It’s not that every Zune on earth stopped working on New Year’s Eve. The understanding is that only first generation Zunes suffered from a calendar bug which caused the devices to stop working on a leap day. The general perception, though, is that the Zune is broken. All of them? Some of them? Only a few? It doesn’t matter. The Zune is broken. December 31, 2008 became “The Day the Music Died”. The Zune, already a PR problem for Microsoft, has become an albatross. So how is Microsoft going to recover from this?

Microsoft can spend millions of dollars fixing the bad PR that comes from this latest disaster, or they can follow another course entirely. I am proposing the latter.

Redmond has already suffered one epically expensive PR problem in 2008. To solve persistent Xbox 360 failures, Microsoft set aside a billion dollars and extended warranties on all the gaming devices. Do they want to do the same, and become notorious as the company that’s always having to pick up the pieces after their hardware fails? Or is it time to strike out in a new direction? Microsoft has to move quickly. With every passing day, they appear to be a rudderless ship as they continue to throw good money after bad. This is what Microsoft must do:

Cancel the Zune

The Zune brand is tainted. Tainted beyond repair. Too much money is necessary to put it in good standing again. Years from now, the Zune will still be remembered as the device that failed because it couldn’t count to 366. Kill it. Kill it now.

Canceling hardware is nothing new for Microsoft. I still lament the loss of their top notch and popular Sidewinder series of gaming devices (a brand only recently resurrected). See, now there’s a brand that should never have been killed off. Microsoft even branched out into wifi hardware for about 5 minutes, and then quickly pulled the plug. What was that all about, anyway?

Don’t Really Cancel the Zune

A lot of work has been put into the development of the Zune. To cancel it now would make the next step (more on that in a second) all the more difficult and expensive. Continue development. Improve it. Add features (rumors persist of an imminent “Zune phone”, for instance).

Release the New Zune (under a different name) in Time For the Christmas 2009 Shopping Season

The new Zune cannot be called a Zune. It cannot look like a Zune. And the interface must be markedly different from that of the old Zune. For starters, it has to be a touchscreen device. No point avoiding this fact anymore. All the trendy new products are touchscreen. Unless Microsoft can invent a wrist-mounted holo-projecting device in time for Christmas 2009, touchscreen is the only way to go. And it has to be trim and slick. If the screen isn’t at least as big as the iPhone, and the thickness isn’t at least as thin as the iPhone, then don’t even bother. Get rid of that stupid big fat button, and don’t give it a bezel any bigger than a human hair. You don’t want a device that’s “almost as good” as the current iPhone (12 months from now, no less!) You want a product that competes with whatever Apple will be putting out in December ‘09. Make sure it has a phone, and a camera (and no dinky camera, either – it better friggin’ do video and have a flash!) And get started on an app store right now. I still remember how I had to add applications to my old Dell Axim and that’s not going to fly in this modern age of app stores.

One big problem Microsoft has to contend with this new device will be, of course, that they already have a phone. Dozens of phones, in fact. Microsoft may have been late to the game when it came to a phone OS a few years back, but by throwing enough money at the problem, they eventually became a major player (heck, even Palm puts out a phone running Windows Mobile these days). So, does this new Zune run the old Zune OS or does it run Windows Mobile? The smart choice would be to adapt Windows Mobile for the new device. Many of the Windows Mobile hardware makers these days are adding their own layer on top of the phones these days to make the OS look slicker and more contemporary (i.e. more “iPhone-ish”). It’s time for Microsoft to get a clue and catch up. And they’re already juggling too many disparate operating systems. Besides the Windows family of operating systems, Microsoft also develops the Xbox OS, and the Zune OS. They’re fragmenting their own market. Apple, on the other hand, developed an OS so dynamic that it can run on a desktop, a settop box (AppleTV), or a handheld device (iPod/iPhone). If Microsoft really intends to stick with the Windows kernel for their desktop platform, then it needs to be made more dynamic. It’s still considered somewhat clunky and sluggish when it comes to its Windows Mobile iteration, but if we’ve learned anything from the early betas of Windows 7, it’s that Microsoft can take something old and make it blazing fast. And it doesn’t look half bad, either. So put a trimmed down version of Windows 7 on this new Zune.

Which leaves us with our last question mark: If we can’t call it a Zune, then what will we call it?

Introducing the XboxGo

It won’t look like a Zune either in terms of hardware or software. It won’t even be running the Zune software. It will be a successor to the Zune in spirit, only. What it really is is the mythical and long rumored portable Xbox. When this comes out in late 2009, people will say “Hey, it’s that portable Xbox everyone’s been talking about since 2006!” Never mind that it was actually developed practically overnight after the catastrophic collapse of the Zune.

Apple did what I’ve advocated for years. They started with a simple handheld device – the iPod – and slowly added features (thus eliminating the need for other handheld devices). PDA, camera, phone, gaming all came gradually to the iPod, like it was natural, evolutionary. This was revolutionary only to those who couldn’t see the big picture. Do you really want to carry around an iPod, a Razr, an iPaq, a Coolpix and a DS when you can just carry one device? The only question was who was going to do it first, and most affordably. For Microsoft, there will never be a portable Xbox. Whatever their portable gaming device is, it will be integrated into something else. Either their Windows Mobile platform or their Zune platform. After all, market analysts don’t salivate over divergence. Convergence is the buzz word they like to throw around.

By slapping the Xbox brand on their new portable device, Microsoft will open the device to a whole new market of users who would never have considered getting a Zune. If even all you can do is download your avatar from the Xbox to your portable device and make him dance to the music you’re listening to, that will still be enough to make an Xbox user stand up and take notice.

Microsoft already has a substantial footprint in the mobile phone market. They’ve also make quite a name for themselves in the gaming industry. That’s two big check marks in the plus column for them. Despite Steve Jobs’ assertion that the iPod Touch is the “Funnest iPod Ever” (fair enough, when it comes to iPod, I’m sure it is), Apple still doesn’t dominate the gaming market. That title belongs to Nintendo, by a staggering margin. Second is Sony with its PSP, but in numbers so small that they’re practically insignificant. Gaming is where the future of handhelds is at. It’s the next killer app that will put your handheld device in the hands of consumers that so far have resisted buying your phone/gps/web browser/camera/toaster hybrid. Nintendo and Sony are not sitting still here. They see the future as well as Apple did. Sony’s working on its PSP2 while Nintendo has already released its DSi in Japan. Portable music and video, phone, GSP, camera, PDA, and much more are coming to your handheld gaming device (and in some cases, already has).

Humiliating Sony has become a favorite past-time for Microsoft’s gaming division. Making Sony’s imminent PSP2 an also-ran would put some grins on the faces of executives in Redmond. And eating into Nintendo’s market share would be sweet revenge for Microsoft and the beatdown they got from Nintendo’s Wii.

To accomplish this, Microsoft must act quickly and spend freely. Spending freely is not a problem. Even in this economy, Microsoft has the means. But can they right the ship quickly enough to recover and turn this into a viable proposition? Granted, this may not be a profitable endeavor for a long time. Surely, to grab a substantial market share, Microsoft will have to sell this new device at a greatly reduced price. But this is nothing new for Redmond, either. They’ve been selling Xboxes for below cost since the first generation device came out. Make a product that’s at least as good as the competition’s, and sell yours for less, and you’ll come out the winner every time… even if you end up broke. Microsoft’s already got the hardware and the software necessary to make this happen. Microsoft has experience in portable operating systems (including a phone OS), and whether it was ever intended as an actual product or not, you know that work has been done on a portable Xbox and a Zune phone in the past. All the pieces to the puzzle are there, they just need to put them together. A few design tweaks here and there, and they can start producing this killer device in a few months. The start up costs necessary to get the factories up and running will probably be the biggest expense. Building buzz by leaking a few bits of information here and there – catering to the rabid and hype-sensitive gaming community, of course – will help build demand. Show off some working prototypes this summer at E3. And by Christmas, Microsoft will have the “must have” device of the season.

It’s a formula with massive potential. But Microsoft must first realize that the Zune is a sinking ship and cut its losses, and that’s not going to be an easy decision to make. Even with all the Zune resources re-allocated to this new “super secret” project, there’s going to be resistance internally (even if externally, analysts have been seeing the “Death of Zune” coming for months). But the time has come for Microsoft to stop playing “also ran” and take the lead. The Zune crash of ‘08 is an opportunity Microsoft cannot afford to pass up.

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Trip Chowdhry, of Global Equities Research, today asserts that the company will unveil a new device combining the features of the company’s Zune music player and its Danger Sidekick handhelds, combined with what he describes as “some motion enhancement features” using an accelerometer, like the Apple (AAPL) iPhone.

That would be consistent with other recent reports that Microsoft is readying a combined Zune/Danger device; CNBC reported in November that the company plans to unveil a Zune-based phone code-named Pink; that follows previous reports that Microsoft was a working on a project known as “Project Pink,” or “the pink and purple project” to do something similar.

Read the Eric Savitz post at Baron’s Tech Trader Daily

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The smartphone threat is ringing at Microsoft. Is it brave enough to answer?

Buzz over a Microsoft-branded handset is building, with The Inquirer claiming that a Microsoft-branded smartphone will be introduced in February. The unidentified sources don’t have the specs, beyond noting that it will be powered by NVIDIA’s Tegra chip. The processor would give the device groundbreaking video playback quality, but won’t that come at the expense of sucking up battery life?

This is all rumor mill fodder until Microsoft or NVIDIA make it legit. It’s pretty much inevitable at this point, though.

Calling in slick
Zune Phone chatter is nearly two years old. Talk heated up again earlier this year, as Apple rolled out its 3G iPhone, Research In Motion gave a multimedia upgrade to its BlackBerry, and Google jumped into the fray with its Android platform for handset makers.

Microsoft has no choice but to slap on its swim trunks and dive right in. If this is where Google and Apple are swimming these days, Microsoft can’t ignore its two biggest rivals when more than just the future of its mobile operating system is at stake.

Acquiring Research In Motion, now trading for less than a third of its 52-week high, would be the ideal solution. It’s a perfect match, with BlackBerry’s growing base of 19 million subscribers. Since BlackBerry appeals to the corporate crowd given the appliance’s email smarts, it’s the ripe target audience for Microsoft and 19 million fewer obvious customers that it has to win over.

Microsoft can’t afford to play it safe here. Its very presence will spook its Windows Mobile handset partners, even if the company ultimately teams up with one or more to make it happen like Google has.

The Xbox factor
The real prize here is going for the knockout blow, but that’s easier said than done when you’re competing against Apple and Google.

It doesn’t help that Microsoft is also, well, Microsoft. As far as corporate brands go, Microsoft is about as cool as a sauna. The Zune media player is a noble shot at street cred, but the gizmo had just a tiny 4% sliver of the market according to NPD Group earlier this year.

The real killer app for Microsoft would be hog-tying a wireless device to its Xbox 360 franchise. After all, Microsoft is the only video game console maker without a portable gaming device. Nintendo owns the market with its DS. Sony has been a feisty silver medalist with its PSP. Where is the portable Xbox?

“Transforming the Zune into a cell phone or portable video game player may not be enough, though at least it would get customers talking again,” I suggested back in May. Rebirthing the lethargic Zune into a gaming device would get it back into retailers that have booted the fringe device. Putting out a smartphone with Zune functionality would be the bare minimum of a response to Apple’s iPod-backed iPhone.

So why can’t Microsoft put it all together and create the triple threat? Why can’t the “mPhone” be a multimedia player, a handheld gaming system, and a Web-smart cell phone? It’s a lot to ask in a product, but if Microsoft is going all-out with state-of-the-art NVIDIA graphic chips as The Inquirer claims, it’s already aiming for a younger crowd hungry for eye candy.

Teen gamers can’t afford smartphones with costly data subscription plans? The Zune is such a sorry ecosystem that it will hurt sales? All of this still won’t pry an iPhone out of your hands?

You’re asking the right questions. It’s Microsoft’s job to drum up the right answers.

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