Analyst: Zune phone "not likely"

would clash with the very fundamentals of Microsoft's mobile operating system business and with the partners it depends on to succeed, according to early Any attempt by Microsoft to release a Zune-branded phoneobservations by Jupiter Research analyst Michael Gartenberg. He warns that the frustrations with success in the market that led to the creation of the Zune media player don't exist with Windows Mobile. While companies selling Windows Media-compatible players and the relevant protect music format had largely struggled before the Zune launched in November 2006, Windows Mobile is still considered successful with 20 million copies sold for various devices in the company's fiscal 2008.

"Zune worked to some extent since the technology Microsoft was licensing wasn't getting them anywhere," Gartenberg says, referring to the PlaysForSure program for protected music. "The phone is different. [Windows Mobile] is a core platform and OS. No one has ever been successful licensing technology platforms to others and then competing with a device of their own."

Apple and Palm are cited as examples of this, with Apple having seen substantial losses while it licensed out the desktop Mac OS to third parties in the mid 1990s only to regain its footing after canceling the program. Palm in turn licensed out the PalmOS to Japan-based ACCESS but has had little success encouraging the spread of the software beyond its own phones.

Many Windows Mobile partners would also likely revolt, the analyst suggests, particularly if Microsoft decided to follow the same one-carrier strategy as Apple did with the initial iPhone. The move would force Microsoft to compete against close dependents and also create conflicts with licensees that would see Microsoft favoring certain providers and services over others. The company is unlikely to see much success should it follow Nokia's route and sell a high-end phone only as an unlocked model, according to the researcher.

Apple for its part has allowed a multi-carrier strategy for the iPhone 3G and in multiple countries offers the device through two or three carriers in non-exclusive agreements.

Gartenberg however suggests that any theoretical Microsoft change would most likely to work the Zune's media playback features into an update to Windows Mobile and let third-party manufacturers develop suitable phones if they so choose. Windows Mobile 7 is the next earliest opportunity for this and is planned for a launch in the second half of 2009.